Filing Income Tax Returns (ITR) in the Philippines

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Questions and Answers

When is the deadline for filing the annual income tax return for business income earners?

November 15 of the following year

April 15 of the following year (correct)

August 15 of the following year

May 15 of the following year

What is the minimum amount of tax due that allows an individual taxpayer to elect to pay the tax in two equal installments?

Php2,000 (correct)

Php1,000

Php5,000

Php3,000

Who is required to file an income tax return?

Only individuals with a minimum income of Php500,000

Only individuals deriving compensation from one employer

Individuals engaged in business and/or practice of profession, regardless of the results of operations, and individuals deriving compensation from two or more employers (correct)

Only individuals engaged in business

What is Juan's taxable income for the taxable year 2023?

500,000 Signup and view all the answers

What is the 'Pay as you File' system?

A system where you pay your tax at the time you file your return Signup and view all the answers

What is the tax rate that Juan may be qualified to avail, considering his income and status?

8% preferential tax rate Signup and view all the answers

When is the deadline for the 2nd installment of tax payment if the individual taxpayer elects to pay the tax in two equal installments?

October 15 following the close of the calendar year Signup and view all the answers

How do married taxpayers, who do not derive income purely from compensation, file their tax returns?

They file separate returns for the taxable year, which are consolidated by the BIR. Signup and view all the answers

What is the basis for dividing income between spouses when it cannot be definitely attributed to or identified as income exclusively earned or realized by either of the spouses?

The income is divided equally between the spouses. Signup and view all the answers

How often are individuals with purely compensation income earners required to file their income tax return?

Annually Signup and view all the answers

What is the purpose of consolidating the separate returns filed by married taxpayers who do not derive income purely from compensation?

To verify the income reported by the spouses for the taxable year. Signup and view all the answers

What is the requirement for married taxpayers who do not derive income purely from compensation, in terms of filing a return for the taxable year?

They file separate returns for the taxable year, which may be consolidated by the BIR. Signup and view all the answers

Who is classified as a Resident Citizen under the NIRC?

A natural person with income derived from within the territorial jurisdiction Signup and view all the answers

What is the characteristic of a Self-Employed individual?

Controls who s/he works for, how the work is done, and when it is done Signup and view all the answers

What type of Nonresident Alien is engaged in trade or business?

Nonresident Alien Engaged in Trade or Business (NRAETB) Signup and view all the answers

Who is considered a Professional under the NIRC?

A person formally certified by a professional body belonging to a specific profession Signup and view all the answers

What is the classification of an individual who is not a citizen of the country but has income derived from within the territorial jurisdiction?

Resident Alien (RA) Signup and view all the answers

What is the characteristic of a Professional Entertainer?

Engages in an art or sport for money as a means of livelihood Signup and view all the answers

Study Notes

Filing of Income Tax Returns (ITR)

Filing of ITR is required once a year, unless qualified for substituted filing, and is due on or before April 15 of the following year for purely compensation income earners.
For business income earners, quarterly tax returns are required to be filed on or before the following dates:
1st quarter: May 15
2nd quarter: August 15
3rd quarter: November 15
Final adjusted/annual return: April 15 of the succeeding year
Filing can be done manually, through the Electronic Filing and Payment System (eFPS), or through eBIR Forms.

Payment of Income Tax

The "Pay as you File" system requires payment of income tax at the time of filing the return.
For tax due exceeding PHP 2,000, the individual taxpayer may elect to pay the tax in two equal installments:
1st installment: at the time of filing the annual ITR
2nd installment: on or before October 15 following the close of the calendar year

Persons Required to File Income Tax Return

Individuals engaged in business and/or practice of profession, regardless of the results of operations.
Individuals deriving compensation from two or more employers concurrently or successively at any time during the taxable year.

Income Tax Due of Married Taxpayers

Husband and wife shall compute separately their individual income tax based on their respective total taxable income.
Income that cannot be definitely attributed to or identified as income exclusively earned or realized by either of the spouses shall be divided equally between the spouses for the purpose of determining their respective taxable income.
Married individuals who do not derive income purely from compensation shall file a return for the taxable year to include the income of both spouses.

Individual Taxpayers

Individual taxpayers are classified as:
Resident Citizens (RC)
Nonresident Citizens (NRC)
Resident Aliens (RA)
Nonresident Aliens (NRA)
- Engaged in Trade or Business (NRAETB)
- Not Engaged in Trade or Business (NRANETB)

Self-Employed and Professionals

Self-employed individuals are sole proprietors or independent contractors who report income earned from self-employment.
Professionals are persons formally certified by a professional body, whose competence can be measured against established standards, and include but are not limited to:
People who engage in some art or sport for money, as a means of livelihood, rather than as a hobby.

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Description

Learn about the basics of filing income tax returns in the Philippines, including deadlines and requirements for compensation income earners and business income earners. Understand the quarterly and annual filing requirements for different types of income earners.