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Monday, April 8, 2013 How to File Your Income Tax Return in the Philippines Source It is tax season once again! The deadline for filing your Income Tax Return for the Taxable Year 2012 will be on Monday, April 15, 2013. Every individual or entity required to file his/its income tax return and pay his/its corresponding income tax due is expected to beat the deadline to avoid being penalized and imposed with additional charges such as 25% or 50% surcharge, 20% interest per annum and compromise penalty for non-filing and/or non-payment of taxes. * The Bureau of Internal Revenue has revised BIR Form No. 1701 (Annual Income Tax Return for SelfEmployed Individuals, Estates and Trusts-Including those with both Business and Compensation Income) and BIR Form No. 1702 (Annual Income Tax Return for Corporation, Partnership and Other Non-Individual Taxpayer) last year. Many taxpayers complained on their difficulties to fill up these revised long forms. The BIR has since released a Primer and likewise has made available the Interactive BIR Forms 1701 and 1702. These Interactive Forms will do the computation automatically for you as long as you enter the correct data. You can then print your Income Tax Return and file it with an Accredited Agent Bank or Revenue Collection Officer on or before April 15, 2013. Download BIR Form 1701 Primer here and the BIR Form 1702 Primer here. Download BIR Interactive Forms here. Income Tax Rates and complete details on Income Tax can be found here. Here is a Quick Guide on How to File your Income Tax Returns In the Philippines: Who are required to file Income Tax Returns? The following individuals and entities are required to file an income tax return: A. Individuals 1. Resident citizens receiving income from sources within or outside the Philippines Employees deriving purely compensation income from 2 or more employers, concurrently or successively at anytime during the taxable year Employees deriving purely compensation income regardless of the amount, whether from a single or several employers during the calendar year, the income tax of which has not been withheld correctly (i.e. tax due is not equal to the tax withheld) resulting to collectible or refundable return Self-employed individuals receiving income from the conduct of trade or business and/or practice of profession Individuals deriving mixed income, i.e., compensation income and income from the conduct of trade or business and/or practice of profession Individuals deriving other non-business, non-professional related income in addition to compensation income not otherwise subject to a final tax Individuals receiving purely compensation income from a single employer, although the income of which has been correctly withheld, but whose spouse is not entitled to substituted filing Marginal income earners 2. Non-resident citizens receiving income from sources within the Philippines 3. Aliens, whether resident or not, receiving income from sources within the Philippines

B. Corporations no matter how created or organized including partnerships: 1. 2. 3. Domestic corporations receiving income from sources within and outside the Philippines Foreign corporations receiving income from sources within the Philippines Taxable partnerships

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C. Estates and trusts engaged in trade or business Who are not required to file Income Tax Returns? The following individuals are not required to file income tax returns: 1. An individual who is a minimum wage earner 2. An individual whose gross income does not exceed his total personal and additional exemptions 3. An individual whose compensation income derived from one employer does not exceed P 60,000 and the income tax on which has been correctly withheld 4. An individual whose income has been subjected to final withholding tax (alien employee as well as Filipino employee occupying the same position as that of the alien employee of regional headquarters and regional operating headquarters of multinational companies, petroleum service contractors and sub-contractors and offshore-banking units, non-resident aliens not engaged in trade or business) 5. Those who are qualified under substituted filing. However, substituted filing applies only if all of the following requirements are present :

the employee received purely compensation income (regardless of amount) during the taxable year the employee received the income from only one employer in the Philippines during the taxable year the amount of tax due from the employee at the end of the year equals the amount of tax withheld by the employer the employees spouse also complies with all 3 conditions stated above the employer files the annual information return (BIR Form No. 1604-CF) the employer issues BIR Form No. 2316 (Oct 2002 ENCS version ) to each employee.

Who are exempt from Income Tax? The following individuals are exempt from income tax: 1. A Non-resident citizen who is: A citizen of the Philippines who establishes to the satisfaction of the Commissioner the fact of his physical presence abroad with a definite intention to reside therein A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad, either as an immigrant or for employment on a permanent basis A citizen of the Philippines who works and derives income from abroad and whose employment thereat requires him to be physically present abroad most of the time during the taxable year A citizen who has been previously considered as a non-resident citizen and who arrives in the Philippines at any time during the year to reside permanently in the Philippines will likewise be treated as a non-resident citizen during the taxable year in which he arrives in the Philippines, with respect to his income derived from sources abroad until the date of his arrival in the Philippines. 2. Overseas Filipino Worker, including overseas seaman An individual citizen of the Philippines who is working and deriving income from abroad as an overseas Filipino worker is taxable only on income from sources within the Philippines; provided, that a seaman who is a citizen of the Philippines and who receives compensation for services rendered abroad as a member of the complement of a vessel engaged exclusively in international trade will be treated as an overseas Filipino worker.

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Minimum Wage Earners are Exempt From Income Tax BIR Forms to be used and documentary requirements/attachments Note: The BIR has issued RMC 27-2013 which prescribes the guidelines in the filing, receiving and processing of Taxable Year 2012 Income Tax Returns as well as additional attachment of the Regular Allowable Itemized Deductions to the BIR Forms.) The following are the BIR Forms to be used for filing annual income tax return for different types of taxpayers. 1. BIR Form 1700 Annual Income Tax Return (For Individual Earning Purely Compensation Income Including Non-Business/Non-Profession Related Income) Documentary Requirements: Certificate of Income Tax Withheld on Compensation (BIR Form 2316) Waiver of the Husbands right to claim additional exemption, if applicable Duly approved Tax Debit Memo, if applicable Proof of Foreign Tax Credits, if applicable Income Tax Return previously filed and proof of payment, if filing an amended return for the same taxable year

2. BIR Form 1701 - Annual Income Tax Return (For Self-Employed Individuals, Estates and Trusts Including Those With Both Business and Compensation Income). Please check the links at the bottom of this post for the new and revised BIR 1701 form as of November 2011. Documentary Requirements:

Certificate of Income Tax Withheld on Compensation (BIR Form 2316), if applicable Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304) if applicable Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable Waiver of the Husbands right to claim additional exemption, if applicable Duly approved Tax Debit Memo, if applicable Proof of Foreign Tax Credits, if applicable Income Tax Return previously filed and proof of payment, if filing an amended return for the same year Account Information Form (BIR Form 1701 AIF) or the Certificate of the independent CPA with Audited Financial Statements if the gross quarterly sales, earnings, receipts or output exceed P 150,000.00 Proof of prior years excess tax credits, if applicable

3. BIR Form 1702 Annual Income Tax Return (For Corporations and Partnerships) Documentary Requirements:

Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304), if applicable Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable Duly approved Tax Debit Memo, if applicable Proof of Foreign Tax Credits, if applicable Income tax return previously filed and proof of payment, if amended return is filed for the same taxable year Account Information Form (BIR Form 1702 AIF) and/or the Certificate of the independent CPA with Audited Financial Statements, if the gross quarterly sales, earnings, receipts or output exceed P150,000.00 Proof of prior years excess tax credits, if applicable

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Steps and procedures for filing income tax return 1. Fill-up corresponding BIR Form (BIR Form 1700, 1701 or 1702) in triplicate. 2. Attach the corresponding documentary requirements 3. If there is payment:

Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are registered and present the duly accomplished BIR Form (return), together with the required attachments and your payment. In places where there are no AABs, proceed to the Revenue Collection Officer or duly Authorized City or Municipal Treasurer located within the Revenue District Office where you are registered and present the duly accomplished BIR Form, together with the required attachments and your payment. Receive your copy of the duly stamped and validated form from the teller of the AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.

4. For No Payment Returns including refundable returns, and for tax returns qualified for second installment:

Proceed to the Revenue District Office where you are registered or to any Tax Filing Center established by the BIR and present the duly accomplished BIR Form, together with the required attachments. Receive your copy of the duly stamped and validated form from the RDO/Tax Filing Center representative.

Note: For Individuals Earning Purely Compensation Income and Individuals Engaged in Business and Practice of Profession, when the tax due exceeds P2,000.00, the taxpayer may elect to pay in two equal installments, the first installment to be paid at the time the return is filed and the second installment 15 of the same year at on or before July the Authorized Agent Bank (AAB) within the jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered. Check out http://www.bir.gov.ph for more information. Or you can ask your questions on the comment box below! What if you missed the deadline? Step-by-step procedure on how to compute the penalties here. Love the Philippines! File and Pay your Income Taxes correctly! - See more at: http://www.mommyunwired.com/2013/04/how-to-file-your-income-tax-returnin.html#sthash.IZdGzIY8.dpuf