Citizen vs Resident vs Non-Resident Quiz
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Questions and Answers

What defines a non-resident alien engaged in trade or business in the Philippines?

  • A non-citizen who comes to the Philippines for a vacation.
  • A citizen who works in the Philippines for less than 183 days.
  • A resident who operates a business from the US without any local presence.
  • A non-resident who is not a citizen and stays for more than 183 days. (correct)

    • What is the maximum amount exempt from income tax for compensation income?

  • P1,000,000
  • P250,000 (correct)
  • P500,000
  • P100,000

    • Which of the following statements about Optional Standard Deduction (OSD) is true?

  • Corporations may opt for OSD amounting to 40% of gross income. (correct)
  • Individuals who are non-resident aliens can apply for OSD.
  • OSD for individuals is 40% of gross income.
  • OSD cannot exceed 30% of gross sales.

    • Which of the following is NOT considered an allowable deduction from business income?

    <p>Luxury expenses related to personal use</p> Signup and view all the answers

    How is taxable income determined?

    <p>Gross income minus allowable deductions.</p> Signup and view all the answers

    What defines a resident citizen in the Philippines?

    <p>A citizen who permanently resides in the Philippines.</p> Signup and view all the answers

    Which of the following statements is true about non-resident citizens?

    <p>They have a definite intention to reside abroad while maintaining citizenship.</p> Signup and view all the answers

    Which criterion does not qualify someone as a citizen of the Philippines?

    <p>Being born in the Philippines to non-Filipino parents.</p> Signup and view all the answers

    What characterizes a non-resident alien engaged in trade or business in the Philippines?

    <p>They conduct business in the Philippines and may be subject to specific tax regulations.</p> Signup and view all the answers

    What best describes a resident alien?

    <p>An individual whose residence is within the Philippines but is not a citizen.</p> Signup and view all the answers

    Which of the following groups includes non-resident citizens?

    <p>Citizens who work abroad and stay there for more than 183 days.</p> Signup and view all the answers

    Which statement correctly describes a non-resident alien?

    <p>They may work temporarily in the Philippines without residency.</p> Signup and view all the answers

    Which of the following is a requirement for a person to be classified as a citizen of the Philippines?

    <p>Election of Philippine citizenship upon reaching adulthood.</p> Signup and view all the answers

    Study Notes

    Citizen vs Resident vs Non-Resident

    • Citizen: A member of a country with rights to be there, either by birth or naturalization. In the Philippines, this includes individuals born to Filipino parents, those born before January 17, 1973, to a Filipino mother who elect Philippine citizenship upon reaching the age of majority, and those naturalized according to the law.
    • Resident Citizen: A Filipino citizen who permanently resides in the Philippines.
    • Non-Resident Citizen: A Filipino citizen who lives abroad with the intention of residing permanently. This includes Filipinos who work and derive income abroad for at least 183 days during the taxable year.

    Resident vs Non-Resident Alien

    • Resident Alien: An individual who resides in the Philippines but is not a citizen. This is typically someone who has no intention of leaving the Philippines.
    • Non-Resident Alien: An individual who does not reside in the Philippines and is not a citizen. This could be someone who visits the Philippines for vacation but does not live or work there permanently.
    • Non-Resident Alien Engaged in Trade or Business: A non-resident alien who carries on a business in the Philippines. This typically applies to individuals who stay in the Philippines for over 180 days during a calendar year.

    Allowable Deductions

    • These are items or amounts that are deducted from gross income to determine taxable income.
    • Compensation Income: The first P250,000 of compensation income is exempt from income tax.
    • Business Income:
      • Itemized Deductions: Specific business operating expenses allowed by the Tax Code. This includes general business expenses, interest, taxes, losses, bad debts, depreciation, depletion of oil and gas wells and mines, charitable and other contributions, research and development, and pension trust.
      • Optional Standard Deductions (OSD): An alternative to itemized deductions where individuals can deduct 40% of their gross sales or receipts. This option must be notified to the Bureau of Internal Revenue (BIR).

    Taxable Income and Tax Due

    • Taxable Income: The amount of income remaining after deducting allowable deductions from gross income.
    • This is the base upon which the tax rate is applied to calculate the tax due.

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    Description

    Test your understanding of the differences between citizens, resident citizens, non-resident citizens, and aliens in the Philippines. This quiz will help clarify the definitions and implications of each status in relation to residency and citizenship. Perfect for anyone looking to deepen their knowledge of Philippine laws on citizenship.

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