Tax allowances for children in the case of joint physical custody

Czech Republic: Tax breaks for children are governed by Sec. 35c of the Income Tax Act. Taxpayers prove their claim for this particular kind of tax benefit to their employer by way of the documentation referred to in Sec. 38l (3) of the Income Tax Act.

The Income Tax Act does not specifically provide how to proceed in cases in which parents take joint physical custody of their child. This information is instead found in General Finance Directorate Directive D-22, where it says that if the child has been put, by way of a court decision, into the alternating care of both parents, then the decisive criterion in terms of who may claim the tax allowance is who of the parents lives with the minor in a jointly managed household.

It may be the case that the court put the child into the joint physical custody of both parents, but that there exists no single ‘jointly managed household’. The tax allowance for such a child may then be claimed by one of the parents for one part of the year, and by the other parent for the other part of the year. Note that the amount of the tax allowance claimed for this child need not necessarily be the same for both parents.

Alternatively, the parents may agree that the child remains a member of only one jointly managed household throughout the entire tax assessment period, irrespective of the custody decision by the court, whereupon only one of the parents can claim the tax allowance. If no agreement can be reached, then it is upon the court to decide to which jointly managed household the child belongs. In any case, it is impossible to claim the tax allowance twice for the same child.

Employees must prove their claim for the tax allowance by signing a Declaration on Tax and producing the said agreement or, failing that, an affidavit according to which the other parent will claim no tax allowance for the given child in the given assessment period (or only for a certain time period); if the other parent is also employed, then a confirmation by the other parent’s employer must moreover be submitted.

For the event that the parents cannot reach consensus with respect to the manner in which they will make use of the tax allowance for their child, Directive D-22 recommends to claim the tax allowance only after the tax assessment period has passed, by filing a tax return.

Source: Income Tax Act, Directive D-22 by the General Finance Directorate


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