The tax season often brings about a sense of dread, but employees in the Czech Republic have various tax reliefs and deductions at their disposal that could lead to significant tax refunds. After the annual tax reconciliation for the previous year, employees who claim certain tax deductions or annual tax reliefs might get a substantial tax overpayment. Submitting the required documents to your employer’s payroll office by February 15th to claim these reliefs is crucial.
Two crucial actions on one form – signing the tax declaration and the request for annual settlement – can save employees on taxes without struggling with a tax return. Due to government consolidation package changes, this is the last year to apply for kindergarten fees or a student discount. On the other hand, the spouse discount can still be claimed for 2024, but the conditions for claiming will tighten.
At the heart of the tax refund mechanism is that prepaid installments during the year 2023 are higher than the calculated annual income tax. This is because it’s only possible to claim tax deductions and some tax reliefs for the entire year. For example, employees might get a relatively high tax overpayment in their March salary after performing the annual tax reconciliation. The taxpayer discount is always applied in the annual 30,840 CZK settlement, even if the employee worked only part of the year, for instance, due to studies or job loss.
For 2023, an employee can claim kindergarten fees up to 17,300 CZK per child and a spouse discount with their annual decisive income up to 68,000 CZK for 24,840 CZK in the yearly tax settlement for the last time. These high tax reliefs, which cannot be claimed proportionally during the year but only for the entire year, are the reason for the high tax overpayment.
To claim kindergarten fees, you need to deliver a confirmation from the kindergarten and, for the spouse discount, an honorable declaration from her. From next year, kindergarten fees and student discounts will disappear and the discount for the second spouse with income up to the limit will be limited only for the case of caring for a child up to three years.
Remember, these are your rights and are there to be utilized. So, as we enter the tax season, ensure you have all the necessary documents and be ready to claim what’s rightfully yours!