Friday, April 19, 2013

Some CZ vs. USA Cultural Differences

Not liking the bundle

I just finished reading a short article on by Elizabeth Haas called 10 Ways I’m More Czech Than American; and can't help but repost. She delightfully explains some of the endearing cultural differences you can experience while a newbie in Prague.

One of my favorites is:

"9. I frequently fret that my daughter will catch cold.
Long before I became a mom, I worked at a Czech nursery school. The parents continually nagged the staff, no matter what the season, to tuck the kids’ shirts into their pants and pull the pants high, as if a thin scrap of denim could shield vital organs. Cut to a well-heated living room in the U.S. last fall as my baby niece braves the elements barefoot with a slice of back exposed, while my own child plays alongside her in punčochy, the thickest Czech tights money can buy...hiked beyond her navel, naturally!"

Although I did not become a bundler, the Czech use of tights is brilliant and we adopted them for our youngest. The two other Czech behaviors for infants that stood out here:

1. Many Czechs keep their infants lying flat in a stroller until they are one year old. You rarely see a Czech infant in chair position. I was told that Czech's believe that it helps promote spine development. In Prague, there are many expensive and well designed strollers.

2. In cold or windy weather, Czech's make sure to put hats on their kids, especially to cover the ears. I am not sure if a majority of Czechs adhere to this practice but I have been scolded for not having a good hat on my kids. A Czech mom told me that they believe it protects the ears from any sort of damage.

I have also been scolded for having about 2 cm of skin exposed between Alani's leggings and socks in the Fall. When at a festival, three women came up to me separately to tell me that Alani's full legs weren't covered, and that I should get a blanket. Its been fun to learn the different beliefs in India and now the Czech Republic, makes me see my own American expectations in a new light.

Wednesday, April 17, 2013

Paying Czech Income Taxes

 One of the great image results, when you search for "daň z obrázku" 
or "tax image" in Czech

As I documented in the post Working as a Freelancer in the Czech Republic, I landed a contract for a user experience project in Prague. In order to complete the work, I had to get at least front-office approval and a živnostenský list (a business license).

For the front-office approval, I signed a statement pledging that I would pay Czech income taxes, and as an proud owner of a živnostenský list I needed to report my income as well. Of course I put off researching what and how to pay Czech taxes until the very last moment, but in the end it was actually less painful that some of my U.S. tax returns.

The universal image for paying taxes

After the contract work, I also landed a full-time job, so my income for 2012 included both freelance and "employee" income. Employees of organizations in the Czech Republic typically pay income taxes with every paycheck. Rumor has it that employees that pay regular taxes may not have to file an income tax report, unless they owe taxes for other reasons, but since I also had freelance income, I didn't research this further.

My experience is relative to income earned in 2012. I have seen comments on Prague expat groups that the rules may change for 2013, but hopefully my experience can serve as resource for someone with similar circumstances.

The best source of information on this subject is the population of expat freelancers (writers, actors, teachers) that live in Prague. I was lucky to meet a creative, opinionated one at my job, who had been navigating Czech law for several years. Although he had someone else report his taxes, he did tell me about the 40%/60% rule, which would have been mind boggling without explanation.

This is a common feeling when paying taxes, with Czech actors

Talking to people in my situation, searching online and the awesome expat Facebook group CrowdSauce CZ, lead me to the following:

1. Taxes are due on March 31st
2. Most individuals pay 15% income tax
3. If you have a freelance z-list, you can take a standardized deduction of 60% expenses, and then pay tax on the remaining 40%.
4. Use to prepare your taxes. It is the Czech TurboTax and you can navigate it with Google Translate open in another browser tab.
5. There are post offices open on Saturday, and the lines aren't that long in the morning.
6. If you owe taxes, you can make a direct bank transfer to the account information for your tax office. See more at How to pay taxes to Bank Accounts of the Czech Tax Offices.

Three other things to mention related to this subject:

1. The Czech Republic has a reciprocal agreement with the United States, in that if you pay social taxes here you can get credit in the U.S. This may be useful for someone making a substantial amount of money for multiple years, since you do not automatically get credit in the U.S. and it can boost your U.S. Social Security payments.

2. You still need to report the income earned in the Czech Republic on your U.S. taxes, as foreign earned income, if you are a U.S. citizen. If you make less that $80,000 U.S., you will not owe any U.S. taxes, and you can claim business expenses that will lower the net foreign earned income. So save your receipts even though you take the standard 60% deduction for Czech taxes!

3. I hopefully will remember to close my Czech živnostenský list before we leave. From my research, when having one for multiple years, self-employment fees are charged for the z-list on a quarterly basis. Since I would like to visit Prague many times after we depart post, I need to close my z-list so that I do not have a huge fine on our return!

Happy Taxing!