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A Filipino's Guide to Filing Your Income Tax Return

It's tax season and all your accountant friends are probably in a stressful state right now computing their company's taxes. There is a portion of the human population in this world that don't like filing their income tax return (ITR) specially when they find out that they need to pay additional tax. But as much as we hate the word "taxes", the good in paying them will always outweigh the bad. Think of it this way, we're contributing to the development and progress of the country!

But what is an ITR?

According to the Bureau of Internal Revenue, an Income Tax is a tax on a person's income, emoluments, profits arising from property, practice of profession, conduct of trade or business or on the pertinent items of gross income. A tax return, however, is a return of excess taxes paid during a given tax year. This must be filed annually by an individual or a company that has received income during the year.

RELATED: WHO ARE REQUIRED TO FILE INCOME TAX RETURNS?

Am I required to file an ITR?

If you have a job and receiving compensation, then yes. Basically, anyone and everyone who is a Filipino citizen living in the Philippines, receiving income from sources within or outside the Philippines is required. Whether your income comes from being employed in a company, your own business, or even freelance gigs, when there's income, we are all required to file our ITR.

If you're employed by a company in the Philippines, they usually file your ITRs for you, but if not, like say you're an owner of a business, or a freelancer, or you have a corporation, you'll have to file them yourself. I know. Just the thought of lining up at the BIR office is sending terror signals to my head, that's why it's always best to file your taxes way before the deadline—April 15, 2016—to avoid long cues.

What forms do I need to file my ITR?

tax
filingThanks to technology, you can now easily download and print the BIR Forms online. Now, that's one less stresses you need to go through. However, do note that this article only tackles individual employees earning compensation, and self-employed individuals.

​1. For individuals earning income only as employees; and for marginal income earners, you'll need to fill up three (3) copies of BIR Form 1700

Documents needed:

Certificate of Income Tax Withheld on Compensation (BIR Form 2316); and if applicable, waiver of the spouse's’s right to claim additional exemption; duly approved tax debit memo; proof of foreign tax credits.

​2. For self-employed individuals; for individuals deriving mixed income, you'll need to fill up three (3) copies of BIR Form 1701.

Documents needed:

Certificate of Income Tax Withheld on Compensation BIR Form 2316; and if applicable, tax debit memo, proof of prior year’s excess tax credits; Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304) if applicable.

RELATED: THE FREELANCER'S GUIDE TO BIR REGISTRATION

Now let's proceed on filing your tax returns:

Tax
filingStep 1. Fill-up BIR Form 1700, 1701, or other forms above in triplicate copies.

Step 2. Ifthere is payment:

  • Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue District Office where you are registered and present the duly accomplished BIR Form 1701, together with the required attachments and your payment.
  • Receive your copy of the duly stamped and validated form from the teller of the AABs/Revenue Collection Officer

For "No Payment" including refundable/creditable returns, returns with excess tax credit carry over, and returns qualified for second installment:

  • Proceed to the Revenue District Office where you are registered or to any established Tax Filing Centers established by the BIR and present the duly accomplished BIR Form 1701, together with the required attachments.

  • Receive your copy of the duly stamped and validated form from the RDO/Tax Filing Center representative.

Sometimes it get's a little complicated that this, specially if it's your first time to file your taxes. Our best advice for you to understand tax filing better, ask officers from BIR to help you, or your human resources personnel, or your accountant friends. So now, go and do your taxes because you have roughly about one week before doomsday.

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