Workers are sometimes paid various types of benefits. But is material assistance taxed? The answer here will be in the affirmative. Providing their employees with a certain amount of financial support, employers should take into account that personal income tax can be withheld from this payment. But it is also important to know that there are types of financial assistance from which tax is not withheld. What is it? What conditions does the tax law introduce in the current year? This is what we will understand in the article.
Main issues
Is material assistance taxable? It depends, first of all, on two conditions. It is important for the employer to know the answers to the questions:
- What category of citizens is this kind of help needed?
- What amounts of financial support are tax deductible?
Material support from all other incomes of citizens is distinguished by the following characteristics:
- It does not depend on the activities of the worker.
- It is independent of the performance of the employing organization.
- It is not affected by the cyclical nature of work.
In Russia, the grounds for receiving financial assistance can be divided into two groups - target and general.
Key Terms
Before you specifically determine whether material assistance is taxed, we give the definitions of the main concepts that appear in the article:
- Material assistance is a cash payment to a citizen who is in dire need of such financial support. These funds are allocated by the employer to a specific employee. What could it be? Cash support from the union to working students. Financial assistance for a serious illness of an employee. Benefit in case of death of a family member of an employee. Material assistance here is also distinguished by another special characteristic: it is a lump sum payment.
- Personal income tax. Definition - in the decoding of the abbreviation. These are taxes on personal income. Accordingly, financial assistance is a kind of income of a citizen. Financial compensation that is issued by organizations (including the employer) is the income from which it is necessary to pay personal income tax.
But there are some exceptions. Is material assistance taxed? Not if its amount does not exceed 4000 rubles. With that financial support that is more tangible than this value, personal income tax must be paid according to the law of the Russian Federation.
Who is issued?
Is material assistance taxed? We determined that yes, but not in all cases. For example, if this is a payment of less than 4000 rubles, then you do not have to pay tax.
But this is not the only exceptional condition. There are categories of citizens whose material support should not be subject to personal income tax. First of all, this:
- Persons who have become victims of a terrorist takeover, attack, attack.
- Citizens affected by natural disasters as a result of an accident.
In addition, financial support will be exempted from taxation in the following cases:
- Payment of damage in case of certain harm to health.
- Cases when a citizen must incur unexpected cash expenses. The reasons here are different - from the wedding and the birth of children to the funeral of close relatives.
- Additional material support for large and low-income families.
It is important to determine that in such situations, the law does not force the employer to help his employee financially. This decision is up to the employer. And if he determines that financial assistance is needed, it is paid.
Legislative regulation
Are employee benefits taxed? The answer can be found in the laws of the Russian Federation:
- Art. 217, p. 8 of the Russian Tax Code. Circumstances in which reliance is not relied upon.
- Art. 224 Tax Code. The limit of such financial support has been determined.
- Art. 421, 422 of the Tax Code of the Russian Federation. The points are listed at which insurance premiums are not paid in the case of financial assistance.
- Art. 217 Tax Code. Is material assistance taxed with personal income tax? This article answers this question. It directly lists the circumstances in which the allowance is not taxed. It also lists benefits that are not subject to taxation. It is said about the maximum permissible tax-free limit of 4000 rubles.
- Ch. 23 Tax Code. It lists what material payments are exempted from paying certain percentages, taxes from them to the state treasury.
What is not taxed?
Is material assistance taxed on income? As we have discussed, not in all cases. We list the types of financial support for employees who are fully exempt from taxation:
- Birth or adoption of a child / children. But it is important to note that the amount of benefits here does not exceed 5000 rubles.
- The death of a member of the worker’s family.
- Material assistance to disaster survivors.
- Financial support to citizens who were terrorist attacked or suffered material damage due to the terrorist attack.
What payments are required to provide the state?
Is material assistance taxed on income? Yes, but it is important to remember the above exceptional cases, which are relatively many.
Now consider when this kind of support to citizens is provided not by their employers, but by the state:
- In cases where the age of the needy is more than 60 years.
- If the needy, the injured is an officially unemployed citizen, he is listed in the status of “unemployed”.
- If the family is in need of care for a disabled relative.
- If the needy is a low-income and / or large family.
It is important to pay attention to such a moment. The employer provides financial assistance to the needy employee only if the latter submits the relevant application. Moreover, the employee must document the fact that he needs the benefit.
Registration of material support from the state
Is holiday material assistance taxed? Yes, if the value of this payment exceeds 4 thousand rubles.
Now we will focus on the execution of financial support not on behalf of the employer, but on behalf of the state. Here you also need to start the business by writing a statement. Only on its basis will the issue of providing the citizen with material state support begin to be dealt with. When preparing a document, you must pay attention to the following:
- Unambiguously and clearly state the reason why you need to receive this type of financial support.
- Attach documents that certify the fact that you need material assistance to the application. For example, certificates confirming that a situation really had a place to be.
With all the prepared documents, you should then come to one of these government agencies:
- The department of social protection of the population of your locality.
- Local branch of the state FIU.
Please note that in this case, financial assistance will be one-time, rather than periodic support. This applies to benefits from both the employer and the state.
Benefit Decision
At the workplace, a citizen passes his application to the employer. The latter gets acquainted with the contents of the document, the attached references. Based on this, he can decide on the appointment of financial assistance - issue an order to issue a certain amount of money.
If the application was submitted to the social protection authorities or the Pension Fund, you should wait for the decision of the state structure within 7 working days. At this time, a commission will be created, which will issue a verdict on whether it is necessary for this citizen to appoint financial support.
If the state body made a positive decision, the applicant shall be notified of this. He can then receive help from the state in the manner indicated by him in the application:
- Withdraw this amount from your bank account (it must be indicated in the document).
- Get money in cash at a savings bank.
The amount of cash support
Is material assistance to employees taxed? Yes, but not in all cases, as we established above.
What is the amount of such help? Depends on the category of citizens to which the applicant belongs. And from the severity of his financial situation. Moreover, the Tax Code of the Russian Federation has the following restrictions:
- The amount of assistance cannot be higher than 5 times the value of s / n.
- The amount of financial support is calculated based on the money spent by the citizen (this is judged by the documents attached to the application).
- If the amount of help is less than 4000 rubles, it will not be taxed.
Types of support
In conclusion, we consider what types of material assistance Russian citizens can apply for:
- On vacation. An additional incentive that is voluntarily paid by the employer. But if the fact of the obligation of such compensation is indicated in the employment contract, then the employer must charge it without options.
- To the prize. Once again, we recall that all types of income of citizens that are not taxed are indicated in Art. 210 Tax Code of the Russian Federation. As for this mother aid, she is exempt from personal income tax if she does not exceed 4 thousand rubles.
- For the burial of a close relative.
- At the wedding of the employee.
- For the anniversary of the employee.
- In tragic circumstances. Severe illness of the employee, natural disasters, etc.
- Student staff. In case of unforeseen financial waste, when causing damage, at the funeral of close relatives.
- Assistance to former employees. If the employee is already a pensioner who has crossed the 60-year threshold, such benefits are not taxed. In other cases, if the limits are exceeded, such income is subject to personal income tax.
Material assistance is a type of support for citizens on behalf of the employer or the state in special life circumstances. Such payments are considered income and, according to the Tax Code, are subject to personal income tax. However, there are a number of conditions under which material assistance is exempt from this taxation.