All tax return citizens are entitled to a full taxpayer discount. In order to claim a basic tax discount, there is no need to provide any document for the tax return. Employees, retired pensioners or disabled pensioners or women on parental leave are also entitled to a basic taxpayer discount.
Entitlement to a taxpayer discount even with passive income
Citizens with income from capital, rental, or other income who are required to file a tax return will apply a basic tax discount of CZK 24,840 to the taxpayer, even though they have only passive income, for example. Entrepreneurs claiming flat-rate expenses who are otherwise not entitled to tax benefits for children and a tax discount on their wife with their own annual income not exceeding CZK 68,000 are also entitled to a taxpayer discount.
Signing the tax declaration
Employees apply a basic tax discount monthly to calculate the monthly net wage. In order to be able to apply a basic taxpayer discount when calculating the monthly net wage, an employee must sign a tax declaration with the employer (so-called pink paper). The basic tax discount can be applied only once in a given month. Thus, when working for two or more employers, it is possible to apply a basic tax rebate only to one of them for whom a tax declaration is signed. Entitlement to the basic tax rebate on the taxpayer is also when working on a work contract. Due to the application of the basic tax discount to the taxpayer, no claim for tax overpayment can arise.
When do I not pay income tax?
Employees do not pay anything for income tax to the gross income of CZK 10,290 due to the monthly tax discount on the taxpayer. Tradesmen and citizens filing a tax return do not pay income tax to an annual tax base of CZK 165,600. However, the basic tax discount on the taxpayer does not affect the calculation of social insurance and health insurance.
Non-use of discount on taxpayer during = refund of tax
Employees who during 2016 do not fully use the basic tax deduction for the taxpayer and pay some income tax advance payments will be entitled to a tax refund after making an annual clearing or filing a tax return. In practice, this happens, for example, because of retirement during the year or work for part of the year during the study. The annual tax settlement is carried out when the statutory conditions are met (eg the employee may not work simultaneously for two employers or have rental income) the employer for the employee.