Is there income tax on sick leave in 2021?

In this article we will find out what taxes and contributions are subject to sick leave. Let's figure out what contributions the sheet is subject to in 2021. Let's consider an example of calculation.

Labor legislation guarantees that the employee’s period of incapacity for work will be paid. Compensation is subject to both the sick time of the employee himself and his children if they need to be cared for, as well as benefits for pregnancy and childbirth, and for caring for a close relative. Read also the article: → “Sick leave for individual entrepreneurs in 2021”

On the one hand, sick leave payment resembles wages. On the other hand, compensation for sick time is made from other sources. Therefore, the employer has a question: are amounts accrued on sick leave subject to mandatory taxation and are they subject to any contributions?

Base

In accordance with the Labor Code of the Russian Federation (Article 183), as well as Federal Law No. 255 “On Compulsory Social Insurance” (Article 13), in the event of an employee’s illness, the employer is obliged to provide him with the opportunity to receive benefits for the entire period of his disability. Wherein:

the first 3 days of illness are paid at the expense of the employer;
the rest of the period is at the expense of the Social Insurance Fund.

The basis for receiving payments is sick leave.

Are sick leave contributions to the Pension Fund?

As already mentioned, payments for sick leave are made at the expense of the Social Insurance Fund (in whole or in part). That part of the sick leave that is paid from this fund is not subject to any mandatory insurance contributions.

In paragraph 1 of Art. 9 of Law No. 212-FZ states that sick leave payments are benefits received from the state fund. Therefore, it is impossible to charge and collect insurance premiums from these benefits.

In some cases, several days of illness of the employee are paid from the employer’s “pocket”. These payments are also not subject to insurance premiums due to the “state nature” of benefits.

In paragraph 1 of Art. 20. 2 of Law 125-FZ states that “sickness” payments are also not subject to contributions for “injuries”.

Possible benefit reduction

The law defines 2 possible grounds for reducing the amount of disability benefits:

If the insured person violates the regime assigned to him in a medical institution.
If the patient avoids carrying out the medical social examination assigned to him or does not appear for mandatory medical examinations.

The benefit can also be greatly reduced if it is proven that the employee’s illness or injury was the result of alcohol abuse, the use of narcotic, toxic, or other illegal drugs.

If the organization pays employees up to the average earnings for sick days

Thus, if an employee’s income far exceeds the limit values included in the calculation of average earnings, or his work experience has not reached 8 years, then the loss of income on sick days can be quite significant.

For the purpose of social support for employees, the company can establish for all or some of them an additional payment up to average earnings in case of illness.

Such a measure of support must be prescribed either in the collective agreement or in the employment contract of each employee. This will allow such additional payment to be taken into account when calculating income tax.

Complete waiver of benefits

An employee may be denied benefits altogether if he has lost his ability to work intentionally. That is:

independently caused harm to his health;
there was a suicide attempt.

Also, a person will be deprived of payment if he received an injury/illness or injury while committing an illegal act or an intentional crime.

In the first and second cases, the basis for refusal or reduction of the payment amount is the establishment of a cause-and-effect relationship between:

impartial actions of the patient;
his actions, his intake of substances;
the onset of illness or injury.

Deadline for granting benefits

After the employee submits sick leave to the accounting department of the enterprise where he is registered, disability benefits should be assigned to him no longer than 10 days.

The transfer of funds for this obligation is carried out on the nearest day when the enterprise usually pays wages to employees. An employee can receive the money due (at his choice, at the request of the recipient):

through the post office;
banking or credit organization;
at the company's cash desk.

If the insured person does not apply for the payments assigned to him, then he can receive them in full upon subsequent application, but no more than 3 years after the date of the last assigned transaction. If the funds are not received by an individual due to the fault of third parties or, for example, an employer, then the statute of limitations in this case is not established by law.

Are sick leave subject to insurance premiums?

Payments for the period of illness are made at the expense of the employer himself, as well as the Social Insurance Fund. According to Art. 9 of Law 212-FZ, the employee has no obligation to independently calculate the required contributions.

This fact is due to the following reasons:

insurance premiums are already part of the disability benefit;
The Social Insurance Fund should not make deductions for itself.

Based on this, we can conclude that sick leave payments are subject to income tax only. Such rules have been in force since 2009.

Since 2021, a new form of sick leave has been put into circulation, which contains the following main lines:

the amount that the sick employee will receive from the Social Insurance Fund;
the amount of funds that the sick employee will receive from the employer;
a final line indicating the total value of these two indicators.

The employer must fill out these deadlines. Based on the calculations made, a payroll is generated, which indicates the amount to be paid. When the employee receives these funds in his hands, he signs this document confirming their receipt.

The calculation is made by the accounting service based on the following indicators:

the length of service of this employee. If he has a total insurance period of less than 5 years, then he can count on only 60% of average earnings. If the total length of experience ranges from 5 to 8 years, then the employee will receive 80%, but if the experience is more than 8 years, then payment will be made in the amount of 100% of the average earnings;
the average earnings of this employee for 1 working day. For calculations, you should take indicators for the last 2 years. It is for these purposes that upon dismissal, a certificate of average earnings is issued;
duration of illness in days.

Personal income tax on temporary disability benefits

At the moment - in 2021 - funds received by the insured person as temporary disability benefits are not included in the list of income not subject to personal income tax. This provision is reflected in Article 217 of the Tax Code of the Russian Federation. This means that an employee on sick leave will receive a benefit amount already reduced by the amount of tax (personal income tax is usually 13%).

The employer - being a tax agent - is obliged to transfer the personal income tax withheld from the employee to the treasury no later than the end of the month in which the sickness benefit was issued. It doesn’t matter how the benefit was received – to a current account/in cash from the company’s cash register/to a salary card.

Is sick leave subject to alimony?

A child always needs financial support, regardless of whether the parent is older or not. Since sick leave payments are a citizen’s income, alimony is withheld from them.

But there is an important nuance! Alimony in favor of a child or other relative is collected from “sickness” payments only if there is a court decision or court order, that is, an enforcement case has been opened and a writ of execution has been issued. It can be issued on the basis of:

alimony agreement that spouses enter into among themselves, but one decides not to fulfill it;
a writ of execution issued on the basis of a court decision or court order.

Therefore, no other document can be the basis for withholding alimony. For example, a parent transfers money to another parent for the maintenance of their common child. They did not sign or draw up any documents. Thus, payment is made on the basis of an oral agreement. One parent gets sick, and the other writes a letter to him at work demanding that he pay him a certain amount as alimony. No deduction should be made based on this letter. It is illegal!

In order for the withholding from payments on a certificate of incapacity to be legal, the following steps must be taken:

enter into an alimony agreement or file a claim in court demanding collection;
wait for the court's decision on the case;
transfer this decision or court order to the bailiff service;
receive a writ of execution;
submit this document to the accounting department of the enterprise where the alimony payer works.

If you take such actions, then alimony will be paid every month on the day of payment of wages, regardless of whether the alimony payer was sick in the current month or not.

Temporary disability can only affect the amount of alimony received. For example, an employee on sick leave receives only 60% of his average earnings. He was ill for almost a month, therefore, he received much less wages than for a whole month of work. If alimony is collected as a percentage of income, the recipient will receive a much smaller amount.

FSS pilot project

A special project has been launched in several corners of the Russian Federation since 2011. Its essence is that the tax agent of employees may not be the employer, but directly the Social Insurance Fund. Employers throughout the country are looking forward to its widespread implementation. After all, for them such an innovation means a reduction in responsibility and workload, and getting rid of the lion's share of routine reporting. In fact, their role in this matter is exclusively intermediary.

If this pilot project were adopted in all regions, employers would no longer have to worry about paying benefits or whether income tax is charged on certain payments.

At the beginning of 2021, 33 regions of Russia are already participating in the project. A complete list with the start dates of the FSS pilot project can be seen by reading the Decree of the Government of the Russian Federation No. 294 of 04/21/2011. Also see “Participants in the pilot project”

Is income tax payable on sick leave?

We sorted out the insurance premiums. Is income tax deductible on sick leave? The answer will depend on the type of benefit. According to paragraph 1 of Art. 217 of the Tax Code it is necessary to withhold income tax from ordinary government benefits. That is, for example, in case of a general illness of an employee or when caring for a sick child. But, let’s say, there is no obligation to withhold personal income tax from the B&R (pregnancy and childbirth) benefit.

The personal income tax rate is set according to the norms of the Tax Code of the Russian Federation. When calculating, the benefit amount refers to the month for which the funds are paid. The employer is required to withhold income tax for the entire period of incapacity. It does not matter from what source the payment is calculated. For the first 3 days, the employer performs the calculation. In this case, the total amount of benefits to be accrued is first determined, taking into account the employee’s length of service. And then, at the working rate, personal income tax is withheld from compensation and the amount of funds to be issued “in hand” is calculated.

For the remaining days of the illness period, it is calculated directly by the Social Insurance Fund (with the participation of the region in the pilot project) or by the organization. In the second case, after checking the documentation and subject to a positive review, Social Insurance returns the entire amount of the benefit to the enterprise. That is, taking into account accrued personal income tax.

Where can I view data on accrued sickness benefits for an employee?

Certificate 2-NDFL contains the most complete information about all income of an individual and the tax paid on it. The amount of amounts paid to employees as disability benefits must also be reflected when filling out this certificate.

In 2021, the digital code for the type of income such as disability benefits in the 2-NDFL certificate remained the same - “2300”.

Also see “The Federal Tax Service of Russia has approved 5 new income codes and 1 deduction for the 2-NDFL certificate.”

What amounts are taxable?

In order to correctly calculate the total amount of benefits, you need to have information about the average salary per day for a two-year calendar period, length of service and temporary period of disability in days (hereinafter referred to as VN). The length of service of a worker affects the percentage of payment from the amount of the average daily benefit:

less than five years – 60%;
five – eight years – 80%;
more than eight years – 100%.

To obtain the final benefit amount, the calculation scheme is as follows: CD * DZ * PR = IV, where CD is the number of days on the ballot, DZ is the average daily income, PR is the percentage for length of service, IV is the total from which the tax amount is calculated.

When no tax is charged

The Tax Code of the Russian Federation exempts a number of state benefits from income tax - maternity leave for maternity leave and the birth of children, monthly benefits for a child up to one and a half years old, and compensation payments for a child up to three years old.

A number of citizens are exempt from paying taxes