Personal income tax deduction codes: decoding

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

In each individual document 2 personal income tax, the agent must fill in the cells. He must indicate income, tax deductions. The composition of personal income tax deduction codes is supplemented annually by tax service specialists. Accountants must constantly improve their skills in order to correctly fill out reports.

Ciphers

The tax deduction code is a three-digit numeric value. Deduction - the amount deducted in the presence of documented information from the calculation base. It reduces the fiscal tax on a citizen's income.

Sections of personal income tax deduction codes

Some amounts and deductions on income statements are listed in section three. The deduction is displayed opposite the citizen's income for which it is applicable. For other deductions, the certificate has section four. Social, property, standard deductions are prescribed there.

Deductions for children

Standard deductions are provided from the income of citizens, taxed at a rate of thirteen percent. As part of these benefits, tax laws provide for child deduction codes. They are granted on the basis of applications submitted bycitizens to the accounting department or inspection, along with certificates confirming the right to such a deduction.

Formerly old child tax deduction codes. The old deductions and ciphers are shown in the table below.

Deduction Code	114	For the first child
	115	For the second baby
	116	For every child after the second one
	117	For a disabled child of the first or second group

New ciphers for 2018

Child Deduction Conditions:

• Child must not be older than the age of majority.
• For a child studying full-time in an educational institution, the age limit is twenty-four years.
• Earnings (except for income from dividends) of the recipient of the deduction for the year on an accrual basis should not exceed three hundred and fifty thousand rubles. When the total income exceeds the maximum threshold, child deductions will no longer be provided.
• The deduction is available for any child, regardless of previous children.
• If a parent or guardian is recognized as a single parent or guardian, then the fiscal deduction is given to him in double the amount. The reason for the single parent is the death or recognition (declaration of recognition) as missing by the second parent.
• If single parent marries, double deduction for parentin the sole person ceases to be provided.
• If the other parent applies to deny the child allowance. The doubled deduction can be transferred to another parent (including adoptive parents) at their request.

Introduced new child deduction codes for 2018. More details of the new ciphers are given in the table below. Deduction code 114 changed to code 126.

Code	Size	Transcript
		Who is the recipient	Child
126	1400	Parent, adopter	First
127	1400		Second
128	3000		Third (subsequent)
129	12000		Disabled child
130	1400	Guardian, trustee, adoptive parent	First
131	1400		Second
132	3000		Third (subsequent)
133	6000		Disabled child
134	2800	Single parent or adoptive parent	First
136	2800		Second
138	6000		Third (subsequent)
140	24000		Disabled child
135	2800	Guardian, custodian or step parent who is a single parent	First
137	2800		Second
139	6000		Third (subsequent)
141	12000		Disabled child
142	2800	A parent or adoptive parent. The other parent refused the deduction	First
144	2800		Second
146	6000		Third (subsequent)
148	24000		Disabled child
143	2800	Guardian, custodian or adoptive parent. The other parent refused the deduction	First
145	2800		Second
147	6000		Third (subsequent)
149	12000		Disabled child

Property tax deductions

From 2008 to 2014, the amount of deduction for property was within two million rubles per property. The deduction on interest paid on loans for the purchase of real estate was not limited.

The amount of tax deduction from 2014 is limited to two million rubles per taxpayer. You can claim a deduction from several objects until the total cost reaches the maximum threshold. The mortgage interest deduction is limited to three million rubles. These rules apply to citizens who did not receive a deduction until 2014.

Annually, a citizen can return no more thanthirteen per cent of the annual income taxable at that rate. Dividends are not tax deductible.

Code 311

Income spent on the construction or purchase of real estate in the Russian Federation, the acquisition of land provided for housing construction, and the land on which the acquired property is located

Code 312

Income used to repay interest on loans actually spent on the construction or purchase of real estate in the Russian Federation, the acquisition of land provided for housing construction, and the land on which the acquired residential property is located, to repay interest on loans received from credit institutions for the purpose of on-lending for the construction or purchase of objects in the Russian Federation

Tax deduction is possible to receive:

• in the year of signing the acceptance certificate of transfer and further, if the citizen had a contract for equity participation in construction, a contract for the assignment of rights to claim a document for participation in construction, a contract for a housing construction cooperative;
• in the year of making an entry in the register of immovable property and rights to it and beyond.

The right to property deduction does not stop. A person can receive it, subject to the restrictions in force at the time of obtaining the right. The deduction can be drawn up from the year the right to it arises. Retirees can receive a deduction from the income of the past four years.

Social deductions

Social taxthe deduction is given to a citizen who has spent his own earned funds on expenses related to treatment or the purchase of medicines:

• own treatment, husband (wife), first-line relatives, children (until they reach the age of majority);
• drugs prescribed to a citizen, his wife (husband), parents, children under the age of eighteen during treatment and purchased at the expense of personal funds;
• insurance contributions to organizations under personal he alth insurance contracts for the taxpayer, wife (husband), parents, children (until they come of age).

Standard tax deduction codes are shown in the table below.

Code 320	Studying in higher educational institutions, my brother (sister) at the age of twenty-four full-time
Code 321	Education of foster children under the age of twenty-four
Code 324	Medical services for yourself, parents, spouse, children (including adopted children) under the age of eighteen, wards under the age of eighteen
Code 325	Insurance premiums paid under insurance contracts on a voluntary basis for themselves, first-line relatives, children (including adopted children, wards) under the age of eighteen, concluded with insurance companies operating on the basis of a license providing for payment by such insurance companies only services in the amount of actual costs
Code 326	Expensesfor expensive medical treatment

According to Russian law, the maximum allowable amount of money spent on treatment and the purchase of medicines, together with other social expenses, should be one hundred and twenty thousand rubles.

The amount of the deduction is not limited by any monetary limits and is provided in the amount of all costs if an individual has spent his own funds to pay for expensive services. A citizen can determine which treatment (medicines) are expensive according to a certificate of payment for services to be submitted to the inspection:

• code 1 - not expensive treatment;
• code 2 - Expensive treatments.

The deduction for the cost of purchasing expensive drugs is provided to a taxpayer citizen if:

• consumables were purchased during an expensive treatment;
• the clinic (hospital) confirms that it does not have these expensive medicines, their purchase is provided for by the contract;
• provided a certificate from a medical institution (clinic, hospital) indicating that expensive medicines were needed to treat a sick person;
• taxpayer citizen received a certificate with code 2.

To apply for a social deduction for treatment, purchase of medicines, an individual needs:

• Take the application in free form to the tax agent (to the employer's accounting department).
• Enter your personal data in form 3 of the personal income tax at the end of the calendar year and take it to the inspection. Obtain a certificate from your employer at the place of your employment on the amounts of accrued tax dues for the calendar year in the form of an individual certificate. Prepare copies of the required documents on the degree of relationship between the taxpayer and the relative undergoing treatment, on the costs incurred for treatment, purchase of medicines.

Occupational deductions

Professional deductions are available for the following person's earned income:

• income of individual entrepreneurs (private business owners);
• income of notaries, lawyers engaged in private practice and established law offices;
• income received under GPC agreements;
• author's remuneration for the creation of utility models, inventions or remuneration for the creation, performance or other use of works of science, literature and art.

Code	403	Costs associated with the performance of work under GPC agreements
	404	Costs associated with receiving roy alties, special payments (awards) to authors of discoveries, inventions, utility models
	405	Amount within the norms of expenses associated with the receipt of roy alties (as a percentage (share) of paid earnings)

To receive a professional deduction, the taxpayer needs:

• Send in freeapplication form to the employer.
• Fill out a personal income tax form 3 declaration to the tax office at the place of residence (registration) with documents confirming the funds actually spent, in respect of which you want to receive a fiscal deduction.

If the earned income has not been withheld and paid by the employer, the taxpayer must submit a tax return by April 30, taking into account the professional deduction. The calculated amount of the mandatory fiscal contribution must be paid no later than the fifteenth of July.

Help

Material assistance in monetary terms up to four thousand rubles paid to an employee is shown with the following codes: income - 2760, and deduction code 503. If the employer has paid tax-free assistance to an individual who is not his employee, he does not submit a certificate for this person to the tax office.

A one-time payment to an individual in connection with the birth of a child is reflected with income code 2762 and deduction code 504. Assistance in connection with the appearance of a new family member is provided on the following conditions:

• She is not taxed on income up to fifty thousand rubles for the birth of one child.
• It must be paid to the taxpaying parent within one year of the child's birth.

Code 503	Assistance provided to workers (including formeremployees) who terminated their employment contract due to retirement
Code 506	Helping disabled people and their community organizations
Code 508	Assistance provided for the birth (adoption) of children

Help without deduction codes

Financial assistance not subject to income tax, regardless of the size, is not reflected in the certificates. Sometimes there is a lump-sum payment in connection with the collapse of the house due to an earthquake or landslide, a forest fire, as a result of which the cottage burned down. There is no need to reflect such assistance in the personal certificate 2 of the employee's personal income tax. Emergency and natural disaster assistance is not subject to income tax.

2018 Changes

Every year the individual reference is updated. There are changes to deduction codes in 2018. They are listed below.

Deduction code	Destination
619	Positive financial result obtained from operations of an individual on a personal investment account of a citizen
620	Other amounts

Personal investment account is an account intended for separate registration of funds and securities of a citizen, his obligations under contracts concluded at his expense. An investment account is opened and maintained by a trustee or brokerage officer. The deduction for operations on an individual investment account is provided by the decision of a citizen in the amount of:

• money deposited into a personal investment account;
• positive financial result obtained from transactions with securities accounted for on a personal account.

If a tax resident of Russia invests in securities, then in order to reduce the amount of income tax paid to the budget, he can receive an investment deduction.