Every citizen pays income tax. The rate in most cases is thirteen percent. However, some categories of persons are entitled to tax deductions. This benefit allows you to save a certain amount on a monthly basis until the citizen’s income reaches a certain level. Sometimes questions arise, for example: what does deduction code 128 mean? This article will help to figure it out.
Taxes. Personal income tax
What is personal income tax? Under this abbreviation hides the tax on personal income. He, which is clear from the name itself, is used to tax all income, including the wages of employees of organizations. Each type of income has its own tax rate, that is, the percentage that is transferred to the tax service. Moreover, it is also important whether the employee is a resident of the country or not.
Revenues. What is taxed and what is not?
Incomes that are directly taxed include the following types:
- income from the sale of property, both real estate and stocks or bonds;
- interest received from the organization, various kinds of dividends;
- profits arising from the use of patents or copyrights.
However, there are incomes that are not taxed for any reason. These include the following points:
- income derived from inheritance;
- profit from the sale of property that has been in use for three years or more;
- income arising from the gift of something from relatives.
Tax rates: nine to thirty-five
As mentioned above, tax rates have different meanings. They range from nine percent to thirty-five. When does each of them apply? Detailed definitions are discussed below.
The lowest minimum rate, which is nine percent, applies to dividends received before 2015. The same applies to bonds that were issued before January 1, 2007. The thirteen percent rate is known to many. That is how much is charged from the wages of employees of organizations. This includes not only payments under customary employment contracts, but also dividends.
Also, shares issued later than 2015 are now taxed at a specific rate. A rate of fifteen percent is relevant for those who receive any dividends from organizations and are not a resident of the Russian Federation in tax terms. A rate of thirty percent is known to those individuals who are not residents of this country. And finally, the thirty-five percent rate has many reasons. This includes profit from any gain and interest income arising on deposits with banks if it exceeds the amount established by law.
Standard tax deductions
In order to pay less taxes, many employees actively use the right to receive tax deductions. What does this mean? Provided that there are all necessary documents that confirm the citizen’s right to receive benefits, the employer must provide the employee with a deduction, that is, reduce his tax base by a specific amount. If for some reason the employee has not submitted documents, he has the right to apply to his tax service at the end of the calendar year and submit documents here to refund the amount of tax that he has excessively paid.
Also, each tax deduction has its own code, which is reflected in the certificate in the form 2-NDFL. The deduction code 128 in the certificate, for example, means that the employee enjoyed the benefit as if he had a third child under eighteen.
Personal deductions and benefits for children
Two large-scale categories of deductions can be considered the so-called benefits “for themselves” and “for children”. In the first case, certain categories of persons, for example, those who were issued a certificate of participation in hostilities, have the right to benefit. In the same category can be attributed and disabled persons of the second group.
Deductions for children are more extensive. Everyone who has a child, both his own and the adopted, has the right to receive a deduction. In this case, there are two main conditions:
- The child is under 18 years old, or turns this year.
- In the presence of an adult child, the parent has the full right to benefit upon reaching 24 years of age, but only on condition of full-time education (full-time) both in higher and secondary special educational institutions.
Deductions for children: main points
As mentioned above, deductions for children are displayed in the form of codes by which the employee can check in the 2-NDFL certificate whether the employer applies the benefit. The first group of deductions for children is provided to complete families whose child does not have a disability. It does not matter whether the child is a family or adoptive. The amount and deduction code do not change.
Code 126 applies to those who use the deduction for their first child. Its size is 1400 rubles. Code 127, respectively, is used for the second child, its size is also 1400 rubles.
The second group includes deductions for those who are a single parent. These are single mothers and fathers or widows. They are invited to bring relevant documents to confirm their right to a specific benefit. Deductions are provided to them twice. That is, the parent of one child can count on a deduction in the amount of 2800 rubles.
It is also worth noting separate codes for those who raise a disabled child. This is where the state divides into categories. Those who raise a child have the right to a deduction of twelve thousand rubles. Guardians can use only six.
There are also separate codes for those who use deductions for two, when one of the parents refused deductions in favor of the other. In this case, the employee is also entitled to a double benefit.
Deduction code 128 - what is it?
This code displays the presence of tax benefits for those parents whose third child has not yet reached the age of majority. It also includes a child over eighteen, but who has submitted a certificate of his studies at the full-time department of a university or university.
A deduction code of 128 is applied when the parent submits the entire package of documents and writes a request for benefits. The size of the deduction is three thousand rubles. That is, this benefit allows you to save 390 rubles per month. Accordingly, 4680 rubles come out per year. And this is if older children no longer fit the category that allows parents to use the benefits.
However, it is worth remembering that there is a limitation. An employee has a full right to benefits only if his cumulative income for the year has not reached a certain level. For 2016 and 2017, this amount is fixed at around 350,000 rubles. In the month when this amount is reached, the deduction per child will no longer apply.
It is also worth noting that the fourth, fifth child and so on are also hidden under this code. This code, which carries a deduction of three thousand, is suitable for those who have three or more children. The new deduction code 128 replaced code 116, which, like many others, was replaced at the end of 2016.
Benefits for those with three children
It is worth highlighting that if an employee has three children, each of whom is not older than 24 years old and is studying at a university, the total amount of the deduction will be 5800 rubles. This allows you to save 754 rubles a month. For a year, a good amount is obtained, which settles in the pocket of the employee, and is not transferred to the tax authorities.
Required documents
If the employee wants to use the deduction for the child with code 128, then he must provide all the documents.First of all, you need to bring a statement written in free form. However, enterprises often have ready-made forms or samples to fill out. In the general case, they indicate their data, as well as the data of all three children. Although older children may already be over twenty-four years old, documents are also provided for them. This allows us to prove that the child on whom the deduction code 128 is applied is precisely the third, since the size of the deduction for him is greater than for the first or second.
The main documents that confirm the parent's right to deduction are the birth certificates of the children. In this case, provided:
- Birth certificate of the first child;
- Birth certificate of the second child;
- Birth certificate for a third child.
If any of the children is enrolled in full-time education, without having reached the age of 24 at the same time, then a certificate should be regularly brought to confirm this. It is recommended to provide it twice a year, namely at the beginning of the calendar and school year.
Additional documents
Sometimes there is a need to provide additional documents. This is true if the father was not entered on the birth certificate, but his paternity was established later. Then the relevant documents are attached. The same goes for the parent who changed his last name. This item is most suitable for women. If the first child was born in one marriage in which the mother bore the name of her husband and the other two had a different surname, which she also changed, certificates of marriage and divorce should also be brought.
Important! Even if the child already has a passport, there is no need to bring it. To provide a deduction code of 128, just like any other, the birth certificate is used, since it is there that the parent's data are indicated.
Help 2-PIT. New job
The same applies to the reference 2-PIT. A deduction code 128 is indicated in it if the employee worked elsewhere in the calendar year. This document is required when submitting to a new job, as it allows you to adjust the total income for the year, that is, check whether it has exceeded 350,000 rubles. Sometimes the deduction code is not indicated in the certificate. This means that the employee for some reason did not use deductions at the old place of work.
Examples: if two children are minors
There are situations when only a few children have all the conditions in order to provide parents with the right to deductions. They can be considered in more detail.
When is the deduction code 127 and 128 applied? This can be deciphered as follows: the parent has three children, and the first, that is, the eldest, has already reached 24 years old, while the other two have not. For example, an employee has three children. The oldest at the age of 19 does not study anywhere, while the younger are 17 and 15 years old, respectively. That is, the employee has the right to a benefit denoted by deduction codes 127 and 128. Thus, the total amount of deduction per month will be 1400 + 3000 rubles, that is, 4400.
Other, more complicated situations are possible in which the accountant may get confused. For example, an employee has four children. At the same time, the eldest is already 22 years old, but he is studying full-time at the university. The second and third children are twins, they are under 20 years old, but they do not study anywhere. The fourth child is only five years old. Thus, the employee is entitled to deduction codes 126, 128. The deduction amount will also be 4400.
It is noteworthy that you can check the correctness of tax deductions in the certificate. The deduction code 128 is located in the middle part, immediately below the employee income column. If the employee uses other deductions, then the codes will be located one after another. If only one, then the deduction code 128 in the certificate 2-NDFL will be the first and only. This column indicates the amount of deduction used in the calendar year.
How to calculate the amount of tax?
It is also worth considering how you can calculate your tax if there is a tax deduction of code 128? Simple enough. To do this, it is necessary to subtract the corresponding amount of benefits from the amount of wages.If at the moment only one deduction is applied, then three thousand rubles should be taken away, and 13 percent should already be taken from this amount.
That is, with a salary of 10,000 rubles, the tax would be 1300 rubles. However, if the parent takes advantage of this benefit, only 7,000 rubles are taxed, that is, the tax will be 910 rubles. In the case of the above-described employees, whom we have analyzed using examples, with a salary of 10,000 rubles, their tax will amount to 728 rubles.
Thus, a deduction code of 128 applies to those who have three or more children. In this case, the employee can both use the deductions for the two previous children, and already not have such an opportunity. Earlier, code 116. The deduction code 128 came to him at the end of 2016. However, the general rules for its application, the amount of the deduction, as well as the maximum amount of income of 350,000 rubles, remained the same.
