Obtaining a tax deduction for treatment through an employer

Until January 1, 2021, the only type of deduction that could be received from an employer, and not through the tax authority, was a deduction for the purchase of housing. However, on January 1, 2021, changes to tax legislation came into force, which, in addition to the property deduction, also allowed social deductions for training and treatment to be received through the employer (Clause 2 of Article 219 of the Tax Code of the Russian Federation as amended).

Next, we will consider in detail the possibility of obtaining a tax deduction for treatment from an employer, as well as the advantages and disadvantages of this method.

Note: you can familiarize yourself with the procedure for obtaining a deduction through the tax office in our article Obtaining a social deduction for treatment through the tax office.

Two ways to get a tax deduction for treatment

If you received and paid for medical services for yourself, parents, children, spouse, purchased medications and want to receive a deduction, then you have two options:

1. You can wait until the end of the calendar year and then submit documents to the tax authority. In this case, the tax deduction is returned immediately for the whole year (or several years) by the tax office. The detailed process is described in the article: Obtaining a social deduction for treatment through the tax office.

Example: Klyuev Ya.Yu. in 2021, I paid for dental services in the amount of 50 thousand rubles. At the end of the year, in January 2021, he submitted a package of documents for deduction (3-NDFL declaration, supporting documents, application for deduction) to the tax office. After completion of the desk check of documents Klyuev Y.Yu. will receive funds in the amount of 6,500 rubles.

2. You don’t have to wait until the end of the year and contact the tax office for a Notification confirming your right to deduction. Submit the Notification with a written statement to the employer, and, starting from the month in which you contacted the employer, 13% personal income tax will not be withheld from your salary until the deduction is fully used.

Please note: you can receive a deduction through your employer only for medical expenses incurred in the current calendar year. If expenses were incurred in previous calendar years, then the deduction can only be obtained through the tax authority.

Example: Voronov Yu.E. in March 2021, I paid for treatment in a private clinic in the amount of 100 thousand rubles. Salary Voronov Yu.E. is 25 thousand rubles, that is, he receives 21,750 rubles in his hands, since 3,250 rubles are withheld from him in the form of income tax.

Voronov Yu.E. applied to the tax authority to issue a Notification and received it a month later. In April, Voronov Yu.E. took the Notification along with the application for a deduction to the employer’s accounting department. From April to July 2021 from the salary of Voronov Yu.E. They stopped withholding personal income tax, and he began to receive 25 thousand rubles in his hands. From August 2021, tax was again withheld from him, since the deduction in the amount of 100 thousand rubles was exhausted.

The procedure for obtaining a tax deduction through an employer

Let's consider in order all the steps to obtain a tax deduction through an employer:

1. Prepare a package of documents confirming the right to deduct.

The list of documents is for the most part similar to the list of documents for obtaining a deduction through the tax office. The full list is here: List of documents for tax deduction for treatment.

At the same time, it is worth highlighting several differences: - you do not need to fill out the 3-NDFL declaration; — no need to take a 2-NDFL certificate; — there will be a different application format. This will be an application for the issuance of a notice (with all the details of your employer).

2. Submit the prepared package of documents to the tax authority.

When the package of documents for the deduction has been collected, you can submit it to the tax office at the place of your permanent registration (in person, by mail or through your Personal Account on the Federal Tax Service website) to confirm the right to deduct. The tax authority, within 30 days after submitting the documents, must issue a Notification confirming the right to a tax deduction (paragraph 2, paragraph 2, article 219 of the Tax Code of the Russian Federation).

3. Provide documents to the employer.

As soon as you receive a Notification from the tax office confirming your right to a deduction, you need to write an application to your employer and, together with the Notification, submit it to your employer’s accounting department.

After this, all further calculations necessary for the deduction will be made by your employer. Starting from the month of submitting the notice to the employer, no income tax will be withheld from your salary, and you will receive a salary amount that is 13% more than usual. This will happen until you have completely exhausted the deduction amount.

Example: Sizov E.Sh. officially works and his salary is 30,000 rubles. Personal income tax is withheld monthly in the amount of 3,900 rubles. He receives 26,100 rubles in his hands.

Sizov E.Sh. paid 60,000 rubles for a paid operation in March 2021. He contacted the tax office at the place of registration with a full set of documents necessary to receive the deduction: - an application for the issuance of a notice confirming the right to the deduction; — supporting documents (agreement with a medical institution, a certificate of payment for treatment for the tax authority).

In May 2021, the tax inspectorate issued E.Sh. to Sizov. Notice confirming the right to deduction. He immediately handed over the Notification along with a written application for a deduction in the amount of 60,000 rubles to his employer.

In May and June 2021 Sizov E.Sh. received wages without deduction of 13% personal income tax. That is, he received 30,000 rubles in his hands, and not 26,100 rubles, as before. Since July 2020 Sizov E.Sh. again began to receive wages minus 13%, since he exhausted the deduction in the amount of 60 thousand rubles in 2 months.

From what month is personal income tax not withheld and can an employer return tax for previous months?

As can be seen from the situation given above, the taxpayer turns to the employer to receive a deduction not at the beginning of the year, but in May. In this regard, the question arises: from what moment will the employer stop withholding income tax?

Based on para. 2-3 p. 2 tbsp. 219 of the Tax Code of the Russian Federation, a social tax deduction for treatment is provided to the taxpayer by the employer starting from the month in which the taxpayer applied to the employer to receive them.

Example: Terikhov D.M. paid for dental services in September. I received a notice in November and asked my employer to refund the tax paid earlier this year. The employer rightfully refused, saying that tax would not be withheld only from the month of filing the application, that is, from November.

Documentation

To obtain a tax refund for receiving dental services, a citizen must provide the inspector with a package of documents, which includes:

1. Declaration;
2. Document confirming payment of personal income tax;
3. Copies of identification documents;
4. An application containing a request for a tax deduction and details for the transfer;
5. Copies of documents confirming the existence of contractual relations with medical institutions where the applicant was provided with dental services;
6. Copies of medical institution licenses;
7. Copies of receipts, checks confirming payment for the dentist’s work.

Application example:

What is the best way to receive a deduction: through the inspectorate or through the employer?

There is no clear answer to this question. Below we will look at the pros and cons of each method:

1. When applying for a deduction through your employer, you receive money faster, since you do not need to wait until the end of the calendar year and submit a declaration.
2. Not all employers and accountants like to be approached for deductions, as this adds more work to them. If your employer is one of these, and you don’t want to waste time and nerves arguing with him, then it will be easier for you to get a deduction through the tax office.
3. If you make frequent payments for treatment during the year, then it is more convenient for you to contact the tax office once at the end of it than to receive notifications multiple times and take them to your employer. If you paid for treatment in a single payment (for example, an expensive operation) and do not want to wait until the end of the year to receive the deduction, then you can choose to receive the deduction through your employer.
4. When receiving a tax deduction through an employer, you will have to take more actions than when receiving through the tax authorities (visit the tax office to submit documents, receive a notification a month later, write and take a statement with the notification to the employer). When receiving a deduction through the tax authority, it is enough to submit a package of documents once and wait for the funds to be transferred. Although, on the other hand, when filing a deduction through an employer, the need to fill out a 3-NDFL declaration is eliminated, which is undoubtedly an advantage of this method of obtaining a deduction.
5. It is worth noting that if at the end of the year you need to file a declaration for other reasons, for example, to declare income from the sale of property, then it is easier to additionally include a deduction for treatment in the declaration and not waste time on filing a deduction through the employer.

So, it’s easier to get a deduction through the tax authority at the end of the year. However, in some situations, for example, with a one-time payment for treatment at the beginning of the year, it will be more convenient to receive a deduction through the employer.

Are all costs included in this amount?

No, not all. A tax deduction is provided for diagnostic and therapeutic procedures and consumables, but its amount does not include the cost of orthodontic structures. Therefore, the clinic usually breaks the cost of treatment into separate components.

For example:

• Therapeutic dental treatment.
• Implant installation. The deductible amount includes: the initial doctor’s appointment and the taking of a diagnostic image, treatment planning and the operation to install it, repeat appointments, crown installation.
• Correction of bite with braces: diagnosis, installation of the system, techniques during treatment and activation, replacement of the arch, removal - are included in the deductible amount, but the cost of the system itself and its components is not.
• When treating with aligners, a deduction is also applied to the amount of the doctor’s work.

Can I apply multiple times?

There are cases when treatment is carried out and paid for not once in a calendar year, but several times. In such situations, is it possible to apply for notice to the employer several times during one calendar year?

The Tax Code does not contain rules limiting the number of applications to the tax authorities for a Notification confirming the right to a tax deduction. If you have paid for treatment several times in one calendar year, you have the right to contact the tax office and receive a Notification each time you pay for medical services.

Example: Tikhomirov D.E. in January 2021 I paid for the operation. The following month, he received a notice from the tax office and immediately took it to his employer along with an application for a deduction. By May, he received his full tax deduction. In May 2021, Tikhomirov D.E. prescribed medications, after purchasing which he immediately contacted the tax office to receive a Notification. Having received the Notification in June 2021 and contacting the employer with it, Tikhomirov D.E. received a tax deduction again.

Clinics: paid and free

In public dentistry there is a list of paid services; there is no need to talk about private ones - even an appointment and a simple examination will cost money. From which clinic are the bills eligible for the deduction? The answer is from any. The main thing for the tax authorities is a license to provide medical services. If dentistry has official documents for conducting professional activities, then the demand for a deduction for paid treatment in both a private and free hospital will be considered legitimate.

What if the year has ended and the deduction has not been fully used?

A situation is possible when you apply for a deduction from your employer, but do not have time to fully use it before the end of the calendar year. In this case, at the end of the calendar year, you can contact the tax authority (by filing a 3-NDFL declaration) and return the lost part of the deduction from taxes withheld from you before submitting the notice to the employer.

Example: Konstantinov A.I. paid for dental services in October 2021 in the amount of 100,000 rubles. His salary is 20,000 rubles/month. He immediately applied with the prepared package of documents to the tax authority for the Notification and, having received it in November, took it to the employer. In November and December 2021, Ivanov received his salary without tax withholding. At the beginning of 2021, he applied to the tax authority with a 3-NDFL declaration to return the remaining deduction amount and returned 13% x (100,000 - 2 x 20,000) = 7,800 rubles.