Sunday, January 22, 2017

Guide in Computing your BIR Income Tax in the Philippines

Below are the basic things to consider in computing income tax.
  • Basic Salary of employee
  • 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

So, Elmer taxable income is amounting 14,716.30. Next thing you do is to refer to the BIR tax table
bir tax table

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
                = 1,651.59

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. 

Hope this article would help you in finding how much does your company deduct in your income tax. If you think this article is a great help, would you mine share it to other by simply clicking the social sharer button below.
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