1 John 5:16 "you don't need to pray for that"?

The Roman Church uses this verse to justify the idea of mortal and venal sins. That in turn leads to their concept of Purgatory, where non-mortal sins can be paid for by physical suffering (or by having others pay indulgences to the Church).

But this is very different from the teachings of other denominations, and from what the rest of the Bible teaches about salvation and the forgiveness of sins. E.g. "Sin is the transgression of the law.", and "The soul that sinneth, it shall die."

When John referred to sins that lead to death and sins that do not lead to death, he wasn't comparing the seriousness of the individual sins. All sins earn the death penalty. He was comparing what happens to individual people after they sin.

The NLT translation of 1John 5:16-17 reads:

If you see a Christian brother or sister sinning in a way that does not lead to death, you should pray, and God will give that person life. But there is a sin that leads to death, and I am not saying you should pray for those who commit it. All wicked actions are sin, but not every sin leads to death.

Notice it says "sinning in a way". It is the way we sin, not the kind of sin, that makes a difference. As indicated in the verses from Matthew in the original question, it is the attitude of the sinner that makes the difference.

If someone sins and doesn't care that they have done so, they have earned and deserve the ultimate death penalty. If someone sins, realizes their mistake, regrets it, repents, and asks for help, it is a completely different situation. Their sin can (and will) be forgiven. It is not a difference in the sin, but in the sinner.

A person that sins and realizes their mistake, is someone that can still be helped. People can pray that God will help them to repent and ask for forgiveness.

But there is little point in praying for unrepentant sinners. They are determined to continue in their way.

"Am I correct to think that the verse encourage "yes... you can decide if it's a mortal sin or not"."

No; one cannot change the ontological nature of a sin by his opinion (the degree to which he is guilty is effected by the degree to which he knew he was comitting a mortal sin, though).

St. John means that we cannot pray for the forgiveness of a mortal sin (i.e. praying for a brother in that kind of sin cannot "give him life" again), since such demands an eternal punishment; only the penitent sinner can find remission of that sin himself from the bounty of the grace of Jesus Christ, through the Sacrament instituted for such reconciliation.

"it seems human won't ever be able to decide that someone committed sin that leads to death"

This is precisely why Christ founded a Church to be "the pillar and foundation of His truth:" (1 Tim 3:15; Mt 18:17-18) to teach what are mortal sins. And it has. Doctrine isn't something we decide or derive, but recieve and accept. Something that, when challenged, has led to every heresy without exception.

I think that if one attempts to interpret this passage in the context of a taxonomy of sin, wherein some sins are "sins unto death" (e.g. "mortal" sins) and others are not (e.g. "venial" sins), then one will not arrive at a completely sensible meaning.

Another interpretation is that sin is "unto death" occurs when one has neither the slightest bit of compunction nor desire to repent. Under this interpretation, what John is saying is that there is essentially no point to pray for such a person, since they themselves do not wish to avail themselves of the benefit of anyone's prayer.

The 20th century Orthodox theologian Justin Popovic, explains this passage:

He committed a sin and died [spiritually] for it, dealing death to himself, killing himself; but if he supplicates God for his sin, he will be given repentance and through repentance, resurrection from the dead - life ... He shall not pray for a sin unto death. But why? Because man with his entire being, soul, and consciousness has voluntarily entered sin and remains there consciously and voluntarily, and does not want to renounce it and hate it. This is already the "second death" from which one cannot resurrect. On such a man, God neither desires nor wants to forcefully impose repentance. He neither desires not wants to because God is love, is abundant in love, and lives and exists in it. God crated man through love with God-like freedom. If He were to forcefully impose His will, His Gospel, His salvation, His kingdom, and Himself, He would destroy mans free will. Then man would cease to be a man and would become an automaton, a machine, and a robot.

Although certain western Church Fathers (e.g. Jerome, Augustine) seem to have understood a "sin unto death" as a particularly grave type of sinful act (e.g. Jerome, Treatise Against Jovianus II.III.20; Bede, Homilies on the Gospels II.5), their views do not represent the consensus of the first millennium Church. Canon V of the 7th Ecumenical Council, for example, states "It is a sin unto death when men incorrigibly continue in their sin."

The Lord God is not found among such, unless, perchance, having been humbled by their own fall, they return to a sober mind. It behoves them the rather to turn to God with a contrite heart and to pray for forgiveness and pardon of so grave a sin, and no longer to boast in an unholy gift. For the Lord is nigh unto them that are of a contrite heart [Psalm 33:18 LXX].

The subject of unforgivable sins arises elsewhere in Scripture. The Gospels mention blasphemy against the Holy Spirit (Matthew 12:31-32; Mark 3:28-30; Luke 12:10). In the Epistle to the Hebrews (6:4-6) we read:

It is impossible for those who were once enlightened, and have tasted of the heavenly gift, and were made partakers of the Holy Ghost, And have tasted the good word of God, and the powers of the world to come, If they shall fall away, to renew them again unto repentance; seeing they crucify to themselves the Son of God afresh, and put him to an open shame.

The eastern Christian understanding of these verses is summarized by Protopresbyter Michael Pomazanski:

In all these cases, the reason why the forgiveness of sins is not possible is to be found in the sinners themselves, and not in the will of God; more precisely, it lies in the lack of repentance of the sinners. How can a sin be forgiven by the Grace of the Holy Spirit, when blasphemy is spewed forth against this very Grace? But one must believe that, even in these sins, the sinners, if they offer sincere repentance and weep over their sins, will be forgiven. “For,” says St. John Chrysostom about the blasphemy against the Holy Spirit, “even this guilt will be remitted to those who repent. Many of those who have spewed forth blasphemies against the Spirit have subsequently come to believe, and everything was remitted to them” (Homilies on the Gospel of St. Matthew).¹

^{1. Orthodox Dogmatic Theology (3rd ed.), p.294.}