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How to file your Income Tax Return?

How to file your Income Tax Return?

As one of the business-immersed countries in Asia, the Philippines offer a vast line of enterprises to choose from. From large companies to freelancers, running a business comes with a cost – a cost to pay your tax. As a taxpayer, it is but paramount to fulfill the obligation to pay taxes imposed by law (e.g. Estate Tax, Income tax, Documentary Stamp tax, and etc.)

 

Who is subject for filing?

For Individuals:

  • Resident citizens receiving income either from within or outside the Philippines
  • Non-Resident citizens receiving income from sources in the Philippines
  • Resident or Non-resident Aliens receiving income from sources in the Philippines

For Non-Individuals:

  • Domestic Corporations
  • Foreign Resident Corporations
  • Partnerships
  • Estates and Trusts (engaged in trade or business)

 

How to File Your Income Tax Return?

When settling your Income Tax, one must file BIR Form 1700 or 1701.

BIR Form 1700, commonly known as your Annual Income Tax Return form, is acquired by individuals earning income with purely compensation only. This form reflects the transactions accumulated every year. Pursuant to the guidelines following the filing of annual income tax returns of the BIR, individuals obligated to file this form are as follows below:

“This return shall be filed by every resident citizen deriving compensation income from all sources, or resident alien and non-resident citizen with respect to compensation income from within the Philippines, except the following:

  • An individual whose taxable income does not exceed Php 250,000.00;
  • An individual with respect to pure compensation income, as defined in Section 32(A)(1) derived from sources within the Philippines, the income tax on which has been correctly withheld (tax due equals tax withheld) under the provisions of Section 79 of the Code: Provided, that an individual deriving compensation concurrently from two or more employers at any time during the taxable year shall file an income tax return;
  • An individual whose sole income has been subjected to final withholding tax pursuant to Section 57(A) of the Tax Code; and
  • A minimum wage earner as defined in Section 22(HH) of the Tax Code or an individual who is exempt from income tax pursuant to the provisions of the Tax Code and other laws, general or special.” (BIR Guidelines)

 

BIR Form 1701, internally known as your Annual Income Tax Return form for mixed earners, is acquired by small business owners, self-employed individuals, trusts and estates. This form reflects the transactions accumulated every year. Pursuant to the guidelines following the filing of annual income tax returns of the BIR, individuals obligated to file this form are as follows below:

“BIR Form No. 1701 shall be filed by individuals who are engaged in trade/business or the practice of profession including those with mixed income (i.e., those engaged in the trade/business or profession who are also earning compensation income) in accordance with Sec. 51 of the Code, as amended. The annual income tax return summarizes all the transactions covering the calendar year of the taxpayer.

This return shall be filed by the following individuals regardless of amount of gross income:

  • A resident citizen engaged in trade, business, or practice of profession within and without the Philippines.
  • A resident alien, non-resident citizen or non-resident alien individual engaged in trade, business or practice of profession within the Philippines.
  • A trustee of a trust, guardian of a minor, executor/administrator of an estate, or any person acting in any fiduciary capacity for any person, where such trust, estate, minor, or person is engaged in trade or business.
  • An individual engaged in trade or business or in the exercise of their profession and receiving compensation income as well.” (BIR Guidelines)

Consequently, under the new TRAIN LAW, if an individual earns less than 250,000 annually, they are exempt from paying income tax but are still required to file. So if you fall under this category, you are exempted from paying your Income Tax but you are still subject and required to file for a BIR ITR Form.

 

Where to File?

 

Every year, taxpayers are obligated to pay for their Income Tax and file for an Annual Income Tax Return on or before April 15. Individuals may opt to file either manually or electronically (either by electronic Filing and Payment Systems (eFPS) or Electronic BIR Forms (eBIRForms)) with the BIR. For manual filings, taxpayers may visit their nearest Revenue District Office (RDO) to submit their annual Income Tax Return (ITR). For electronic filings, taxpayers may file virtually using the BIR website.

If you want help with your Income Tax Return in the Philippines, you can get in touch with us today by calling +1.806.553.6552 or by reaching out to us at FilePino.