An Easy Guide to Filing Your Income Tax Return in the Philippines

Whether you are an employee, a business owner, or a freelancer "“ you need to pay taxes. Taxes are every citizen's contribution to the country's coffers. It is the law and your duty to file your income tax return. So, how do you file your income tax return? 

Here is an easy guide through the basic steps of filing your income tax return.

• Tax Identification Number (TIN)

First, you need to have a tax identification number or TIN. Usually, your first employer will help you get one if you do not have one yet. You can also get a TIN online through the BIR eRegistration system.  

• Income Tax Return (ITR)

According to the Bureau of Internal Revenue (BIR), income tax is a tax on a person's income, salary, profits from property, professional practice, trade or business, or other pertinent items of gross income. The annual income tax return (ITR) is filed by the employer or an individual to report income and pay necessary taxes for the year.

• Individuals and entities required to file an income tax return

Most taxpayers in the Philippines are either corporations or individuals. Individuals are either employed, self-employed, or a mix of both. Those who are employed earn compensation income. On the other hand, self-employed individuals include business owners, who register as single proprietors or entrepreneurs, and freelancers, who register as professionals. Here is a more detailed list of individuals and entities who need to file an ITR.

A. Individuals

• Filipino resident citizens with income more than PhP60,000 from sources within or outside the Philippines. This includes those who are employed, self-employed or derive a mixed-income. 
• Non-resident Filipino citizens earning income from sources within the Philippines. Only the income earned from the Philippines is taxable.
• Aliens, regardless of residency, receiving income from sources within the Philippines. Taxable income is that which is earned from sources inside the Philippines.

B. Corporations and partnerships

C. Estates and trusts

• Exemptions and optional filing

A. The following are exempted from filing an ITR:

• Non-resident Filipino citizens living and working outside the Philippines
• Overseas Filipino Workers
• Minimum wage earners

B. The following have the option not to file their Income Tax Returns:

• Those whose gross income is not more than their total personal and additional exemptions
• Those whose compensation income from one employer is not more than Php60,000, and income tax has been correctly withheld
• Those whose income has gone through the final withholding tax
• Those who are qualified for substituted filing

• BIR ITR Forms 1700, 1701, 1702

There are three kinds of BIR ITR Forms downloadable through the eBIRForms.

A. Form 1700 

For individuals earning only compensation income including non-business or non-profession-related earnings. Employers use this for most of their employees.

B. Form 1701

For self-employed individuals, estates and trusts. Also for those with both business and compensation income.

C. Form 1702

For corporations and partnerships.

• Steps in Filing Your Income Tax Return

Employees using BIR Form 1700 are usually assisted by their employers in filing their ITR. For those using BIR Forms 1701 and 1702, here are steps to follow.

• Fill-up the appropriate BIR Form in three copies. 
• Attach the required documents. 
• Go to your RDO's Authorized Agent Bank (AAB). Present your filled-up BIR Forms, along with the required attachments and your payment.
• If there are no AABs in your area, go to the Revenue Collection Officer or Authorized City or Municipal Treasurer within your RDO. Present your BIR Form, along with required attachments and payment. 
• Receive your stamped and validated copy from the AAB teller, Revenue Collection Officer, or Municipal Treasurer.
• For Income Tax Returns with "no payment," including refundable returns, and for tax returns qualified for a second installment, go to your RDO or any BIR Tax Filing Center. Present your filled-out BIR ITR Form, along with the required attachments. Get your stamped and validated copy from the RDO/Tax Filing Center representative.

You may file your income tax return in person or do it online using the Electronic Filing and Payment System (eFPS). Forms are available through the eBIRForms. Payments may be made through an online banking or money transfer facility. Confirmation of receipt of return is done through email. 

The annual deadline for filing and/or payment of the income tax return is on April 15.  

ITR filing may seem difficult or tedious, but it gets easier with practice. The ITR also comes in handy when applying for bank loans or a travel visa. 

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