In 2022, the amount of child tax credit that a taxpayer can apply as a reduction in personal income tax liability was increased. This article deals with the conditions for its application, even in cases where the parents of the child in question are separated, divorced or in dispute.

Tax credits in the year 2022

According to article 35c of the Income Tax Act (hereinafter the “ITA”), the taxpayer is entitled to tax credit for a dependent child living in a jointly managed household in the amount of:

• CZK 15,204 for the first child
• CZK 22,320 for the second child
• CZK 27,840 for the third child and other children

Conditions for application

1)    The taxpayer’s income under article 6 or 7 of the ITA must exceed at least six times the minimum monthly wage. For the year 2022, therefore, a minimum of CZK 97,200.

2)    The dependent child must share the household with the taxpayer. According to article 21e of the Income Tax Act, a joint household is a community of natural persons who live together permanently and jointly bear the costs of their needs.

3)    Only one parent can claim this deduction. The taxpayer claiming this credit must prove that the other taxpayer living in the same household with the child does not claim this benefit on his/her tax return (provide a statutory declaration from the other parent).

Application in case of divorce

For separated taxpayers, the decisive condition is the sharing of a common household, i.e. if the child is entrusted to the care of one of the parents in the event of divorce, he or she will be entitled to claim the tax credit (the same applies to the parent with whom the child lives and who takes care of the child – regardless of permanent residence – in cases where the court has not yet ruled on custody).

If the child is entrusted to shared custody, it is up to the agreement of both parents to decide who will apply the credit. It is also possible to claim the credit on a pro rata basis. So, if the child lives in shared custody, the parents can agree on how many months one and the other will claim the tax credit for. This agreement should be made in writing.

How to proceed in case of a dispute

Application of this deduction is not compulsory, so if the parents do not agree, neither taxpayer needs to apply the deduction. If one of the taxpayers does not agree that the deduction should be forfeited, he or she may bring an action for determining that the tax deduction for the dependent child pertains to one of the parents (action to establish a joint household). 

The action must be filed at the defendant’s place of residence and a court fee of CZK 2,000 must be paid. The claim must be accompanied by stating:

• which parent has been caring for the child since the joint household ended
• income of both the plaintiff and the defendant
• evidence of any attempts to make arrangements to claim the child tax credit
• whether the plaintiff claimed the credit after the end of the taxable period on his/her tax return

As mentioned above, the decisive condition for claiming tax credit for a dependent child is sharing a common household. If the parent does not live with the child, the other parent is entitled to claim the tax credit, even if the other parent contributes to the child’s maintenance. Maintenance payments cannot in any way reduce the tax base or the tax itself.

Tax credit for a child other than your own

Dependent child means not only one’s own child, but also an adopted child, a child in substitute care, a child of the other spouse and one’s own grandchild or a grandchild of the other spouse. The tax credit can thus be claimed by a grandparent or partner of the dependent child’s parent. This situation often arises when parents do not have the minimum income to qualify for the discount. 

Author: Roman Burnus, Valérie Kovářová