You are entitled to a refund of overpaid tax if you paid more tax in advance for last year than you ended up having to pay. Alongside this, we also sometimes see overpayments for health or pension insurance. Under what circumstances do overpayments arise, how do you claim them and when do you get the money?
Quick overview
An overpayment occurs when you pay more in advances than the resulting tax.
The Revenue will refund the overpayment within 30 days of the statutory deadline for filing your return.
Only amounts over CZK 100 are refunded.
The overpayment can be used to pay other tax arrears.
For health insurance, amounts over CZK 200 are refunded.
When does the state have to refund my overpayment? If you have filed your tax return on time and have no other debt due to the state, the tax office must return the overpayment to you within 30 days of the deadline for filing the return. However, the overpayment does not arise automatically – it must be requested on the tax return itself.
If you are unsure whether you have actually incurred an overpayment or whether it has been correctly calculated, we can check your situation. Contact us.
When you add up all your income and expenses, take into account any advance payments you have made and apply various allowances and deductions on your tax return, you get a result which can be either positive or negative. If you have paid a lot in advances, or if you have made many different claims for tax credits or deductions, the state will give you a refund.
The calculation of income tax itself is based on the Income Tax Act, which regulates the construction of the tax base, tax credits and tax bonus.
Tip: The terms tax credit and tax deduction are often used interchangeably. However, the law makes important distinctions between them. A tax deduction reduces the tax base itself, from which the 15% income tax is then calculated. If we take as an example a tax deduction of CZK 10,000, by which the tax base is reduced, we save 15% of CZK 10,000, i.e. CZK 1,500 in tax. In contrast, a tax rebate (for example, a taxpayer rebate) reduces the resulting tax already calculated. If we take the tax rebate of CZK 1,000 in our example, we will pay CZK 10,000 less on the resulting tax.
The refund of an overpayment is governed by the Tax Code. It provides for a 30-day period for the refund of the so-called refundable overpayment. The general time limit for the tax office to refund an overpayment is 30 days. Note, however, that its first day is not the day you filed your tax return, but the day that constitutes the “deadline” for filing the tax return. whether the return was filed by the proper deadline on paper, electronically or with a tax preparer also plays a role.
What variations of overpayment refunds can we face?
The reason why the 30-day period does not start until the day after the due date for filing the return is to allow the taxpayer to amend the return and file an amended return.
Unsure about a calculation or have a dispute with the IRS? We can help you find out if you are actually entitled to a refund.
Sometimes employers contact us with questions about their employees whose wages are affected by garnishment. They do not know how to proceed if they incur an overpayment resulting from the settlement of advances paid by their employer.
There are two legal approaches and they are diametrically opposed.
According to one view, the overpayment resulting from the annual accounting of advances paid by the employer is therefore considered to be part of the net wages and therefore subject to wage execution.
According to another view, the overpayment can be enforced solely by attachment of another monetary claim. Moreover, the assignment of the other monetary claim must be served on the employer in the period when the employee requested the annual tax settlement, but not later than the overpayment was paid in the March paycheck. At no other time can the assignment of the debt be taken into account.
In our view, two situations must be distinguished:
In practice, this problem is encountered repeatedly, particularly by employers who are unsure whether to pay the overpayment to the employee or to include it in the enforcement deductions. The most common mistake is to automatically treat the tax bonus as part of the salary.
Tip: Even a master carpenter makes mistakes sometimes. You file your tax return every year and have the whole process down pat, but you may still forget to declare extra income, or you may forget a tax-deductible item that helps reduce your tax. What can you do in this situation? How can I correct my tax return? We have answered this in our separate article.
We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
You must apply for a refund of the overpayment. This is done via the tax return itself, which contains the request on the last page. Only overpayments of more than 100 crowns are refunded, typically by bank transfer. However, sending a postal order is not excluded.
The request can be sent no later than six years after the end of the year in which the overpayment was incurred. It should always be sent to the tax office that records the overpayment, using one of the methods used to file the tax return (typically by data box).
In practice, we often see that people forget to tick the overpayment claim box on the tax return itself. The tax office will then not refund the overpayment automatically.
If an entrepreneur or company recognises a tax loss, they can claim it as a reduction in the tax base in subsequent years. Claiming a tax loss allows the loss to be spread over up to five consecutive tax years, reducing future tax liability. In addition, newer legislation allows the tax loss to be claimed retrospectively, i.e. to reduce the tax liability for the previous two years. This option gives businesses greater flexibility in managing their finances and helps them to better cope with economic fluctuations. However, in order to claim the tax loss correctly, it is necessary to comply with the conditions and procedures laid down by law.
Tip: another term that is used in connection with tax overpayments and underpayments is tax loss. This is a situation where tax expenditure is higher than tax revenue. In the case of individuals, it can arise only for two partial tax bases – income from self-employment (business) and rental income.a tax loss cannot be achievedon theother sub-bases (i.e. typically on the employee’s employment income). We also consider a loss if the taxpayer has not earned any income but has nevertheless incurred expenses (for example, for the upkeep of an apartment that he did not rent). A tax loss can be included in one of the main deductible items of the personal and corporate income tax base. The tax loss incurredcannot be reduced by the sub-base of income tax on employment income. All other sub-bases may be reduced.
In some cases, a debtor may pay more than the amount actually due in a foreclosure proceeding. This foreclosure overpayment should be refunded to the debtor, either automatically or upon request. The bailiff is obliged to settle the overpayment without undue delay. If the debtor discovers that the overpayment has not been returned to him, he can contact the bailiff directly and, in the event of inaction, lodge a complaint with the Chamber of Executors or a petition for review with the court. Proper handling of an overpayment of execution can help the debtor to recover funds wrongly withheld.
Sometimes employers contact us with questions regarding their employees whose wages are affected by garnishment. This is because if they incur an overpayment resulting from the settlement of advances paid by their employer, they do not know how to proceed.
There are two legal approaches and they are diametrically opposed.
According to one view, an overpayment of execution arising from the annual settlement of advances paid by the employer is therefore considered to be part of net wages and therefore falls within the scope of wage execution.
According to another view, an overpayment of execution can only be affected by attachment of another monetary claim. Moreover, the assignment of another monetary claim must be served on the employer in the period when the employee requested the annual tax settlement, but not later than the overpayment was paid in the March paycheck. At no other time can the assignment of the debt be taken into account.
In our view, two situations must be distinguished:
Tip: Tax filing time is approaching. Many of us may not even know that in some cases we may not have to pay taxes or may save a lot of money. As the old morbid wisdom goes, everything can be avoided except death and taxes. But in reality, it doesn’t have to hurt your wallet so drastically.
Advance tax payments are not the only payment that affects sole traders. They also pay health and pension insurance premiums. Overpayments can therefore arise here too.
If the total of the advance payments exceeds the health insurance premium calculated as 13.5% of the assessment base, this is an overpayment of insurance premiums. The overpayment shall be refunded by the insurance company if the payer has no other liability (i.e. debt) due to it, otherwise it shall be used to reimburse it. The insurance company shall only refund an overpayment whose total amount is at least CZK 200. no separate application for reimbursement of the overpayment of premiums is necessary. The filing of the statement itself shall be deemed to be a request for reimbursement of the overpayment if it shows an overpayment of premiums. The health insurershall be obliged to refund the overpayment of premiums within one monthof the date on which it became aware of the overpayment.
A similar principle applies to pension insurance. The overpayment of insurance premiums is also claimed as part of the submission of the statement. The Social Insurance Institution shall reimburse the overpayment within one month from the date of submission of the statement. However, it will not refund the money you have overpaid if you have a liability due to the authority. In that case, the overpayment would be used to pay the debt. They will also not refund you if the amount is less than CZK 100.
An overpayment of tax arises when you have paid more in advances than your actual tax liability after allowances and deductions have been applied. The Revenue will refund it within 30 days of the statutory deadline for filing your return, if you request a refund and you have no other arrears due to the State. Only amounts over CZK 100 are refunded and the overpayment can be used to pay another debt.
Overpayments of health and pension insurance work in a similar way, but different limits and procedures apply. A specific situation is that of execution – here it depends on whether the overpayment is from the annual payroll or, for example, a tax bonus.
It arises when the sum of advances paid exceeds the resulting tax liability after the application of discounts and deductions.
Yes, the application is part of the tax return. Without it, the tax office will not refund the overpayment.
The tax office only refunds amounts over CZK 100.
Yes, if you have other outstanding arrears, the overpayment will be used to pay them.
Usually within 30 days of the statutory filing deadline.
Yes, in some cases it can be part of the enforcement deductions.
Not sure how to do your taxes correctly so you don’t get it wrong? We can help you navigate the law, whether it’s dealing with a specific tax situation, preparing for an audit by the tax authority or defending yourself in court.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
In person and online. Just choose the appropriate service or opt for an independent consultation when you are unsure.
