Childcare costs are among the most popular deductions in individual income tax returns, but for some 11,000 parents, the refund system will be at the centre of a misunderstanding that could cost them dearly.
Many working parents entrust their children to daycare centres, which often involve high costs. However, in Belgium, parents of children up to the age of 14 (or 21 if the child is severely disabled) – can deduct the costs they incur for childcare from their taxes. This includes expenses for activities of subsidised sports organisations or youth clubs.
Childcare expenses should be included in Box X, Heading B, code 1384-71, while the amount that can be entered is equal to the number of childcare days multiplied by the amount paid, with a maximum cost per day.
For 2022 (the assessment year 2023), this maximum amount for a tax reduction is set at €14.40 per day of childcare, and parents are entitled to a substantial tax reduction of 45% of the expenses paid. In 2023 for the assessment year of 2024, the amount will even increase to €15.70 per day and per child.
However, the number of days and the amount received by the childcare service are not filled out by the authorities, even though the Ministry of Finance has the tax sheet to do so. This means that the exact amount has to be filled out by the parents themselves. None of these forms mentions that the tax administration applies a maximum amount – with many parents not aware of this.
Most of the tax sheets given by the company providing the child care mention the number of days, the daily rate and the amount the childcare service received, and many parents simply copy the total amount stated on this paper.
Helping parents next year
The consequence is that a large number of parents accidentally entering too much childcare cost, putting them at risk of a tax hike or a fiscal penalty due to the over-declaration of expenses in their tax returns, De Standaard reported.
Of the 510,000 tax returns that include the childcare deductions, the Ministry of Finance reported that 11,000 incorrect returns were registered, amounting to around 2%. These have since been corrected, to the taxpayers’ detriment.
Parents who fill out an "incorrect or incomplete" declaration risk a 10% increase in their tax – unless the maximum declarable cost remains below €2,500 – and a fine will be sent to parents in case of another error in a next return.
The Ministry of Finance is working on a pre-filled-out system to "greatly help parents", but stressed that the proposed pre-completed code or Simplified Declaration Proposal will not relieve citizens of their final responsibility to verify whether the data are correct and complete.
