15.11.2021

HOW TO GET TAX REDUCTIONS FOR A CHILD

Higher tax reliefs for children and children with disabilities will be applied once, only for the income acquired in 2021. The new amounts are adopted by the Law on the State Budget of the Republic of Bulgaria for 2021. The amount of the one-time relief for children depends on their number, as for one minor child is 4500, for two - 9000, and for three and more - 13 500.

The amount of the tax relief for children with disabilities is BGN 9,000, the National Revenue Agency clarifies. As the income tax is 10%, in practice parents with one child receive back BGN 450, for two children - BGN 900 and BGN 1,350 - for three or more children.

It is important for parents to check their tax insurance account before submitting the necessary documents for using the tax relief. If they have unpaid debts, they should repay them in order to take advantage of the tax rebate.

In order to benefit from the tax relief for children and children with disabilities through the employer under the main employment contract, the employee must submit several documents between 30 November and 31 December 2021. These are a declaration for the use of the tax relief for children and/or a declaration for the use of the tax relief for children with disabilities and a copy of a valid decision of the TEMC/NEMC of the child.

A declaration is also required that at the time of submitting the documents to the employer, the parent has no public obligations subject to enforcement. For convenience, instead of an additional declaration, the parent should note in the declaration for the use of tax relief for children that there are no enforceable public obligations.

By January 31, 2022, the employer in the main employment relationship must calculate the amount of annual income tax due with the benefit used. As the relief is great, not only will the tax due for December be reduced, but most parents will have to receive money from the treasury. In these cases, until January 31, 2022, the employer will have to pay the parent the overpaid tax, and then the amount will be refunded by offsetting from subsequent contributions to the state budget for income taxes.

If the employer has not paid the overpaid tax to his employees, the parents can use the tax relief by filing an annual tax return, even if they only have income from salaries.

In principle, each of the benefits for children or children with disabilities is used only by one parent (foster parent, close or relative).

When the amount of the relief exceeds the amount of the annual income (after deducting the insurances and the legally recognized expenses) of one parent, the difference should be used by the other parent (the other foster parent, close or relative). This is done by filing an annual income tax return from 2021. In these cases, the total amount of tax relief used by both parents, respectively foster parents, relatives or friends, may not exceed the allowable amount, according to the number of children.