Whether alimony is taxable or not - this question is of interest to almost all alimony payers. Let's look at the situation from a legal point of view using specific examples.
Alimony is calculated and deducted from both wages and other income of the payer after the main tax levy is withheld. This is regulated by Article 99 Part 1 of Federal Law 229 “On Enforcement Proceedings”.
Calculation method
Determining the monthly amount of deductions is preceded by the process of calculating personal income tax on the income of a particular person.
Calculating the amount of deductions makes it possible to obtain a basic value that will allow you to calculate the maximum amount of alimony payments for deduction. This value represents the total income that remains after deducting all necessary official taxes. Calculation example No. 1
At the enterprise where the payer works, alimony is collected in the amount of ¼ of the debtor’s income. His monthly salary is 60 thousand rubles. Until alimony payments are made, the amount of earnings is reduced by a percentage of the tax levy. In this case, its size is 7800 rubles. (13% is deducted from the salary amount in accordance with accepted rates). After deducting the tax, the amount of income will be 52,200 rubles, from which deductions are made for children (52,200 divided by ¼, resulting in 13,050 rubles).
When the over-withheld tax is returned to the alimony-paying employee, alimony is subject to full recalculation. Alimony payments are calculated from the returned amount.
Tax collection calculations in the presence of a writ of execution
To get a clear answer to the question “Is alimony taxable?” All individual circumstances must be considered. If there is a writ of execution, the amounts specified in it are withheld from income after income deductions have been withheld. This option is relevant if alimony is calculated from an individual who has received more than 2 writs of execution. It is important to follow the order of repayment of existing debts. Accounting employees who carry out such calculations know these rules.
Alimony is considered to be the first priority of amounts withheld. This category also includes cases related to:
- compensation for harm caused to health;
- compensation for damage in connection with the sudden death of the main breadwinner;
- compensation for damage arising as a result of the crime committed;
- compensation payments for moral damage.
Queue No. 2 includes requirements regarding payments to the budget:
- amounts of income deductions;
- all kinds of additional tax charges.
All subsequent claims are satisfied in cases of full repayment of debts in the first two stages. At the same time, the rules for restrictions on the amount of deductions are strictly observed.
Calculations in the presence of one writ of execution of the first stage are carried out according to the standard formula: the total amount of deductions with which income is taxed is indicated in the sheet; it is divided by the amount of deductions under other writs of execution and multiplied by the maximum amount of all monthly deductions of the debtor.
Cases of illegal collection of deductions
When paying tax compensation in a lump sum to a bank account and when paying alimony in good faith, it is impossible to deduct them from the deduction. Regardless of whether the benefit is issued after the purchase of an apartment, a private house, a room or part, a plot of land or after repairs and decoration, in the absence of debts it does not represent the type of income from which alimony can be withheld.
The deduction is not listed in the Schedule of Resolution 841, and also does not apply to periodic payments and does not apply to the type of salary. It can be classified as other tax income and benefit.
Cash for children with material benefits (tax calculations)
Material benefits (interest savings for the use of borrowed funds) are not taken into account when withholding alimony in accordance with Article 82 of the IC of Russia. Are such funds subject to tax? Undoubtedly. In this situation, alimony is withheld from an amount of income that is less than the amount on which personal income tax will be withheld. Material benefits are taken into account only for the purpose of tax deduction; alimony is not withheld. Determining the base for further deductions of alimony payments occurs by reducing the total income by the amount of the tax levy that was withheld from this type of income.
According to examples from legal practice, in such situations, the rights of the child are violated due to a decrease in the amount of funds, since the parent making alimony payments has a loan on preferential or gratuitous terms. The alimony payer receives “unofficial” income, from which alimony deductions are not made.
Features of calculating the tax deduction for children
The child tax credit is a standard deduction. It is not related to the taxpayer’s salary, and reduces taxable income by a fixed amount established by law:
- the first two children are entitled to a reduction in taxable income in the amount of 1,400 rubles for each child;
- for the third child, taxable income is reduced by 3,000 rubles.
The deduction is carried out until the income during the year with an accrual total is equal to 350 thousand rubles. The provision of such a deduction is only available to parents who can confirm the costs of their children.
These include:
- minor children;
- disabled children;
- also children studying full-time at an educational institution, provided that they are no more than 24 years old.
When receiving a Notification from the Tax Service about the right to a child benefit, you should decide on the method of receiving the deduction. In order not to subject the amount received to inclusion in additional income, it is better to arrange a transfer of funds to a bank account at the end of the tax period.
Russian citizens who are parents do not always create families in legal marriage, or maintain them after the birth of a child. Those separating from their spouse often want to know if they are entitled to the child tax credit, which is standard if they pay alimony from their ex's official pay to support the child.
Tax deduction: alimony
Property deduction
Alimony and personal income tax are related concepts. Any taxpayer has the legal right to carry out a property tax deduction in situations with the purchase of housing or its construction. Such a deduction is made at the enterprise/organization based on the documents provided. Such amounts are significant. It follows that income contributions will not be withheld from the alimony payer for some months (or even the entire tax period). In this case, alimony is necessarily withheld from all income received by the debtor. When a property deduction is granted, there is an actual decrease in the tax base and a parallel increase in the official level of income.
The process of calculating alimony payments in the event that the employer provides a property deduction to the alimony payer directly depends on the direct size of the deduction itself and the amount of income. There are several algorithms of action.
Algorithm No. 1
When the amount of the deduction is less than or equal to the debtor’s income, then:
- there is no need to recalculate alimony payments for the months preceding the notification of the Federal Tax Service Inspectorate about the restoration of information about the debtor’s income, during which no funds were withheld. During this period, personal income tax was withheld legally and no recalculations are required. The tax service, if there is a surplus in withholding this tax, will recalculate and return it, but this will not affect alimony payments;
- Alimony is calculated from all types of earnings of the debtor without deductions for personal income tax, starting from the month when the notice of deduction is provided until its end.
Algorithm No. 2
The amount of the deduction exceeds the official income of the alimony payer for the entire period, starting from the month of notification until the full end of these property deductions. In this case, the calculation of alimony payments occurs according to generally established rules and a standard form, when the tax levy is subtracted from the amount of earnings and multiplied by ½, ⅓ or ¼, and at the end of the year the debtor independently applies to the tax office for a tax refund based on the relevant documentation . It is also appropriate to use the first algorithm of actions.
Standard deduction for personal income tax for children A person who pays alimony has the right to be provided with a standard tax deduction for each month until the income at the beginning of the tax period increases to 280 thousand rubles. For the first and second child, this amount is 1,400 rubles, for all subsequent children - 3 thousand rubles. (or this amount for each person if there are disabled children or students under the age of 24 in the family). To receive a deduction, you must provide the tax inspector with:
- birth certificate of the child/children;
- a document confirming the fact of divorce;
- documents confirming payment of alimony (receipt, agreement, payment order, etc.).
Such a right does not exist for those alimony payers who:
- do not make these deductions in accordance with a court decision or agreement;
- they pay alimony in an insignificant amount that does not allow them to properly support children;
- are not the child’s real parents, although they take part in providing for it.
Methods for calculating tax deductions
In order to receive a tax benefit, an employee must collect the necessary documents and submit them to the tax office along with the application. For example, when receiving a property deduction, you must present:
- agreement on the transaction for the purchase of housing;
- mortgage agreement;
- act of acceptance of purchased housing;
- documents confirming payments made for real estate and obtaining a mortgage loan.
After reviewing all submitted documents, the Federal Tax Service issues the applicant a Notice of confirmation of the right to a property deduction.
The tax deduction is returned to the employee in two ways:
- by compensating for overpaid tax in the form of a one-time amount, the funds are transferred to the payer’s bank account or his bank card;
- by canceling the collection of personal income tax for some time.
In the first option of receiving a deduction in a one-time amount, you will need to submit to the Federal Tax Service an income tax return with a monthly breakdown, which is issued by the company’s accounting department, and submit an application there for the refund of the excessively transferred amount of tax to the bank account specified in the application.
In the second method of obtaining a deduction, you should immediately contact the accounting department of the enterprise after receiving the Notification from the tax service about the right to a tax benefit to adjust the collection of VAT.
Settlement agreement on tax, alimony
The taxation of alimony may be addressed through a settlement agreement. In this case, a corresponding document is drawn up between the claimant and the debtor in the presence of a bailiff and at the stage of enforcement proceedings. In order to cancel coercive measures in relation to the fulfillment of alimony obligations, it will be necessary to file an application with the court and then submit it to the bailiff.
There is also a flip side to the coin. Alimony payments from the recipient who has entered into this agreement are subject to general income tax for individuals, since payments are not included in the category of those for which personal income tax is not charged; alimony withheld according to documents of an executive nature is not subject to income tax for individuals. A way out: at the time of applying to the court to approve a settlement agreement, indicate the need to divide the amounts of funds. One part will not be taxed (alimony due to the claimant), and the second will become the amount of withholding.
Employers' liability
The main recipient of alimony for minors has the legal right to file claims in the form of a lawsuit against citizens who are the debtor's employers in the event of delays or incomplete transfers due to their fault. This issue is regulated by Article 118 of Federal Law 229.
The employer bears full responsibility for the timely deduction of alimony payments, starting from the moment the alimony payer submits the corresponding application, receives a court decision and other writ of execution. Failure to fulfill a monetary obligation may be brought against an employer who transfers alimony payments untimely or not in full.
The alimony collector has the right to file a claim against the organization/enterprise in order to receive interest for late payments (Article 395, paragraph 1 of the Civil Code of Russia).
If the income of the recipient of alimony payments is fixed in cash, then all interest received in the form of funds falls under the criteria of economic benefit, since the individual receives full right to dispose of them. Income received in the form of interest is subject to personal income tax on a general basis at a standard rate of 13%.
