What are the most common mistakes to avoid in tax returns?

As every year, most entrepreneurs and some employees are required to file a tax return. To ensure a smooth procedure with the tax office, it is advisable to avoid the most common mistakes people make when filling in the form. Here are practical tips on what to look for and what not to forget.
Annexes to the tax return
In order to claim the various items to reduce the tax liability, a number of supporting documents must be submitted. A guide to these can be the signature page of the tax return form, where the so-called DAP attachments are listed at the top. In our experience, persons often do not attach attachments to the tax return that are not specifically listed, mainly because only the first year of application needs to be substantiated. Without these, the tax authorities will not usually recognise the claim.
People forget about the attachment, for example, when taking a deduction in the form of interest paid on a mortgage loan for housing needs, where it is necessary to attach the mortgage loan agreement in the first year of application or the title deed from the land registry. In addition, it is often mistaken that the person claiming the deduction is not the owner of the immovable property or a party to the loan agreement.
At the same time, for example, interest cannot be claimed from the outset when concluding a future contract - the condition of permanent residence in the property must be fulfilled, which is obviously not possible if the property is still under construction.
In addition, people typically forget to provide proof of contract for pension or life insurance contributions (in the first year of application). These are important for the tax office because products for which the tax base can be reduced by the premium paid have very specific conditions. However, some products, particularly life insurance products, do not meet these.
Duplicate claims for child tax credit
Parents can claim the dependent child allowance on their tax return up to the child's 18th birthday or, if the child is a student, up to the child's 26th birthday. However, this allowance applies to one parent only and cannot be used by both parents. If both parents are claiming the tax credit for the same child, the tax authorities can determine this simply by looking at the available data, such as the child's birth number.
Income counted as own income for the spouse's allowance
The condition for claiming the spouse discount is the spouse's own income up to CZK 68,000. Importantly, this limit includes exempt income such as income from inheritance or gifts or sickness insurance benefits (e.g. maternity allowance, nursing allowance or temporary disability), while state social support benefits such as parental allowance or child benefit are not included.
Incorrect address or missing signature
One of the common mistakes is to fill in the address of the place of residence field with the current place where the natural person resides, although the address of permanent residence should be entered here. However, incorrectly filling in the address may result in the return being filed with a different tax office than the one with local jurisdiction and the return may not be delivered on time.
At the same time, if you are filing a paper return, we recommend that you check that the return is signed - both in the signature box and on any overpayment claim.
Self-employed persons should not forget about mandatory electronic filing
Entrepreneurs (self-employed persons) with an accessible data box are obliged to file their tax returns electronically. This can be done by filing via the My Taxes portal or directly via the data box. For the latter, care must be taken to ensure that the submission is in the correct format (XML) and not, for example, in PDF format.
Exemption of income from the sale of securities
Income from the sale of securities is exempt up to CZK 100,000 per year. Importantly, this is a limit on gross income and not profit (i.e. income minus expenses). If this income limit is exceeded, then all income from the sale of securities is taxable. At the same time, this exemption cannot be combined with the exemption for income from the sale of securities after three years of holding.
Depreciation of donated real estate
If an individual realizes income from the rental of immovable property (outside the accommodation services regime), he/she taxes such income in the partial tax base on rent. For the purposes of calculating the tax base, either expenses as a percentage of income (30% of income, up to a maximum of CZK 600,000) or actual expenses may be used. Usually, it will be more advantageous for an individual to use the actual expenditure because he can then claim depreciation on the property in question. However, beware of immovable property received by the individual as an exempt gift, such immovable property is excluded from depreciation.

The content of the article is based on a press release for the general public.