Below are the basic things to consider in computing income tax.
- Basic Salary of
- Employee Status
- How many dependent does employee have
- Your benefits deduction such as (SSS, PAGIBIG, and PHILHEALTH contributions)
- Does employee have any allowance or benefits
- BIR Tax Table
In order to understand this, let set an example. Elmer has the following information below:
Basic Salary = Php 14,000.00
Status = Single or S/ME
Overtime Pay = Php 1,500.00
SSS Contribution = Php 508.70
PAGIBIG Contribution = Php 100.00
PHILHEALTH Contribution = Php 175.00
Problem: Compute its monthly taxable income?
Taxable Income = (Basic Pay + Holiday Pay + Overtime + Night Differential) – (Absences + Tardiness + SSS + PAGIBIG + PHILHEALTH contribution)
Taxable income = [(14,000+1,500) – (508.70+100+175)]
= 15,500 – 783.7
= Php 14,716.30
In the above example our taxpayer is a single with no qualified dependent. Therefore, Elmer tax for the month is 708.33 + 20% over.
Now, Lets compute the income tax of Mr. Elmer
TAX = 708.33 + 20% (14,716.30 – 10,000)
= 708.33 + 20% (4,716.30)
= 708.33 + 943.26
Elmer income tax in a month would be amounting to Php 1,651.59.
Note: Employee with minimum wage earners: as defined in Section 22(HH) of BIR tax Code shall be exempt from the payment of income tax on their taxable income: provided, further, that the overtime pay, holiday pay, night differential pay and hazard pay received by such minimum wage earners shall likewise be exempt from income tax.
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