Property tax deduction through an employer: is it profitable?

There are two options for obtaining a property tax deduction when purchasing an apartment/house:

— through the tax office (the process of obtaining a deduction through the tax office is described here: “The process of obtaining a tax deduction through the tax office”);

— through the employer (we will consider the process of obtaining a deduction through the employer in this article).

The essence of receiving a deduction through an employer is that income tax in the amount of 13% will not be withheld from your salary until the deduction is exhausted. The right to deduction will need to be confirmed with the tax authority every calendar year.

How are funds returned?

A tax deduction is a partial financial compensation (from the state) for taxes paid by a citizen. If these funds are received through the employer, then instead of transferring personal income tax funds to the tax (budget), he gives this part of the money directly to the employee along with wages.

Article 359. Tax base (Federal Law No. 146)

The only caveat: the funds are not issued in one payment, but are divided into equal parts and can be paid over an indefinite period of time (depending on the salary, which affects the amount of personal income tax paid by an employee).

When receiving compensation through an employer, the salary will be increased by 13%. These are the funds that the taxpayer previously paid to the state (money was automatically withheld from salary)

What types of tax deductions can you get from your employer?

You can only receive the following types of tax deductions from your employer:

1. Property. Provided for conducting real estate transactions (purchase of an apartment, house, land plot for the construction of residential real estate). The maximum limit is 2 million rubles (for a lifetime, not annually).
2. For a mortgage. The deduction comes from the interest paid. The main thing is the existence of an employment contract. If the taxpayer does not pay personal income tax, then he will not be able to claim deductions. The limit is the same as the deduction that is provided after purchasing a home (2 million rubles for a lifetime).
3. Social. This refers to the costs of treatment or training. This also includes insurance, purchasing and using health insurance.
4. Pension. But deductions can only be obtained for contributions to non-state funds.
5. Standard. Tax deduction for the birth and maintenance of a child. By the way, such payments are processed more simply; you do not need to contact the tax office yourself and you just need to submit an application directly to the employer.

Table. Types of deductions, legal grounds for application

Investment deductions cannot be obtained (they will require an individual investment account, the income from which is not paid by the employer).

If a citizen does not know whether he has the right to receive a tax deduction, then he can sign up for a consultation with the Federal Tax Service and clarify this issue with the inspector

Legislative acts on the topic

You should study the following documents:

Advantages of receiving payments through your employer

There are several key advantages of receiving compensation through an employer:

• it is possible to draw up a deduction, including in the current year (there is no need to wait for the next year, but if you receive it by transfer to your bank account, then payments can only be received for the previous year);
• a minimum of bureaucratic procedures (take a certificate from the tax office and submit it to the accounting department);
• Payments can be received within a month after applying to the Federal Tax Service (otherwise you have to wait up to 4 months).

But it is worth mentioning that the taxpayer has every right to submit a notification to the employer to receive a deduction in the next year (and not just this year). The so-called “statute of limitations” for transactions that provide for a deduction is 3 years. All this time, the employee can contact the employer (but only if he continues to work for him and has not changed his place of work, an employment contract is also required).

Previously, until 2014, the application had to be submitted in person. Now you can contact the Federal Tax Service in most cases through the official portal

Typical design mistakes

Mistake #1. Waiting until the end of the tax period to apply for a property deduction.

The notification can be submitted at any time, and you will not have to wait until the end of the period for the money to be transferred to your account.

Mistake #2. You cannot fill out an application for a deduction when purchasing a home in the middle of the year.

You can apply for a deduction in the middle of the year; the balance of the amount due to the taxpayer for previous months will be received in the new year through the Federal Tax Service.

Algorithm for obtaining a tax deduction through an employer

The general scheme for receiving a deduction is as follows:

1. Receive a certificate confirming your right to deduction . They issue it at the tax office. Accordingly, initially it is necessary to submit an application and all accompanying documents to the Federal Tax Service, with which the taxpayer may damage his right to financial compensation. This could be a purchase and sale agreement, an extract from a hospital, a copy of VHI (health insurance), an agreement with a non-state pension fund, and so on. The documents provided must necessarily indicate the amount with which it is planned to receive government compensation.
2. After receiving a certificate from the Federal Tax Service (takes about a month from the date of the first application), it is necessary to take it to the accounting department of the enterprise where the taxpayer works. You will also need to write an application requesting a tax deduction.

You don’t need to do anything else; you don’t need to provide any certificates to the employer either. All that remains is to wait for the salary recalculation to be completed (if the next salary is more than 1 - 2 weeks, then payments will begin to arrive from this month).

How to get a certificate from the Federal Tax Service?

There are two options:

• personal appeal to the tax office;
• filling out an online declaration (form 3-NDFL).

Form 2-NDFL is now not mandatory, since the employer is obliged to provide it for the employee. But in practice, information is not always transmitted to the Federal Tax Service in a timely manner. So it is recommended to request the completed Form 2-NDFL in advance from the accounting department of the organization where the taxpayer works.

The fastest way is to submit an online declaration on the official website of the Federal Tax Service . You just need to first obtain a login and password for the first login, and this can be done through the regional tax office (it is recommended to make an appointment in advance). You will only need to have your passport with you (if you apply at a place other than your place of registration, you will also need a TIN). Now, to log into the Federal Tax Service website, it is also possible to use a confirmed level 3 account from the State Services portal.

Submitting an application for a tax deduction is carried out through your personal account. The declaration must be certified with an electronic signature. If the taxpayer has previously received a qualified digital signature certificate, then you can use it. Otherwise, you need to issue a non-qualified certificate directly on the Federal Tax Service portal (such an electronic signature cannot be used to certify electronic documents; its validity period is 12 months from the date of issue).

Next you will need:

• log in to your personal account on the website nalog.ru (using the login and password issued by the tax office, it is recommended to change the password to any other);
• go to the “Life Situations” section, then – “Request a certificate (or other documents)”;
• select “Get a certificate confirming the right to deduction” (by selecting the required deduction option: social or property);
• fill out the step-by-step form (this is the declaration);
• if the employer has already submitted information on 2-NDFL to the tax office, then some of the data will be filled in automatically (you will need to indicate the employer using the interactive form);
• certify the application with an electronic signature (the digital signature must be installed on the computer, and also install the CryptoPRO plugin for browsers - the site can independently determine the signature certificate).

After sending the application, a tax certificate is provided within 30 days. A notification about its readiness will be sent directly to your personal account (in the notifications section, you can download an electronic copy certified with an electronic signature, or you can independently contact the Federal Tax Service office and receive it there in paper form).

To confirm the right to receive compensation for taxes paid, you must provide documents to the Federal Tax Service that confirm this possibility. There is no clear list of documents in this regard, but only for the expenses indicated in them (the amount of personal income tax paid) can you receive compensation

Receiving a deduction when changing jobs

A change of job is not a reason to cancel payments. Upon receipt of settlement documents, the accounting department will provide additional information about the accrued deductions, as well as about the amount already paid. All this will need to be transferred to the accounting department of the enterprise where the taxpayer will work in the future. The interesting thing is that before 2014 there was no such opportunity. More precisely, it was possible to continue paying deductions from the new employer only from the next calendar year.

Deadlines

Readers are interested in what the maximum terms for providing compensation are at their place of work. So, after receiving confirmation from the tax office, you won’t have to wait. The first accruals will go to your next salary.

If, when submitting a declaration, when receiving a deduction in the standard way, you need to wait 90 days, then the application for issuing a certificate is considered in only 30 days. In addition, payment through the company does not require the end of the year: there is a waste, the basis for the return is confirmed and the funds are immediately paid.

We invite you to read: What are the payments for a third child in 2019?

Receiving a deduction from several employment contracts

It also happens that a citizen works for several organizations at once, that is, he has 2 or more employers. Can he simultaneously receive a deduction from everyone? Since 2014, such an opportunity actually exists. Moreover, the taxpayer himself has the opportunity to distribute the amount of payments for each of them independently (this only applies to taxes withheld from wages). However, it is currently impossible to obtain 2 copies of certificates confirming the right to receive a deduction through the online portal. You will have to personally contact the regional tax office at your place of registration and resolve this issue individually with the inspector. It is also necessary to obtain form 2-NDFL from each employer.

Return options

A person entitled to a tax refund can choose (if there is an alternative) where to receive the deduction: from the employer or from the Federal Tax Service. Each of them has its own advantages and disadvantages.

For example, if you currently need money, you can go to your employer for a deduction. And if you don’t know how to save and want to get a large sum, for example, for a trip to the sea, then you can wait until the end of the year and go to the Federal Tax Service.

Is it possible to carry forward the balance of the deduction to the next year?

Carrying over the balance to the next calendar year is allowed, but only for property deductions (social deductions “expire” at the end of the calendar year). You just need to re-apply to the Federal Tax Service in January to receive a new certificate confirming your right to deduction (indicating the remaining amount that was not paid this year). When applying to the Federal Tax Service, you will definitely need a 2-NDFL certificate for the previous reporting year, so the first thing you need to do is get it from the accounting department of the organization where the taxpayer works.

A basic algorithm for how to start receiving compensation for personal income tax paid through an employer. From the moment you contact the Federal Tax Service until the first payments, only 1 month will pass

In total, applying for a tax deduction through an employer is extremely simple; you can submit an application through the nalog.ru portal; in most cases, you will not need to personally visit the Federal Tax Service. You can apply for compensation for taxes in the current year, without waiting for the filing of a declaration from the employer. The funds paid by the state will be accrued along with wages, that is, it will increase by 13% (the current established amount of personal income tax).

Change of employer, reorganization or liquidation

A notice of the right to deduction is issued to a specific employer indicating its name. If, after receiving the notice, the employer changes for any reason (the employee changed jobs, there were changes in the organizational structure, etc.), the question arises about continuing the tax refund.

The Ministry of Finance of Russia in a number of letters (dated November 13, 2010, dated August 25, 2011 No. 03-04-05/7-599) explained that when an employer is reorganized, the taxpayer must contact the tax authority for a new notification for the new employer. The same must be done in case of other changes that have occurred with the employer.

Additionally, the tax authorities explained that such an appeal is allowed only once a year. At the same time, some courts believe that a deduction based on a notification is possible, even if another organization is indicated in it (Resolution of the Federal Antimonopoly Service of the East Siberian District dated June 21, 2007 No. A33-17346/06). Disputes with the tax inspectorate on this matter are quite rare - the courts take time and money, and the likely gain is usually not that great.