Is the award subject to personal income tax?
Premium payments can be divided into two types: labor and non-labor, according to Art. 191 and 129 of the Labor Code of the Russian Federation, both types of payments are equal to wages and are taxed at 13% , like any income of an individual, but some differences still exist.
Labor
Labor bonuses are payments accrued to an employee for quality work, special achievements in the performance of direct duties, high professional qualities, etc. The tax on this type of material incentive is taken on the day when the payment is made , and it does not matter whether it is issued in cash or transferred to a bank account (Article 226 of the Tax Code of the Russian Federation).
The only exceptions are payments that are included in the list provided for by PRF Resolution No. 89 - these are funds of international and all-Russian significance paid to a person for outstanding achievements.
You can find out more about whether a bonus is subject to personal income tax and when it is not withheld from wages here.
Other types
Non-labor accruals include bonuses in honor of anniversaries and holidays, financial assistance to the employee, material remuneration in honor of the founding of the organization, etc. Near-labor material support for employees, although not related to wages, is subject to taxation, like any income of an individual.
Only those types of non-work incentives are exempt from taxation, the amount of which is no more than 4,000 per year (Article 217, paragraph 28 of the Tax Code of the Russian Federation). But in order not to “deduct” personal income tax, the payment should be “linked” to a specific date or holiday, and also paid under a gift agreement (clause 2 of Article 574 of the Tax Code of the Russian Federation).
Is personal income tax withheld from the premium?
There is a clearly regulated list containing cases when income tax is not deducted from the prize (clause 7 of Article 217 of the Tax Code of the Russian Federation), for example, for outstanding discoveries in the field of science, education, culture, etc. This list is approved by the Government of the Russian Federation. In other cases, the question is whether the bonus is subject to personal income tax under clause 1 of Art. 210 of the Tax Code of the Russian Federation, it is not worth it, since almost any income of an individual is subject to taxation.
The article “Are maternity workers subject to income tax (NDFL)?” will tell you whether personal income tax is withheld from maternity workers.
But there are payments, the grounds for which are listed in clause 28 of Art. 217 Tax Code of the Russian Federation. Moreover, if such a payment does not exceed 4,000 rubles, then it is not subject to personal income tax. These include bonuses: they must be strictly timed to coincide with some significant event and amount to no more than 4,000 rubles per year. per employee. In this case, a mandatory rule must be observed: a gift agreement is drawn up in writing (clause 2 of Article 574 of the Civil Code of the Russian Federation), then a payment under it in the amount of 4,000 rubles. for the year can be carried out as income not subject to personal income tax.
Find out whether financial assistance is subject to personal income tax in this article.
Is income tax taken on the bonus upon dismissal? Yes, it is taken in accordance with the general procedure - this is confirmed by the letter of the Ministry of Finance of Russia (dated September 29, 2014 No. 03-04-06/48497).
Find out how to reflect payments upon dismissal in 6-NDFL from this publication.
Reflection of the bonus in personal income tax
When filling out reporting documents, you should take into account the types of bonuses that were paid to the employee, the period of their accrual, as well as some nuances that distinguish the following features of bonuses:
- a one-time payment cannot be defined by the concept (wages), since this type is not systematic and refers to non-labor incentives; in the 2-NDFL certificate it is reflected in a separate code, as a payment made from the profit of the organization or revenues of a targeted nature.
In 6-NDFL it should be written as a separate block from the salary, and the date of tax withdrawal must coincide with the date of direct payment of the bonus or dated the next day after the money is transferred to the person, but no later - order of the Federal Tax Service of the Russian Federation MMV-7-11/450 (more on that , how to reflect the bonus in 6-NDFL separately from the salary, read in a separate material). - In the middle of the month - in certificate 2 it is written with a code based on the direction of the payment and its relation to wages; in calculation 6 it is recorded in the same way as a one-time payment, that is, taking into account the date of payment.
- The monthly bonus is a systematic payment and is fixed in the employment agreement in the form of a monthly bonus payment, therefore it is classified as wages and is written in 2-NDFL under a code that corresponds to payments from the main accounts, not the target ones.
Important! In 6-NDFL it does not need to be written in a separate block (it is written together with the salary); such a bonus is dated, like the salary, on the date of the last working day of the month.When entering salary into calculation 6, the date of salary payment and tax calculation is considered to be the last day of the month, because according to the law, taxes are not calculated from an advance payment, the same rule applies to the monthly bonus.
- At the end of the month - it is reflected in the reporting documents, depending on the direction of payment, because such a bonus can be either monthly (being remuneration), or one-time or periodic (for special merits, etc.), therefore it is recorded in certificate 2 with a code corresponding to the purpose of the money paid.
In calculation 6, if the bonus received at the end of the month is monthly and is included in wages, it is recorded and deducted in trade union organizations no later than the last day of the month (along with the salary).And if this incentive is not included in the payment of labor under an employment contract, then the procedure is prescribed in a separate block, and it is fixed if you transfer personal income tax when the payment of money is withheld, on the same day we record the deduction of the tax and the next day (no later) we record the date of transfer of the tax to budget.
- The annual and quarterly bonus is included in the report in accordance with the nuances provided for by the letter of the Federal Tax Service dated January 24, 2017 No. BS-4-11/1139; here, when filling out 2-NDFL, the same code is used as for the monthly bonus.
Workers employed under an employment contract receive not only a salary, but also bonuses. However, here there is an interaction between labor and tax laws. Read our articles about whether such incentives are taxable, as well as how director bonuses are paid and what documents are needed for this.
Payment of personal income tax on bonuses in 2019: what is the income code “personal income tax premium”
Let's now see how the accountant will reflect these payments according to income codes in the 2-NDFL certificate when personal income tax is withheld from the premium.
According to Appendix 1 to the order of the Federal Tax Service of Russia dated September 10, 2015 No. ММВ-7-11/ [email protected] :
- Gifts for the New Year will be indicated in the 2-NDFL certificate using code 2720 = 4,000.
- Financial assistance to the employee - according to code 2760 = 4,000.
- Reimbursement for the cost of medicines - according to code 2770 = 3,500.
These amounts will also be reflected in the 2-NDFL certificate in the Appendix to it according to deduction codes (Appendix 2 to order No. ММВ-7-11 / [email protected] ):
- Code 501 - gifts.
- Code 503 - financial assistance.
- Code 504 - medicines.
But for the payment of personal income tax on premiums in 2021, the income code depends on the situation in which it is paid. In our example, the bonus was paid at the end of the year, which means for production results, which corresponds to code 2000 (remuneration for fulfilling job duties).
If the bonus is related to other reasons, for example, paid in connection with a holiday, it will correspond to code 4800 (other income).
The material “List of income codes in the 2-NDFL certificate (2012, 4800, etc.)” will tell you about income and deduction codes in 2-NDFL.
However, you should always remember: for personal income tax on premiums, the payment procedure in 2021 stipulates that each issuance of such funds must be documented, be it an agreement, order, or other supporting documents that give the right to interpret the payment as tax-exempt.
For information on how holiday bonuses affect income taxes, see the material “Holiday bonuses can reduce profits.”
Labor type incentive codes
Several years ago, incentives in reporting certificate 2 were recorded under code 2000, as salary (in cases where this type of bonus is fixed in the employment contract as systematic, that is, related to wages) or under code 4800, which denotes additional or other income of an individual faces.
But today, bonuses are reported in accordance with the requirements of the Federal Tax Service order No. ММВ-7-11/633 dated November 22, 2016, which provided separate codes for bonuses.
Payment to an employee for special labor merits, which cannot be paid from the organization’s income or target accounts, is registered with code 2002, and one-time, anniversary and other types of bonuses are recorded under code 2003.
What bonuses are not subject to taxes?
Employers are required to charge income tax on employee bonuses and insurance premiums, because all remuneration - labor and non-productive - is the income of individuals and is subject to taxation on a general basis. For this reason, all incentive compensation is paid to employees minus personal income tax. Article 217, paragraph seven of the Tax Code of the Russian Federation provides for an exception. Income tax is not withheld from bonuses classified as budgetary:
- international;
- foreign;
- Russian national one.
Awarded for significant achievements in the field:
- Sciences;
- technology;
- education;
- culture;
- tourism;
- MASS MEDIA;
- literature and art.
The list of preferential bonuses is specified in the Decree of the Government of the Russian Federation dated February 6, 2001. Monetary rewards awarded by officials of constituent entities of the Russian Federation are not subject to income tax. At the regional level, a list of bonuses is compiled that are not subject to personal income tax.
Is the personal income tax premium in the amount of up to 4,000 rubles
The employer does not need to withhold personal income tax from the bonus if its amount is 4,000 rubles and two conditions are met:
- the entire amount is issued as a gift for the holiday;
- An agreement for donating funds to an employee has been drawn up and signed.
To avoid taxation, it is necessary to correctly display the remuneration in the reporting form 2-NDFL:
- the cash incentive paid is indicated by income code 2720 (gifts);
- code 501 (deductions from gifts) is entered next to the deduction amount, which is equal to the amount of the reward.
How to correctly calculate the date of personal income tax withholding?
The calculation of the tax date on the premium directly depends on its type and the principle of payment. If this incentive is money of a systematic nature, as specified in the labor contract, then the date of actual payment and withholding of personal income tax will be considered the last day of the month, and the day of crediting the money to the state budget will be fixed as the next one.
When to withhold personal income tax from the premium? If the bonus payment is of an anniversary, holiday nature, or is paid for certain merits of the employee, then the dates of actual receipt and withholding of tax will be considered the day when the money arrived in the person’s account (for cases where the bonus was transferred to a bank account).
Reference! If the financial award is given in cash, then the day of actual receipt and deduction of the tax will be the date when the cash was taken from the bank, and the date of entry into the state budget should be fixed the next day after the person received the bonus (in both cases).
Annual or quarterly incentives, as already described above, are dated differently: the date of actual receipt should be written as the last day of the month in which the person received the bonus; the date of deduction of personal income tax should be considered the number indicated in the order for calculating the bonus as the date of payment, and the day of transfer to the budget will be the next number.
The procedure for paying personal income tax on bonuses in 2021: how the tax is calculated, taken and deducted
Let us show with an example what the process of calculating personal income tax from a premium and subsequent deduction of this tax from the payment amounts looks like.
Employee Ivanov I.M. is a former employee of Romashka LLC, is retired and undergoes annual necessary treatment with the purchase of expensive medications. His son, Ivanov R.I., is a current employee of Romashka LLC, a leader in production.
At the end of the year, the general director of Romashka LLC authorized a cash payment in the amount of 10,000 rubles. Ivanov R.I., as well as reimbursement of expenses for the documents provided for the purchase of medicines in the amount of 3,500 rubles. The accountant was faced with the question: should personal income tax be withheld from the premium and how to do this rationally?
The accountant of Romashka LLC formalized it all like this: for 4,000 rubles. a New Year's gift was issued to R.I. Ivanov, for which a financial donation agreement was signed.
In the amount of 4,000 rubles. An agreement for financial assistance was drawn up.
In the amount of 3,500 rubles. funds were issued for reimbursement of the cost of medicines.
In the amount of 2,000 rubles. An order was drawn up for a bonus to R.I. Ivanov based on the results of the year.
It turns out that in this case it is necessary to withhold personal income tax from the premium, and only from it - from the amount of 2,000 rubles. The withholding amount will be 2000 × 13% = 260 rubles, and the payout will be 1,740 rubles.
All these payments were given in the order and documented with proper documents.
As a result, R.I. Ivanov received funds before the New Year in the amount of: 4,000 + 4,000 + 3,500 + 1,740 = 13,240 rubles.
But if the accountant issued 10,000 rubles. bonuses, then from this amount it would be necessary to withhold personal income tax on the bonus in the amount of 13% (10,000 × 13% = 1300), and Ivanov R.I. would receive in his hands: 8,700 + 3,500 = 12,200 rubles.
Reflection of the award
Previously, in the 2-NDFL certificate, bonuses received for special achievements in work in section three were recorded under code 2000, like salaries, and incentives on anniversaries and holidays were recorded under code 4800.
Today, for bonus payments, two separate codes are used, that is, the salary remains under the code 2000, we write it separately in the lines of paragraph 3, and we designate the bonus as 2002, if it is an incentive for work, and we write it under the number 2003, if it was issued in honor of the holiday.
In paragraphs 4 and 5 of this certificate, the income data is summarized, that is, the bonus is reflected separately only in paragraph three.
Systematic bonuses: what is the tax payment deadline?
As for bonuses related to the performance of work duties, at first everything was ambiguous. The regulatory authorities in their explanations did not divide bonuses into those related to the performance of labor duties and those not related. The requirement to recognize the date of payment of bonuses received for the performance of job duties as the date of receipt of income led to legal disputes .
It should be noted that the courts did not agree with the regulatory authorities. Read about this in the material “When to transfer personal income tax from bonuses to employees to the budget .
But then officials developed the following approach:
- Monthly bonuses. The date of receipt of income is considered to be the last day of the month for which the bonus was accrued (letter of the Ministry of Finance dated No. 03-04-07/63400). It does not matter what month the bonus order is dated or when the bonus was issued.
Read more about this here and in this publication .
- One-time bonuses (annual, for production results). The date of income for them is the day of payment (letters from the Ministry of Finance dated No. 03-04-07/63400, Federal Tax Service dated No. GD-4-11/).
Read about the nuances of bonuses issued after dismissal here .
This must be taken into account when reflecting bonuses in 6-NDFL.
Is the bonus recorded on the payslip?
Article 136 of the Labor Code of the Russian Federation states that the employer is obliged to show the employee all accruals on the payslip; the bonus must also be recorded in this document.
The form of the sheet is developed and approved by the organization, taking into account all types of payments, under the item “accrued”, where the names of payments are indicated, there should be a line “premium”, in the fifth column its amount should be reflected, in paragraph 2 - the amount of personal income tax that was withheld.
A bonus is a very strong incentive for every employee, but the main thing when paying this remuneration is to correctly display it in the documents, so that the good intention to please and reward the employee does not lead to additional expenses in the form of a fine for the employer himself.
Payment of bonuses with basic salary: example of reflection in 6-NDFL
Now let’s look at an example when a bonus related to the performance of job duties is paid along with the basic salary.
Example 2
employees were paid the basic salary for October in the amount of RUB 578,400. (Personal income tax - RUB 75,192)
On the same day, they also paid a monthly bonus based on the results of work, accrued for September 2021 in accordance with the order dated, in the amount of 356,700 rubles. (Personal income tax - RUB 46,371)
Below is a fragment of the second section of the calculation of 6-NDFL when paying a bonus, indicating the lines in which the remuneration data should be displayed (reporting period - year).
Page 100: Page 130: 356,700
Page 110: Page 140: 46,371
Page 120:
Page 100: Page 130: 578,400
Page 110: Page 140: 75 192
Page 120:
How is tax on employee bonuses reflected in reporting?
The procedure for including bonus income depends on its type. The following nuances must be taken into account:
- The date of receipt of monthly incentive payments is considered to be the last day of the month for which the employee received bonuses.
- Quarterly and annual bonuses are included on the last day of the month in which the order is issued.
- Non-productive income paid on holidays, anniversaries, and professional holidays must be taken into account on the day of actual payment.
This is important to know: Should an individual entrepreneur pay personal income tax for himself under the simplified tax system?
Form 2-NDFL
A certificate in form 2-NDFL contains data on the income of an individual for the reporting period. It includes the following sections:
- Agent details.
- Information about the individual.
- The amount of income for the month and the corresponding code are entered line by line. Production bonus payments are accounted for under code 2002, and non-production bonuses are recorded separately under code 2003. They are displayed for the month in which the employee received income.
- Social, standard, property, investment deductions. The appropriate fields are filled in if the individual has such grounds.
- The total amount of income paid: accrued, withheld, transferred by personal income tax (the last figures must be the same).
Help on form 6-NDFL
This type of reporting is intended to display the total amounts of income paid, withheld from them and transferred to personal income tax. Help contains topics:
- The first section contains generalized data on income (column 020), personal income tax (column 040), which are displayed on an accrual basis for the reporting period. Column 060 indicates the total number of individuals who received payments.
- The second section provides data on the amount of income paid and personal income tax withheld by date.
Monthly bonuses that the employee received along with his salary are displayed as a single block with salary income. In all other cases they are shown as a separate block. In the second section on bonus payments, fill in the following columns:
- 100 – indicates the last day of the month for which the monthly premium is accrued; the last day of the month in which the order to assign a quarterly or annual bonus was issued; date of issue of non-production cash incentives;
- 110 – date of actual payment of remuneration and withholding of personal income tax;
- 120 – date of tax transfer, the next business day after the date of receipt of payment;
- 130 – amount of incentive compensation paid;
- 140 – the amount of personal income tax withheld and transferred.
