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    My Part Tax Final

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    jonilaw
    Itemized deductions and optional standard deductions are available to taxpayers in the Philippines. Itemized deductions include ordinary business expenses, interest, losses, taxes, bad debts, depreciation, and charitable contributions. Optional standard deductions allow taxpayers to deduct a fixed percentage of gross income or sales without providing documentation of actual expenses. Taxpayers must choose between itemized and optional standard deductions on their tax return. Basic personal and additional exemptions are also allowed to reduce taxable income based on personal status and qualified dependents. Accrual accounting records income when earned and expenses when incurred, rather than when payment is received or made. Tax returns for individuals are due annually by April 15 and corporations file quarterly returns.

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    My Part Tax Final

    Uploaded by

    jonilaw
    41 views5 pages
    Itemized deductions and optional standard deductions are available to taxpayers in the Philippines. Itemized deductions include ordinary business expenses, interest, losses, taxes, bad debts, depreciation, and charitable contributions. Optional standard deductions allow taxpayers to deduct a fixed percentage of gross income or sales without providing documentation of actual expenses. Taxpayers must choose between itemized and optional standard deductions on their tax return. Basic personal and additional exemptions are also allowed to reduce taxable income based on personal status and qualified dependents. Accrual accounting records income when earned and expenses when incurred, rather than when payment is received or made. Tax returns for individuals are due annually by April 15 and corporations file quarterly returns.

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    Itemized deductions and optional standard deductions are available to taxpayers in the Philippines. Itemized deductions include ordinary business expenses, interest, losses, taxes, bad debts, depreciation, and charitable contributions. Optional standard deductions allow taxpayers to deduct a fixed percentage of gross income or sales without providing documentation of actual expenses. Taxpayers must choose between itemized and optional standard deductions on their tax return. Basic personal and additional exemptions are also allowed to reduce taxable income based on personal status and qualified dependents. Accrual accounting records income when earned and expenses when incurred, rather than when payment is received or made. Tax returns for individuals are due annually by April 15 and corporations file quarterly returns.

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    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    41 views5 pages

    My Part Tax Final

    Uploaded by

    jonilaw
    Itemized deductions and optional standard deductions are available to taxpayers in the Philippines. Itemized deductions include ordinary business expenses, interest, losses, taxes, bad debts, depreciation, and charitable contributions. Optional standard deductions allow taxpayers to deduct a fixed percentage of gross income or sales without providing documentation of actual expenses. Taxpayers must choose between itemized and optional standard deductions on their tax return. Basic personal and additional exemptions are also allowed to reduce taxable income based on personal status and qualified dependents. Accrual accounting records income when earned and expenses when incurred, rather than when payment is received or made. Tax returns for individuals are due annually by April 15 and corporations file quarterly returns.

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    12. Itemized Deductions vs.

    Optional Standard Deductions The itemized deductions are available to all kinds of taxpayers engaged in trade or business or practice of profession in the Philippines. The Optional Standard deductions are available only to individual taxpayers deriving business, professional, capital gains and passive income not subject to final tax. Discussion: a. Itemized deductions are allo ed to individuals, estates, trusts, domestic corporations, business partnerships, or foreign corporations engaged in trade, business or professions in the Philippines. The itemized deductions include: 1. Ordinary and necessary trade, business or professional e penses 2. Interest !. "osses #. Ta es $. %ad debts &. Depreciation '. Depletion (. )haritable and other contributions *. +esearch and development 1,. )ontribution to pension trust

    !onresident foreign corporations and non"resident aliens not engaged in trade or business in the Philippines are not allo ed the above deductions because they are taxed on their gross income derived from sources ithin the Philippine sources ithout deductions. #or individual, additional itemized deductions are premiums for health and hospitalization insurance and the personal and additional exemptions if $ualified. %orporations, estates and trusts are not allo ed these deductions, although estates and trusts are allo ed to deduct exemptions. The above itemized deductions &except premiums for health ad hospitalization insurance are not allo ed to be deducted from compensation income.

    b. Optional Standard Deductions Defined: ' fixed percentage deduction ithout regard to any actual expenditure. hich is allo ed to certain taxpayers

    (nder the !)*%, the standard optional deduction is an amount +. not exceeding forty percent &,-./ of the gross sales or gross receipts of the $ualified individual taxpayer sales or gross receipts of the $ualified individual taxpayer. 2. in the case of $ualified corporations not exceeding forty percent &,-./ of their gross income. -ho may avail the Optional Standard Deduction +. )ndividuals a. *esident citizen b. !on"resident citizen 0. *esident 'lien 1. 2state and Trusts ,. %orporations a. 3omestic b. *esident #oreign %orporations

    .ote. ' taxpayer must signify in his tax return the intention to avail of the standard optional deduction other ise he is deemed to have elected the itemized deduction method. 1!. %asic /ersonal and 0dditional 1 emptions )oncept: These are arbitrary mounts hich have been calculated by our la makers to be roughly e$uivalent to the minimum of subsistence, taking into account the personal status and additional $ualified dependents of the taxpayer. They are fixed amounts in the sense that the amounts have predetermined by our la makers and until they make ne adjustments on these personal exemptions, the amounts allo ed to be deducted by a taxpayer are fixed as predetermined by %ongress. (Pansacola vs. CIR, GR. 159991, November 16, 2006) /urpose: The aim is to mitigate the evils arising from the ine$ualities of ealth by a progressive scheme of taxation hich places the burden on those best

    able to pay. To carry out this idea, public considerations have demanded an exemption roughly e$uivalent to the minimum of subsistence. %asic /ersonal 1 emption The subtraction from gross income hich is allo ed for the theoretical personal, family and living expenses of an individual taxpayer regardless of status, hether single or married individual judicially decreed as legally separated ith no $ualified dependents or head of family. The basic personal exemption of individual taxpayers regardless of status is P 4-, ---.--. )n case of married individuals here only one of the spouse is deriving gross income, only such spouse shall be allo ed the personal exemption. )omment: )t is clear from *epublic 'ct !o. 54-, that each of the spouses may claim the P4-, ---. Thus the total familial basic personal exemption for spouses, ho are both earning income, is P+--, ---.--. 0dditional 1 emptions These are the exemptions in addition to the basic personal exemptions that are granted to certain individuals ho have dependents that $ualify them for this exemption. Requisi es! "n in#ivi#ual 1. $%e %er sin&le or marrie# 2. s%all be allo$e# an a##i ional e'em( ion o) *%ousan# Pesos (P25, 000.00) .. )or eac% quali)ie# #e(en#en c%il# /. (rovi#e# %a %e o al number o) #e(en#en s a##i ional e'em( ions ma+ be claime# 5. s%all no e'cee# )our #e(en#en s )or $%ic% *$en +,-ive

    1#. 0ccrual 2ethod of 0ccount This is a method of accounting for income in the period it is earned, regardless of either it has been received or not. )n the same manner, expenses are account for in the period they are incurred and not in the period they are paid. -hen accrual method is to be used

    The propriety of an accrual must be judged by the fact that a taxpayer kne , or could reasonably be expected to have kno n, at the closing of its books for the taxable year. 'ccrual method of accounting presents largely a $uestion of fact, such that the taxpayer bears the burden of proof of establishing the accrual of an item of income or incomes. (CIR v. Isabela Cul ural Commission, G.R. 1022.1, -ebruar+ 12, 2000) +e3uisites to determine 4hen to include amount in 5ross income )t is the right to receive income and not the actual receipt, that determines hen to include the amount in gross income. *e$uisites6 a. That the right to receive the income must be valid, unconditional, and enforceable b. The amount must be reasonably susceptible of accurate estimate c. That there must be a reasonable expectation that the amount in due course ill be paid

    1$. -hen to file income ta returns 6individuals and corporations7 7hen to file the )ncome Tax *eturn8 On or before 'pril +4 of each year covering income of the preceding taxable year for individual taxpayers. )ndividuals ho are self"employed or in practice of a profession are re$uired to file and pay estimated income tax every $uarter as follo s6 +. #irst 9uarter " 'pril +4 0. Second 9uarter " 'ugust +4 1. Third 9uarter " !ovember +4 ,. #inal 9uarter " 'pril +4 of the follo ing year #or corporations, a $uarterly tax return for the first 1"$uarters shall be re$uired on a strictly :-"day basis. The final adjusted return shall be on the +4th day of the ,th month follo ing the close of either fiscal or calendar year.

    Sources: Domondon, Income Ta ation, Tenth 1dition 2amalateo, +evie4er on Ta ation, Second 1dition

    8ST 9olden .otes

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