Income tax refund (NDFL) for life insurance

Part of the tax policy pursuing social and economic goals is a deduction for contributions aimed at voluntary life insurance (LV). At the same time, this element of tax policy carries both negative (for the state) and positive (for the taxpayer) consequences. The main purpose of introducing such compensation was to popularize life insurance in Russia. How to correctly apply for a tax deduction for life and health insurance? What documents will be needed for the procedure? Under what conditions can insurance deductions be obtained? What is the maximum amount of compensation? We will give answers to these questions in this article.

Grounds and conditions for personal income tax refund

The tax deduction is compensation for previously paid personal income tax contributions. Upon conclusion of the contract, the policyholder has the right to return the amount of previously paid tax in full or in part. Since this procedure is social in nature, it can be carried out by any citizen of the Russian Federation who is registered with the tax office. The procedure and basic conditions for tax deduction are regulated by the Tax Code of the Russian Federation. An officially employed taxpayer can count on receiving a tax deduction if the following conditions are met:

• The applicant is a taxpayer;
• The insurance policy was issued for 5 or more years;
• Insurance premiums were made from the personal funds of the policyholder;
• The contract insured the life of the policyholder or his relatives (spouse, child, mother, father);
• The tax was officially paid on the income of an individual (from wages, bonuses, etc.).

From January 1, 2015, citizens have the opportunity to receive a personal income tax refund on expenses incurred for life insurance (if the contract concluded with the insurance company is more than 5 years inclusive). If a citizen officially works, and a personal income tax of 13% is officially paid from his salary, then he can apply for a tax deduction.

Amount that can be received as a deduction

1. The deduction is provided in the amount of insurance premiums paid, but not more than 120 thousand rubles in total for all groups of social expenses.
2. 13% (personal income tax rate) of the provided tax deduction is returned.
3. The amount of the refund will not be changed if, in addition to insurance costs, there are also social expenses that provide for a tax deduction, and the amount of these expenses exceeds 120 thousand rubles.
4. Regardless of the year the contract was concluded, the policyholder may claim a deduction in the amount of insurance premiums paid starting from 2020.
5. If a tax deduction was accrued and received, and the payer terminated the insurance contract earlier than the stipulated period, the returned part of the tax must be withheld by the insurer or paid by the policyholder independently. This rule does not apply to cases of termination of the insurance contract for reasons independent of the parties, as well as in the presence of a document stating that the policyholder did not exercise the right to receive a deduction.

How to get a tax deduction for life insurance?

There are several ways to return funds paid from the state. The first is a personal visit to the tax office with an application and documents. The second is submitting the application electronically through the Federal Tax Service website. The third is to contact the employer with a simple statement. Before starting the procedure, it is worth considering that only those funds that were spent on life insurance are compensated. If a combi-policy was issued, including accident insurance and health insurance, then the Federal Tax Service will not reimburse the costs of these types of services.

How to file a deduction with the Federal Tax Service?

In order to independently apply for a tax deduction for life insurance, you need to submit a 3-NDFL declaration and write an application to the tax office at the place of registration. The tax inspectorate is given 30 days to review the documents and confirm the policyholder’s right to return the money. If the taxpayer's application for a refund is approved, the funds will be transferred to the specified bank account. Refunds made in this way are usually made after the end of the tax period (year), and you can apply for a tax deduction within 3 years from the date the expenses were incurred.

Registration through the employer

If insurance premiums are paid through the employer, then the applicant only needs to write an application to the accounting department, which will independently carry out the personal income tax return procedure. Such a statement is written in free form, but it is necessary to indicate the reason for applying for a tax deduction - the return of the amount of the insurance premium under the life insurance policy. Compensation can be made before the end of the tax period along with wages from the employer.

What you need to do to get a personal income tax refund

The standard procedure for returning personal income tax is as follows:

• collection of documents, the list of which is given below;
• filling out a declaration with the tax authority (standard form 3-NDFL) and a statement of desire to receive a tax deduction;
• provision of the two specified documents to the Federal Tax Service in person or by mail;
• receiving notification from the tax office about the results of consideration of the application.

The legislation establishes a maximum period for providing a response to the applicant of 30 days. If a positive decision is made, the funds are transferred to the mortgage borrower according to the details specified in the application.

Income tax refund for certain types of insurance

For any type of voluntary life insurance, you can receive a refund of part of the tax if the conditions listed above are met. The tax deduction under a life insurance contract cannot exceed that established in paragraph 2 of Art. 219 of the Tax Code of the Russian Federation, as are all social tax deductions.

For investment life insurance

In recent years, ILI has been the leading segment in bancassurance in terms of the volume of premiums received by insurance companies. This product allows you to insure the life of an individual against two risks - death and survival until the end of the contract. The insured amount in the event of a risk event will be equal to the premium paid and investment income from investments. It is necessary to take into account that the minimum period for which an ILI agreement is concluded is 3 years. If the insurance is issued for exactly this period, then it will be impossible to return personal income tax on life insurance due to paragraphs. 4 paragraphs 1 art. 219 of the Tax Code of the Russian Federation.

For life and health insurance of a child

When taking out a combined type of policy, when the life of a child and his health are insured, a refund can be issued only from that part of the insurance premium, the payment of which was aimed at life insurance. To receive a deduction under such an agreement, the policyholder must be a parent, guardian or adoptive parent of the child in whose favor the insurance was issued.

Is it possible to get a tax refund for insurance?

Since 2020, citizens have received the right to an income tax refund for life insurance.

Important! If you had and/or have expenses for voluntary insurance under a contract approved for a period of 5 years or more, then you can compensate for part of these expenses by using a personal income tax deduction.

What a deduction means: It is an amount that is subtracted (hence the name) from your taxable income. The base is your income under Articles 208 and 209 of the Tax Code of the Russian Federation - salary, rental payments, winnings, material benefits, interest savings, etc., i.e. all income on which you pay personal income tax at a rate of 13%.

Attention! If you have income that is not charged 13%, then it does not participate in the personal income tax refund.

In addition to the basic rate, there are tariffs such as 9%, 15%, 30 and 35%.

Let's get back to the deduction. You can reduce the tax base by the amount of compensation for past periods and for current ones. Like this:

• a year passes during which you paid personal income tax on income (or your employer paid for you), then you submit documents to the Federal Tax Service and return the amounts paid for the year; for example, in a year you earned 100,000 rubles, you paid 13,000 personal income tax on it, and next year the state returned this money to you;
• you do not wait until the end of the year and submit documents to the Federal Tax Service to receive compensation at your place of work; the inspection gives you a decision, you contact your superiors with it, and they stop charging you 13% of your salary and other income; for example, you have a salary of 10,000 rubles, and you received 8,700, now, after using the personal income tax deduction, you will be paid the full 10,000 rubles.

To summarize, you must meet the following requirements:

On a note! If you earn money as an individual entrepreneur or self-employed, then you cannot reimburse personal income tax, because you did not pay it.

Voluntary health insurance

It is possible to compensate personal income tax not only under a life insurance contract, but also when purchasing a voluntary health insurance policy. You can purchase it yourself, or your boss can include additional insurance in the employee’s social package and pay for part or all of it.

On a note! All employers pay contributions for compulsory health insurance, but employees do not have the right to return personal income tax on them.

Terms of provision:

• you are a resident of Russia;
• pay 13 percent personal income tax;
• paid for a VHI policy for yourself, parents, children and/or spouse.

For reference! This type of compensation refers to social deductions for personal income tax and is regulated by Article 219 of the Tax Code of the Russian Federation. Why this is important: You can use any type of social deduction, but within a single limited amount.

Under a voluntary life insurance contract

For expenses on voluntary life insurance, personal income tax refund is also provided under the terms of Article 219 of the Tax Code of the Russian Federation. The agreement is drawn up in relation to:

• myself;
• children;
• spouse;
• parents.

On a note! Unlike other compensation clauses, reimbursement of expenses for life insurance does not limit the age of children: even if they are over 18 or 24 years old, the parent has the right to compensate for insurance expenses for them.

Personal income tax can only be reimbursed for life insurance premiums. If a mixed contract is signed, for example, in addition to life insurance, the risks of illness and accidents are taken into account, then only the amount of the DSG is included in the compensation. This is the position of the Ministry of Finance in letters No. 03-04-05/19179 dated March 30, 2020 and No. 03-04-07/40502 dated July 11, 2016.

Return to pension insurance

Contributions to a future or current pension are one of the main areas in which the state carries out powerful incentive policies and advertising. Thus, maternity capital can be spent on pension contributions, and Article 219 of the Tax Code of the Russian Federation provides for the deduction of personal income tax for pension insurance.

What expenses are taken into account:

• voluntary pension insurance with insurance companies;
• non-state pension provision with non-state pension funds.

Important! According to paragraph 4 of paragraph 1 of Article 219 of the Tax Code of the Russian Federation, you can submit documents for the return of personal income tax on pension insurance and in case of payment for insurance for children, parents, spouses, brothers, sisters who are under the guardianship (trusteeship) of disabled children.

Registration of deductions for insurance when lending

The condition for granting an insurance deduction is that the policyholder himself or his close relatives be recognized as the beneficiary. In the case of concluding a mortgage or ordinary consumer loan, as a rule, the creditor bank is listed as the beneficiary in the agreement, and even the presence of life insurance, pensions, or medical insurance in such an agreement does not allow receiving a personal income tax refund.

Important! Loan insurance is not included in the social deduction of personal income tax if the beneficiary is a bank.

What documents are needed?

The application form was approved by Order No. ММВ-7-8/ [email protected] of 2020. The policyholder must indicate in the appropriate columns his INN, full name, number of the article of the Tax Code of the Russian Federation, on the basis of which the application for refund is written, the amount of deduction, tax period, information about the bank account to which the transfer must be made, passport details. Also on page 2 of the document you will need to confirm the accuracy of all the information provided, leave your phone number, date and signature.

A social tax deduction for life insurance can be obtained if you submit to the Federal Tax Service such documents as the 3-NDFL declaration for the past year, a copy of the voluntary insurance agreement, receipts and checks for payment of insurance premiums, and a copy of your passport. Additionally, documents may be required confirming the relationship of the policyholder with the person included in the contract, details of the insurance company, documents on the amount of wages (declaration 2-NDFL).

FAQ

I don’t have a mortgage, but I have life insurance - can I return personal income tax?

Yes, this possibility is provided for by law. To receive the deduction, you must meet the requirements listed above that are not related to mortgage lending. For example, the duration of the contract with the insurance company is 5 years or longer.

What documents do you need to collect when applying for a mortgage in order to receive a personal income tax refund?

To receive a personal income tax refund from the budget as part of life insurance, when applying for a mortgage, you must provide a standard set of documents for any tax deduction. It includes:

• application for a tax deduction;
• declaration filled out in form 3-NDFL;
• documents confirming the cost of the life insurance policy and payment of the insurance premium;
• a life insurance agreement for the mortgage borrower for a duration of 5 years (with a complex agreement, it is mandatory to allocate life insurance costs in a separate line);
• SK license.

Tax deduction amount

Regardless of the amount of contributions paid under the life insurance contract, there is a limit when making a tax deduction for this category of services. The maximum payment for 1 year cannot be more than 15.6 thousand rubles, since a limit has been established on actual expenses incurred. It amounts to 120 thousand rubles.

Example of calculating the deduction amount

A citizen entered into a life insurance contract for 5 years and paid an insurance premium in the amount of 90,000 rubles.
He will be able to return 11,700 rubles (90,000 x 13%) as a tax deduction. The specified deduction limit includes reimbursements for other categories of expenses, which may include expenses for treatment, training, etc. If contributions under a voluntary insurance contract are greater than the permissible limit, then the remaining funds can be redistributed to the next year. It is not always possible to receive the full amount of compensation, since it is impossible to return a tax deduction for life insurance in a larger amount than the personal income tax amount in the previous year according to the provisions of the Tax Code of the Russian Federation.

Who can receive government assistance?

Citizens of the Russian Federation who have entered into an insurance agreement with a mortgage have the right to a refund of personal income tax when insuring life on a mortgage, subject to the following conditions:

1. The minimum term of the insurance contract is 5 years.
2. The contract must insure the life of the citizen.
3. The beneficiaries under the insurance contract must be the borrower, the borrower's children, spouse or parents.
4. The policyholder worked in the previous year and paid personal income tax to the state.

Banks protect not only borrowers, but also themselves from risks with insurance contracts, so they are forced to indicate the banking institution as the beneficiary of such contracts for a mortgage loan. In this case, the borrower cannot receive a tax deduction for life insurance.

Family members with a mortgage can additionally insure themselves with an insurance company and receive a tax deduction. In this case, it is advisable to indicate children or parents as beneficiaries.

To receive a tax deduction from mortgage life insurance, it is not enough to meet the required requirements, because you still need to collect documents and go through a bureaucratic procedure.

Is it possible to receive personal income tax?

A tax deduction is provided if a number of conditions are met:

• it is necessary to conclude a separate voluntary life insurance agreement;
• the duration of the contract is more than 5 years;
• the beneficiaries are spouses, parents or children.

Only if all these requirements are met can you apply for a personal income tax refund.

You need to pay attention to the requirements of the credit institution regarding types of insurance . Sometimes several are required. Then you can use a comprehensive insurance contract. This option is cheaper for the borrower, and more reliable for the bank. But you no longer have to count on a refund of the tax paid.

When concluding an insurance contract, you must first calculate what will be more profitable: spend less, but not return the tax, or overpay, but take advantage of the deduction.

You also need to remember this point. A voluntary life insurance contract may also include insurance against illness and accidents . Then you will need to divide the costs so that it is possible to determine the costs of life insurance. In this case, you can request a certificate from the insurance company, where the costs will be listed by type.

In addition, you must be officially registered at your workplace or have a certificate of registration as an individual entrepreneur. The tax office must obtain documentary evidence of income and personal income tax payment. The proof will be a certificate from the enterprise or a tax return and individual entrepreneur’s reporting.

You can get a tax deduction and refund on your mortgage not only from insurance costs. We advise you to read about in what cases you can apply for a deduction and how to return the tax:

• from interest;
• when buying an apartment;
• when refinancing;
• pensioners;
• for military and social mortgages.

List of required documents

An individual can make a refund of income tax for insurance:

• through the tax office;
• through the employer.

Important! According to the penultimate paragraph of Art. 219 of the Tax Code of the Russian Federation, in all cases, a deduction through the employer can be obtained only for voluntary health insurance and life insurance, and for NPO and DPS - only if the premium (contributions) were transferred to a non-state pension fund or insurance company by the employer himself.

Application deadlines:

• at any time after incurring the relevant expenses (even the next day) - if you intend to return the money through a tax agent;
• at the end of the year in which the expenses were incurred - if returned directly through the tax authorities.

The Federal Tax Service approves - return the tax without problems when you contact them with the following documents:

• application in the form provided for in Appendix 8 to the Order of the Federal Tax Service No. MMV-7-8 / [email protected] dated February 14, 2020 “On approval...”;
• 2-NDFL;
• 3-NDFL;
• VHI / DPS / NPO / life insurance contract;
• documents evidencing expenses incurred (receipts, checks for payment of insurance premiums or contributions);
• documents that confirm the relationship of the taxpayer with the individual in whose favor the insurance was purchased.

When contacting an employer, the list of documents depends on the type of deduction:

• application (form approved by the employer) and confirmation from tax authorities in the form approved by Appendix 2 to Letter of the Federal Tax Service No. BS-4-11 / [email protected] dated January 16, 2020 - for VHI and life insurance;
• application and papers confirming the citizen’s actual monetary expenditures for payment of contributions (premiums) - for NGOs and traffic police.