De Minimis Benefits and Compensation Income

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Questions and Answers

What is the non-taxable limit for the laundry allowance per month?

P500

P300 (correct)

P200

P400

The non-taxable limit for Christmas and Anniversary gifts is P10,000 per year.

False

What amount is the daily meal allowance for overtime work based on?

25% of the basic minimum wage

The total non-taxable limit for CBA and productivity incentive schemes is _____ per year.

P10,000 Signup and view all the answers

Match the benefit categories with their non-taxable limits:

Laundry allowance = P300 per month Employee's achievement award = P10,000 Gifts (Christmas and Anniversary) = P5,000 per year CBA and productivity incentive schemes = P10,000 per year Signup and view all the answers

What is the non-taxable limit for monetized unused vacation leaves for private employees?

10 days Signup and view all the answers

Medical cash allowance to dependents is P300.00 per month.

False Signup and view all the answers

What is the non-taxable limit for actual medical benefits?

P10,000 per year Signup and view all the answers

The rice subsidy can provide up to ______ or 1 sack of rice (50kg) per month.

P2,000 Signup and view all the answers

Match the following de minimis benefits with their non-taxable limits:

Monetized unused vacation leaves (private employees) = 10 days Uniform and clothing = P6,000 per year Medical cash allowance to dependents = P250.00 per month Rice subsidy = P2,000 or 1 sack of rice (50kg) per month Signup and view all the answers

Which of the following types of compensation income are taxable?

Paid vacation and sick leaves Signup and view all the answers

Separation pay is always taxable regardless of the circumstances.

False Signup and view all the answers

What determines the taxability of retirement pay?

It is non-taxable if paid by SSS, GSIS, or the United States Veterans Administration, but taxable if funded by a private employer with specific conditions. Signup and view all the answers

Compensation paid in kind is taxable based on its fair market _____, unless it qualifies under De Minimis Benefits.

value Signup and view all the answers

Match each type of compensation income with its tax status:

Paid vacation and sick leaves = Taxable Retirement pay by private employer with 10 years employment = Taxable Separation pay due to sickness = Non-taxable Compensation paid in kind = Taxable Signup and view all the answers

Which of the following compensations is not taxable for government employees?

Cost of living allowance (COLA) Signup and view all the answers

All forms of 13th month pay are taxable regardless of the amount.

False Signup and view all the answers

What type of allowances are considered de minimis benefits?

Meal allowance used for overtime Signup and view all the answers

Commission is classified as __________ income.

taxable Signup and view all the answers

Match the following forms of compensation with their taxable status:

Fixed allowances = Taxable Christmas bonus = Taxable Overtime pay = Taxable De minimis benefits = Taxable Signup and view all the answers

What form must taxpayers who derive their income solely from compensation file for their income tax returns?

BIR Form 1700 Signup and view all the answers

BIR Form 2316 can be used as a substitute filing for income tax returns.

True Signup and view all the answers

What is BIR Form 2316?

A statement issued by the employer and signed by the employee. Signup and view all the answers

Taxpayers deriving income solely from compensation are required to file BIR Form _____ as their income tax returns.

1700 Signup and view all the answers

Match the following forms with their descriptions:

BIR Form 1700 = Income tax return for compensation income BIR Form 2316 = Substitute filing statement BIR Form 1601C = Monthly remittance return for employees' compensation BIR Form 2307 = Certificate of creditable tax withheld Signup and view all the answers

Study Notes

De Minimis Benefits

De minimis benefits are non-taxable benefits provided by employers to employees.
Some examples of De Minimis benefits include:
- Laundry allowance (P300 per month)
- Employee achievement award (P10,000)
- Gifts (Christmas and Anniversary, P5,000 per year)
- Daily meal allowance for overtime work (25% of the basic minimum wage)
- CBA and productivity incentive schemes (P10,000 per year)
- Monetized unused vacation leaves (private employees, 10 days)
- Medical cash allowance to dependents (P250 per month)
- Rice subsidy (P2,000 or 1 sack of rice (50kg) per month)
- Uniform and clothing (P6,000 per year)
- Actual medical benefits (P10,000 per year)

Other Forms of Compensation Income

Some other forms of compensation income are taxable, including:
- Paid vacation and sick leaves (All unused leaves are taxable.)
- Fixed or variable allowances (Taxable, except for government employees' PERA)
- Retirement pay (Taxable if funded by a private employer, not taxable if paid by SSS, GSIS, or the United States Veterans Administration)
- Separation pay (Taxable if voluntary, non-taxable if involuntarily or due to causes beyond the employee's control)
- Compensation paid in kind (Taxable based on fair market value)
- 13th month pay (Taxable if more than P90,000)
- Christmas bonus (Taxable)
- Overtime pay (Taxable)
- Hazard pay (Taxable)
- Commission (Taxable)
- Fees (Taxable)

Compensation Income Tax Filing

Taxpayers who derive their income solely from compensation are required to file BIR Form 1700 as their income tax returns.
However, employees may present BIR Form 2316 as their income tax return instead of BIR Form 1700.
BIR Form 2316 is a statement issued by the employer and signed by the employee.
This is referred to as substitute filing.

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Description

This quiz explores de minimis benefits and various other forms of compensation income provided by employers. Learn about the non-taxable benefits and the taxable forms of compensation that employees may encounter. Test your knowledge on specific examples and regulations regarding these benefits.