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Questions and Answers
Which of the following best defines mixed-income earners in the context of income taxation?
Which of the following best defines mixed-income earners in the context of income taxation?
What is the total taxable income calculated for Ms. Ysabelle?
What is the total taxable income calculated for Ms. Ysabelle?
Which of the following statements is true regarding the 8% income tax rate?
Which of the following statements is true regarding the 8% income tax rate?
What defines Mixed Income Earners as per R.R. 8-2018?
What defines Mixed Income Earners as per R.R. 8-2018?
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What is the maximum amount excluded from taxable income as non-taxable 13th month pay and other benefits?
What is the maximum amount excluded from taxable income as non-taxable 13th month pay and other benefits?
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What must Mixed Income Earners file annually?
What must Mixed Income Earners file annually?
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Which tax rates apply to Mixed Income Earners as per R.R. 8-2018?
Which tax rates apply to Mixed Income Earners as per R.R. 8-2018?
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What percentage tax must a taxpayer pay on their gross sales under the amended tax law?
What percentage tax must a taxpayer pay on their gross sales under the amended tax law?
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How should the taxable income from compensation and business be treated for tax calculation purposes?
How should the taxable income from compensation and business be treated for tax calculation purposes?
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How does Module 14 differ from Module 15 in terms of tax computation focus?
How does Module 14 differ from Module 15 in terms of tax computation focus?
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What is the correct statement regarding taxation for self-employed taxpayers?
What is the correct statement regarding taxation for self-employed taxpayers?
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Using the information provided, how much is the income tax due calculated for Ms. Ysabelle?
Using the information provided, how much is the income tax due calculated for Ms. Ysabelle?
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Which of the following expenses must be deducted to calculate the net income from operations for Ms. Ysabelle?
Which of the following expenses must be deducted to calculate the net income from operations for Ms. Ysabelle?
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What is the primary focus of Module 16 in relation to income earners?
What is the primary focus of Module 16 in relation to income earners?
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Which statement best describes the income tax rates under R.R. 8-2018?
Which statement best describes the income tax rates under R.R. 8-2018?
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What distinguishes a self-employed individual from an employee regarding tax computation?
What distinguishes a self-employed individual from an employee regarding tax computation?
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What distinguishes mixed-income earners from purely self-employed individuals regarding the P250,000 exemption?
What distinguishes mixed-income earners from purely self-employed individuals regarding the P250,000 exemption?
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Under which condition can an individual choose to be taxed at an 8% income tax rate?
Under which condition can an individual choose to be taxed at an 8% income tax rate?
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How is the total tax due for an individual comprised of different income types determined?
How is the total tax due for an individual comprised of different income types determined?
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What happens to the excess of the P250,000 over actual taxable compensation income for mixed-income earners?
What happens to the excess of the P250,000 over actual taxable compensation income for mixed-income earners?
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What does the graduated income tax rate apply to for an individual with gross sales exceeding the VAT threshold?
What does the graduated income tax rate apply to for an individual with gross sales exceeding the VAT threshold?
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Which of the following statements is true regarding self-employment tax liabilities?
Which of the following statements is true regarding self-employment tax liabilities?
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What is the tax treatment for income from business or profession if the gross sales do not exceed the VAT threshold?
What is the tax treatment for income from business or profession if the gross sales do not exceed the VAT threshold?
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Which section of the Tax Code provides the tax rates for compensation income?
Which section of the Tax Code provides the tax rates for compensation income?
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Study Notes
FABM2 Senior High School - Procedures in the Computation of Gross Taxable Income and Tax Due
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Self-Learning Module 16, Quarter 2: This module is the last part of computing taxable income and tax due, focusing on mixed-income earners.
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Recap of Module 15:
- Self-Employed Individuals: Defined and discussed.
- Annual Income Tax Return: Requirements for taxpayers with gross sales exceeding the VAT threshold.
- Current VAT Threshold: This value is not provided.
- Self-Employed Tax Calculation: Example calculation with a taxable income of P1,689,800.00.
- 8% Income Tax Rate: Calculation example for a self-employed individual with a taxable amount of P900,000.00.
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Module 16 Focus: Computation of liabilities of mixed-income earners. The content differs from Module 14 (employed individuals) and Module 15 (self-employed).
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Similarities of Modules: All three modules use the same income tax rates from R.R. 8-2018 (graduated income tax rates).
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Mixed-Income Earners: Defined as individuals earning compensation from employment and income from a business, profession, or other sources. They file BIR Form No. 1701 annually.
Income Tax Rates (Effective January 1, 2018 - December 31, 2022)
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This section details graduated income tax rates in a tabular format. Ranges of taxable income and corresponding tax rates are clearly listed.
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Tax Due Calculation: The formula is Tax Due = a + (b x c), where a, b, and c are specific values determined from the applicable income range or bracket.
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Individual Citizen/Resident Alien Earning Income from both Compensation and Self-Employment/Professional Practice:
- Compensation income is taxed based on Section 24(A)(2)(a) of the Tax Code.
- Self-Employment Income:
- Can be taxed using either graduated income tax rates or an 8% rate on gross sales (applicable if gross sales/receipts below VAT threshold).
- If gross sales/receipts exceed the VAT threshold, graduated rates are used.
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Illustrative Problem No. 1 (Ms. Ysabelle):
- Compensation Income: P1,350,000.00, including 13th-month pay (net of deductions).
- Business Income: Gross sales of P2,220,000.00, cost of sales P1,000,900.00, operating expenses P500,995.00, and non-operating income P610,000.00 in 2019.
- Tax Calculation: Details provided showing how to calculate taxable compensation and business income, tax due on each, and total tax due. This provides a practical example of how to calculate the combined income taxes for mixed-income earners.
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Illustrative Problem No. 2 (Mr. Manolo):
- Compensation Income: P1,399,000.00 (including 13th-month pay).
- Business Income: Gross sales P3,700,000.00; cost of sales P1,290,000.00; operating expenses P650,000; non-operating expenses of P120,000.
- Tax Calculation: A detailed breakdown of compensation income, business income (gross, cost of sales, expenses, and net income), and total tax due calculation, is provided, focusing on the combined tax due from both sources of income.
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Important Considerations:
- Income tax rates have to be applied based on R.R. 8-2018.
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Note: The provided documents are specific to the Philippines' tax code for a particular period.
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Description
This quiz covers the procedures for computing gross taxable income and tax due for mixed-income earners, as outlined in Self-Learning Module 16 for Quarter 2. It reviews key concepts from Module 15 and discusses the calculation of tax liabilities specific to self-employed individuals. Test your knowledge on how to apply the 8% income tax rate and other essential tax requirements.