Friday, July 8, 2011

Key Things You Should Know about Taxes

I have to say that I am clueless about taxes like most anybody. When I have any inquiry about it, I ask from accountants I know or the net for answers.

In the Philippines, filing of income tax returns monthly and annually are filed for employed people by their human resource or administrative officer. It's a whole different thing for self-employed people.

To give you an idea on the key things you should now about taxation for married people in the Philippines.

  • Income tax percentage is applied progressively depending on your income. This percentage ranges from 5 to 32 % for incomes ranging from P 0 to P 500,000 and above respectively. The 32% percentage applies to income P 500,000 and above.
  • Filing of income tax returns is done annually every April 15th. This date is set and in the Philippines, there is no tax extension or anything of that sort so your returns have to be filed on or before that date. Otherwise, fees are going to be added for interest and late payments.
  • Deductions for every live child is

Personal Exemptions:

From BIR's website:

For single individual or married individual judicially decreed as legally separated with no qualified dependents………………………………………P 50,000.00

For head of family……………………………P 50,000.00

For each married individual *…………P 50,000.00

Note: In case of married individuals where only one of the spouses is deriving gross income, only such spouse will be allowed to claim the personal exemption.

Additional Exemptions:

  • For each qualified dependent, an P25,000 additional exemption can be claimed but only up to 4 qualified dependents

The additional exemption can be claimed by the following:

  • The husband who is deemed the head of the family unless he explicitly waives his right in favor of his wife
  • The spouse who has custody of the child or children in case of legally separated spouses. Provided, that the total amount of additional exemptions that may be claimed by both shall not exceed the maximum additional exemptions allowed by the Tax Code.
  • The individuals considered as Head of the Family supporting a qualified dependent

The maximum amount of P 2,400 premium payments on health and/or hospitalization insurance can be claimed if:

  • Family gross income yearly should not be more than P 250,000
  • For married individuals, the spouse claiming the additional exemptions for the qualified dependents shall be entitled to this deduction

Again, there is no tax extension for filing of income tax returns so prompt filing is definitely needed.

Should you have any more questions, you can refer to the BIR's official website.

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