Is the pension taxable: features, law and calculation

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Most of the income of individuals in Russia is subject to personal income tax. For example, this tax is withheld from the salary of an employee, income from entrepreneurial activity, and other sources of income. But there are incomes from which this fee is not charged. To find out if old-age pension is taxable, see this article.

Personal income tax when calculating pension payments

According to paragraph 2 of Article 217 of the Tax Code of the Russian Federation, pension payments are not subject to personal income tax. But there are exceptions to this. If voluntary contributions were made to the funded pension in the NPF (non-state pension fund), then in some cases the pension payment is subject to taxation. Relatively speaking, "non-state pension" may be subject to personal income tax.

Tax on working pensioners

Such a category of persons as working pensioners,receives salary and pension payment at the same time. Is the pension subject to income tax in this case? The rules that apply to working pensioners are as follows:

• Insurance old-age pension is exempt from taxation.
• Official wages are taxed at the standard rate.

While working retirees have to pay taxes, there are benefits to doing so. For example, senior citizens are en titled to the following tax deductions:

• In accordance with Art. 218 of the Tax Code of the Russian Federation, disabled people, veterans, people affected by radiation disasters, parents and guardians are provided with a standard deduction.
• According to Art. 219 of the Tax Code of the Russian Federation, a social deduction is provided for donations, medical services, training, contributions to the funded pension payment.
• St. 219.1 of the Tax Code of the Russian Federation provides for the possibility of an investment deduction upon receipt of money from the sale of the Central Bank.
• Based on Art. 220 of the Tax Code of the Russian Federation, a property deduction is provided for the sale or purchase of real estate (apartments, land, houses, mortgages and related expenses).
• St. 221 of the Russian Federation provides for the receipt of a professional deduction, that is, for conducting any professional activity that is a source of income.

Calculating the pension of a working pensioner

In addition to personal income tax, contributions to the Pension Fund are paid from wages, the amount of which is 22%. Thanks toTherefore, the pension of a working pensioner is recalculated annually and increases by the number of points that have been accrued over the past period. But a pensioner can get a maximum of 3 points per year (while a young person can get 10 points). If he earned more, then the remaining points are transferred to the next year, and so on. The recalculation is carried out on the first of August and is based on the application of the following formula - Pu \u003d Pdp + IPKSipk, where:

• Pu - the amount of the pension after the increase.
• Pdp - the amount of the pension before recalculation.
• IPK - individual pension coefficient for the past year of work.
• Sipk - the cost of the coefficient, which is valid during the recalculation period. In 2018 it is 81.49 rubles, and in 2019 it will be 87.24 rubles.

Tax on funded pension payments

The question of whether a pension is subject to income tax in Russia if an agreement is concluded with an NPF depends on specific circumstances. In some cases, you will have to pay income tax on the pension payment received. But direct contributions to the NPF are not taxed. This issue is governed by the following provisions:

• St. 219.1 of the Tax Code of the Russian Federation.
• Ministry of Finance Letter 03-04-05/8-1158.

Is the pension taxable if the contract was concluded between the citizen and the fund in favor of a third party? The answer in this case is positive. Together with this obligation, the pensioner will have the right to issue a tax deduction, if there are appropriategrounds.

Is the pension taxed if the contract with the NPF was concluded by the employer? Such cases occur mainly in large companies. Often, funds that are subsidiaries of the enterprise where the future pensioner works act as NPFs. In such a situation, the funded pension will also be taxable.

But a citizen does not need to worry about paying the necessary funds to the Federal Tax Service. This will be done by the NPF.

Special categories of citizens

It's no secret that military personnel and employees of the Ministry of Internal Affairs are on a special account with the state. In addition to the standard insurance old-age pension, they are paid a state allowance for years of service. Is the pension of the Ministry of Internal Affairs and the Ministry of Defense taxed for long service? The answer to this question can be found in Art. 217 of the Tax Code of the Russian Federation. In accordance with it, payments on state pensions, along with insurance pensions, are exempt from personal income tax. Therefore, the pension payment to former military personnel and employees of the Ministry of Internal Affairs is not taxable.

Tax benefits

Regardless of whether pensions are taxed in Russia and whether working pensioners are payers of personal income tax (which is withheld from wages), they are recognized as one of the socially vulnerable groups of the population. Therefore, the state provides them with various measures of social support. In particular, seniors are eligible for the following tax benefits:

• According to Art. 407 RK RF,pensioners do not pay property tax for an object of each category of real estate, namely: a summer residence, a garage, an apartment, and so on. At the same time, the property must necessarily belong to the pensioner by right of ownership and not be used for business purposes.
• Only those citizens who pay personal income tax can use the deduction (regardless of whether pension or wages are taxed).
• Regional authorities provide citizens with a transport tax. The regions provide for different conditions for citizens. But basically, owners of vehicles with a capacity not exceeding 100-150 hp are exempted from paying it. s.
• Land tax is also available at the regional level. Usually, they are not completely exempt from the tax, but a reduced rate applies to certain categories of pensioners.

Tax incentives are not set automatically. To get them, you must submit an application to the tax office at the place of residence. In addition to the application, you must provide:

• ID.
• Pension certificate.
• Documents proving the fact that an object of immovable or movable (car) property belongs to a pensioner by right of ownership.

Holds

Reaching retirement age and entering a well-deserved rest or disability does not mean the release of a citizen from obligations under writ of execution, agreements and other similar documents. Is pension taxable?disability (old age) or not? In order to ensure the fulfillment of obligations, deductions are made from pension payments. The situations in this case may be as follows:

• Transfer of excess pension amounts. At the same time, the PFR assigns deductions up to the full repayment of the previously overpaid money.
• Writs of execution issued by the judiciary.
• Alimony, loans and other agreements.

The amount of deductions is strictly regulated and cannot be higher than the established percentages, namely:

• 20% if excess pension payments were accrued.
• 50% if payment is made under an executive document.
• 70%, when withholding alimony, compensation for harm to he alth (death), for damage caused as a result of a crime.

Decrease in retention amount

Despite the maximum amount of withholding from a pension established by law, in some cases the amount can be reduced. Such a decision is made if the pensioner's financial situation has worsened, he alth problems have arisen and there is a need to use paid medical services.

To do this, you need to contact the organization that initiated the deductions from the pension payment, that is, the FIU, the court or a credit institution. Along with the application, you must provide documentary evidence of the basis for reducing the withholding from the pension.

Retirement withholding example

Understand how funds are withheld fromobligations from a pension, the following example will help. Ivanov A. A. monthly made utility payments in the amount of 4,000 rubles. At some point, the amount was reduced by 1 thousand rubles. and began to amount to 3,000 rubles. Ivanov did not pay attention to this and continued to pay the amounts indicated in the receipt.

Six months later, the management company discovered a mistake and notified A. A. Ivanov about it, demanding to pay the resulting debt. However, the pensioner refused to do so. Then the representatives of the Criminal Code went to court demanding that Ivanov pay 6,000 rubles. debt. The court made a positive decision in the case and ordered Ivanov to pay monthly 20% of the amount of the pension payment until the debt is repaid.

Ivanov A. A.'s pension is 12,000 rubles. Deductions in the amount of 20% amount to 2,400 rubles. Thus, for the next two months, Ivanov will receive 9,600 rubles in his hands, and in the third month - 10,800 rubles.

Conclusion

Now the reader knows whether the pension is taxable or not. Basically, when it comes to old-age insurance pension, you do not need to pay personal income tax. The obligation may appear only when forming a funded pension, but not always. The conclusion about whether a non-state pension is taxed can be made on the basis of an agreement concluded with the NPF.

For working pensioners, personal income tax is withheld from wages in the standard manner. In doing so, they are en titled to a tax deduction. At the same time, regardless of whetherwhether the pensioner continues to work or not, he gets tax benefits. And those obligations that he had before retirement continue to operate. In accordance with them, deductions are made from pension payments.