Employees who have not yet done so should, in their interest, visit their employer’s payroll office by mid-February at the latest. This is because the Income Tax Act has set this deadline for two critical tasks on one form that can save employees’ tax without worrying about filing a tax return. It is the signing of the tax declaration and the application for the annual return.
Employees not required to file their tax return for 2022 can request an annual tax clearance from their employer. However, all documents must be delivered to the payroll accountant on time, and the yearly tax settlement for 2022 must be requested no later than Wednesday, February 15 the payroll accountant on time.
The annual tax settlement for 2022 must be requested no later than Wednesday, February 15. Claiming tax deductions and certain tax credits will result in a refund on the annual tax return.
Employees who did not have taxable income in addition to their wages from employment under Sections 7 to 10 of the Income Tax Act, i.e., self-employment income, capital income, rental income, and other taxable income for the year 2022 exceeding CZK 6,000, are eligible to use the employer’s annual tax settlement.
Another condition is that the taxpayer had income from only one or successively more employers last year and signed tax declarations for all employers.
Employees must apply for the annual tax statement for 2022 by February 15
During the year, monthly advances of personal income tax are made to employees by the payroll accountant. The annual tax statement then calculates the annual tax liability.
Overpayment in the case of higher advances
Employees claiming tax-free allowances, the childcare tax credit, or the spouse’s tax credit often have an annual tax liability lower than the tax advance paid. The positive difference between the monthly contributions and the annual tax bill is then delivered to these employees as a tax overpayment.
“However, all amounts reducing the annual tax liability must be documented by the payroll accountant with the relevant document by February 15 at the latest,” emphasizes tax advisor Gabriela Ivanco from Mazars.
Deductions
Tax deductions reduce the annual tax base and are exhaustively listed in Section 15 of the Income Tax Act. If the statutory conditions are met, they include deductions for interest on housing loans, gifts, life insurance deposits, deposits to supplementary pension savings or pension insurance, contributions to a trade union organization, and payment for examinations verifying further education results.
The maximum tax deduction for interest on a loan for the solution of one’s housing is set at CZK 150,000 for 2022. However, if the housing need was acquired before 2021, the interest on the loan is subject to the original maximum limit of CZK 300,000.
Financial advice: Conditions for claiming interest paid on housing loans
It is CZK 24,000 for deposits on a life insurance contract. However, the same maximum amount applies to pension contracts where own warranties of more than CZK 12,000 are assessed. Thus, the aggregate annual deposits per contract must amount to CZK 36,000 or more for the entire tax deduction. To qualify for all tax deductions, the relevant certificates or contracts in question must be delivered to the payroll accountant by February 15 at the latest.
“For example, in the case of financial products allowing tax deductions, the relevant contract must be presented for the first year of claiming the deduction, followed annually by a certificate from the bank, insurance company, or pension company. In subsequent years, the contract is documented only if there is a change,” Ivanco said.
Annual discounts
For example, the taxpayer’s discount, the student’s discount, or even the tax credit for children can already be claimed when calculating the net monthly salary. In contrast, the tax credit for the spouse and the childcare allowance can only be claimed for the whole year in the annual tax return.
When the childcare allowance can be claimed, and to whom it no longer applies
Finance
It is CZK 24,000 for deposits on a life insurance contract. However, the same maximum amount applies to pension contracts where own warranties of more than CZK 12,000 are assessed. Thus, the aggregate annual deposits per contract must amount to CZK 36,000 or more for the entire tax deduction. To qualify for all tax deductions, the relevant certificates or contracts in question must be delivered to the payroll accountant by February 15 at the latest.
“For example, in the case of financial products allowing tax deductions, the relevant contract must be presented for the first year of claiming the deduction, followed annually by a certificate from the bank, insurance company, or pension company. In subsequent years, the contract is documented only if there is a change,” Ivanco said.
A maximum of CZK 16,200 can be claimed for each child for 2022. “She or his affidavit proves eligibility for the spouse’s discount that his or her income did not exceed CZK 68 thousand in 2022. The taxpayer proves the so-called nursery fees with a relevant certificate from the nursery,” Ivanco adds.