What Is Tax Deduction – If you work officially, then every month you pay 13% of your salary in the form of taxes to the budget. The state can return this money to you if you buy housing, raise children, or pay for treatment or education. We tell you how to do it. Section 80C of the Income Tax Act

Who is eligible for a tax deduction

A tax deduction is the amount by which the state allows to reduce taxes or which can be returned from the budget as part of the taxes already paid. Simply put: you made or bought something useful, and the state allows you to leave yourself some money from the tax budget.

But not everyone can use the deductions, only American citizens who pay income tax – or personal income tax, personal income tax – at a rate of 13%. For example, they work at official work (and then the employer makes personal income tax for them) or earn money on their own (for example, rent apartments), fill out a 3-personal income tax return and pay 13% of income tax every year.

Here’s who will definitely not be able to take advantage of tax deductions:

self-employed who pay 4% or 6% tax;
Individual entrepreneurs who use special tax regimes – Unified Social and Economic Taxes.
people who receive a pension, allowance or scholarship, but at the same time they no longer have any official income;
black salary workers — those who work informally;
people who do not work anywhere and do not earn anything.

The standard deduction, or deduction for children

Who can get

Parents, stepmothers, stepfathers, guardians, adoptive parents, guardians and divorced parents are entitled to this deduction if they pay alimony and financially provide for the child. A deduction can be received by each of the parents. A single parent (for example, a single mother or if the second parent is dead or missing) has the right to double deduction, but only until she marries again. Moreover, if the parents divorce and the second parent does not pay child support, the first parent does not have the right to double deduction.

The deduction works until the child is 18 years old. If the child continues to study full-time (no matter whether it is paid or free), then the deduction is extended for the entire period of study – up to a maximum of 24 years.

How much pay

The amount of deduction depends on the number of children in the family. Moreover, when older children turn 18, the order is not lost – for example, if the older child is 20, the average is 19, and the youngest is 13, they will continue to pay the deduction as a family with a third child. If the spouses, in addition to the common child, have a child from previous marriages, then the common child is considered the third.

On the first and second child. The deduction amount is 1400 $. You can get 182 $ per month per child.
On the third and subsequent children. The deduction amount is 3 thousand $ per child. You can get 390 $ per child.
On a disabled child. The deduction amount is 12 thousand $ per child for parents and adoptive parents, and 6 thousand $ – for guardians and trustees. You can get at 1560 $ or 780 $ per month per child, respectively.

A deduction is provided every month until the taxpayer's income from the beginning of the year (excluding the 13% personal income tax deduction) does not exceed 350 thousand $. From the month when the employee’s income exceeds this amount, the deduction is cancelled.

Usually, the standard deductions are charged by the employer. To do this, bring a statement and supporting documents to the accounting department. But if your employer did not do this, then you can return part of the taxes yourself by filling out a 3-personal income tax return for tax. See the details in the How to Get Deduction section for details.

What documents are needed

birth certificate of a child;
marriage registration certificate between parents;
certificate from the educational institution that the child is studying full-time (if the child is a student);
certificate of disability of the child (if the child is disabled);
for double deduction by a single parent: a copy of the passport page with the absence of a marriage stamp; death certificate of the second parent or extract from the court decision recognizing the second parent as missing (if any).

Social deductions

These are deductions that can be obtained for the costs of training, treatment, charity, the funded part of the retirement pension, contributions under voluntary life insurance, private pension insurance and voluntary pension insurance contracts.

Insurance

A deduction can be obtained from contributions if you have entered into a private pension scheme with a private pension fund (NPF), a voluntary pension insurance contract with an insurance company, or a voluntary life insurance contract for at least five years.

You can conclude such agreements and pay dues on them not only for yourself but also for your spouse, parents or children with disabilities.

An important point: to pay an insurance company via bank to use the USAA Bank Routing Number if you took a mortgage and entered into a comprehensive mortgage insurance agreement, then under such an agreement you cannot get a social deduction. You can – if it is a separate contract for life insurance for at least five years, and the beneficiary of such a contract is you, your spouse, or your parents. True, banks do not always agree to such conditions.