2024-04-11 16:12:04
This year, Czechs will deduct some discounts and deductible items from their taxes for the last time. The government canceled the discount for students and school fees, from the deductible items you subtract the membership fees paid to unions and fees for exams verifying the results of further education.
Tax credits reduce directly calculated income tax. Tax deductions reduce the tax base – every thousand crowns brings a tax saving of 150 crowns. What discounts and deductions can people take advantage of?
Credit for a taxpayer
The basic discount per taxpayer for the year 2023 amounts to 30,840 crowns. “Everyone is entitled to a taxpayer discount. The entire amount of 30,840 crowns directly reduces your potential tax liability. However, if your tax liability is lower than the entire taxpayer discount, the rest of the amount will not be returned to you in the form of an overpayment. This is how the tax bonus only works.” pointed out NeoTax operations director Nikola Žítková.
Discount for children and school fees
Last year’s school fees for each child amounted to 17,300 crowns. For 2022, it was 1,100 crowns less.
“Don’t forget to attach a certificate from the kindergarten to the application. In order to be entitled to a discount, the kindergarten must meet the definition of a preschool facility according to the law,” reminded Žítková.
The tax allowance for children also significantly reduces the calculated income tax. The annual tax benefit is:
- 15,204 crowns for the first child
- 22,320 for the second child
- for the third and next child, 27,840 crowns
- if the child holds a ZTP/P card, it is twice as high
“The tax bonus is essentially the only tax benefit that you can get back in the form of an overpayment of tax, unlike other discounts. If the amount for the tax bonus is higher than your tax liability, you will be overpaid. You are entitled to it if your annual income from employment or business exceeds 103,800 crowns,” said Žítková.
Discount for dependent wife or husband
If you live in the same household with your husband or wife and your counterpart did not have significant income last year, you can use a discount of up to 24,840 crowns, or 2,070 crowns for each such month.
“You can claim a discount for your spouse if his or her income does not exceed 68,000 crowns per year. Income from employment, business, but also maternity benefits are included in this amount. On the other hand, parental allowance or other state social support benefits are not included in income . If the husband or wife has a ZTP card, the discount is doubled, i.e. 49,680 crowns,” explained Žítková.
Interest on housing loans
For 2023, the maximum tax deduction of interest from a loan for own housing is set at 150,000 crowns. However, if the housing needs were procured before 2021, the original maximum limit of 300,000 crowns applies to these loan interests.
Pension and life insurance
If you have supplementary pension insurance or supplementary pension savings and contribute more than 1,000 crowns per month, you can reduce your tax base.
“You can deduct a maximum of 24,000 crowns from the tax base. The final amount of the deduction then depends on how much you have actually contributed. In your tax return, you will then enter the amount reduced by the state pension contribution, i.e. 1,000 crowns less for each month of savings. In total, you can reduce your tax by 3,600 crowns,” added the operational director of NeoTax.
The annual tax can also be lower by the same amount in the case of life insurance, if you meet the conditions for application.
“The bank or other institution will always automatically send you a confirmation at the beginning of the year, where you will be told how much you can ultimately claim in your tax return. If they haven’t sent you anything, you probably don’t meet the conditions, but don’t be afraid to check with them,” advises Žítková .
Further education exams and trade unions
It is possible to reduce the tax base by up to three thousand crowns for paid membership fees to a trade union.
Reimbursements for examinations verifying the results of further education reduce the base by a maximum of 10,000 crowns, for people with disabilities by 13,000 crowns and for people with severe disabilities by 15,000 crowns.
“This year is the last chance when you can claim paid membership fees to trade unions or reimbursement for exams verifying the results of further education in your return. These discounts have been canceled since 2024,” Žítková described.
Gifts
Donations are among the tax-free items that reduce the tax base. Each thousand kroner provided in the form of a donation brings a tax saving of 150 crowns, and for people with a tax base over 1,935,552 crowns even 230 crowns.
Žítková pointed out that a gift agreement must be attached to the tax return, otherwise the discount cannot be applied.
In order to reduce the annual tax base by donations, the legal conditions must be met, i.e. the purpose, the recipient and the amount of the donation. Among the donation purposes supported by the legislation are humanitarian and charitable purposes, science, culture, education, social purposes, health or ecological purposes.
With regard to the possibility of tax deduction, it is necessary to give the gift to the recipient specified in the Income Tax Act, i.e., in practice, most often to legal entities based in the Czech Republic or in EU countries.
In the case of donations to Ukraine, this year as well, an exceptionally increased limit for deducting donations of up to 30 percent of the tax base applies, if the donations provided amount to at least two percent of the tax base or 1,000 crowns.
According to the Financial Administration, a donation made to the published account of the Embassy of Ukraine in the Czech Republic can be proven by an account statement or a slip of a receipt.