Individual Income Tax Returns LECTURE No. 6 ESTELITA C. AGUIRRE, CPA, MM

Form 1700 Annual Income Tax Return for Individuals Earning Compensation Income and Marginal Income Earner (Including Non-Business/Non-Profession Related Income) This return is filed annually by every resident citizen deriving compensation income from all sources, or resident alien and non-resident citizen with respect to compensation income from within the Philippines or marginal income earner.

Not Required to File Form 1700 Section 51A 1. An individual whose gross compensation income does not exceed his total PE and AE 2. An individual receiving purely compensation income, regardless of amount, from only one employer in the Philippines for the TY, the income tax of which has been withheld correctly (tax due equals tax withheld); 3. An individual whose income has been subjected to final withholding tax (SAFE) of RAH, ROH of multi- national companies, petroleum service contractors and sub-contractors, OBU; NRANETBP); and 4. An individual who is exempt from income tax (i.e. minimum wage earners as defined by Sec 22HH).

Required to File Form 1700 Secion 51A 1. An individual whose gross compensation is received from two or more employers. 2. An individual employee with other non-business related income and non-professional related related income.

Filing Date for Form 1700 Section 51C This return is filed on or before April 15 of each year covering income for the preceding taxable year.

Required to file Form 1701 Section 51A Annual ITR For Self-Employed Individuals, Estates, and Trusts (Including those w/both Business/ Profession & Compensation Income) This return is filed annually in triplicate by the following individuals regardless of amount of gross income: 1. A resident citizen engaged in trade, business or practice of profession within and without the Phil. 2. A resident alien, non-resident citizen or non-resident alien individual engaged in trade, business or practice of profession within the Phil.

Required to File Form 1701 Section 51A 3. A trustee of a trust, guardian of a minor, executor/ administrator of an estate or any person acting in any fiduciary capacity for any person, where such trust, estate, minor or person is engaged in trade or business. 4. Individuals who received mixed income (compensation with income from self-employment, i.e business/ professional income).

Not required to file Form 1701 Section 51A (Zipped Excel) 1. An individual whose sole income has been subjected to final withholding tax pursuant to Sec. 57(A) of the Tax Code, 2. An individual who is exempt from income tax pursuant to the Tax Code and other laws. 3. Purely compensation income

Filing Date for Form 1701 Section 51C (Zipped Excel)(Zipped Excel) (PDF)(PDF) This return is filed on or before April 15 of each year covering income for the preceding taxable year.

Estimated Income Tax in Form 1701Q Section 74 (Zipp (Zipp Every individual receiving self-employment income or both compensation and self-employment income shall make and file declaration of his estimated income for the current taxable year. The tax on the estimated income is paid in four (4) installments: April 15, Aug 15, Nov 15 of the current year and April 15 of the following year. EIT is the amount which the individual declared as income tax in his final adjusted/annual ITR of the preceding taxable year minus the sum of the credits allowed against the said tax.

Self-Employment Income ( Consists of the earnings derived by an individual from the practice of profession or conduct of trade or business carried on by him as a sole proprietor or from a General Professional Partnership of which he is a member.

Required to File Form 1701Q Section 74A Quarterly Income Tax Return for Self-employed Individuals, Estates, and Trusts (Including Those with both Business/Profession and Compensation Income) This return shall be filed in triplicate by the following individuals regardless of amount of gross income: 1)A resident citizen engaged in trade, business, or practice of profession within and without the Phil. 2) A resident alien, non-resident citizen or non-resident alien individual engaged in trade, business or practice of profession within the Phil.

Required to File Form 1701Q Section 74A 3) A trustee of a trust, guardian of a minor, executor/ administrator of an estate, or any person acting in any fiduciary capacity for any person, where such trust, estate, minor, or person is engaged in trade or business.

Form 1701Q Not required to file: Those required to file Form 1700 Required to file: Those who are required to file Form 1701

When to File Form 1701Q Section 74B 1 st qtr On or before April 15 of the current taxable year 2 nd qtr On or before August 15 of the current taxable year 3 rd qtr On or before November 15 of the current taxable year

Where to File and Pay Section 51B With an authorized accredited bank, Revenue District Office, collection agent or duly authorized treasurer of the city or municipality in which the person has his legal residence or principal place of business in the Phil. If no legal residence in the Phil, filing is with the office of the Commissioner

Substituted Filing (SF) This refers to the system of filing ITR for an individual where hi employer’s annual BIR Form 1604CF may be considered as the former’s substitute income tax return. Reason: the info provided in Form 1700 of the employee would exactly be the same info provided in his employer’s annual information return, Form 1604CF. Employee gets Form 2316 from his employer signed by both employee and employer.

Who are Qualified for SF Individuals who have complied with all of the ff: 1. received purely compensation income, regardless of amount. 2. received the income from only ONE employer 3. the amount of income tax due was correctly withheld 4. His/her spouse has complied with all Nos His/her spouse filed its Form 1604CF 6. His/her spouse issued him/her BIR Form 2316

Who are NOT Qualified for SF Individual in any of the ff situations: 1. Received compensation income from two or more employers concurrently during the taxable year. (files 1700) 2. Derived compensation income, regardless of amount whether from a single employer during the year, if the corresponding income tax due is not equal to the income tax withheld. (files 1700)

Who are NOT Qualified for SF 3. In addition to compensation from an employer, taxpayer receives other non-business/trade or non-professional income (files 1700) 4. In addition to compensation from an employer, taxpayer receives income from business/trade or professional income. (files 1701) 5. If the spouse is not entitled to SF. (files 1700) 6. If he/she is a non-resident alien engaged in trade or business in the Phil deriving purely compensation i or business/professional income plus compensation. (files 1701)

Amended Income Tax Return The Individual income tax returns may be amended on any day within 3 years from the last day prescribed for its filing, If filed late, return may be amended within three (3) from the filing date. NOT allowed to amend if a Letter of Authority to audit books ar a Tax Verification Notice has been issued and served to the taxpayer.

Signature in the Return Sec 51G The fact that an individual’s name is signed to a final income tax return shall be prima facie evidence for all purposes that the return was actually signed by him..

Form 1703 Annual Income Information Return for Non- Resident Citizens / OCWs and Seamen for foreign-sourced income. This information return is filed in triplicate by Non- resident citizens and Overseas Contract Workers (OCWs), including qualified Filipino seamen, on income derived from sources abroad. An individual citizen of the Phil who is working and deriving income from abroad as an overseas worker is taxable only on income from sources within the Phil. Income from sources within the Phil should be filed in either Form 1700 or Form 1701.

Filing Date for Form This information return is filed not later than the April 15 of the year following the taxable year in which the income was earned.

Form 1706 Capital Gains Tax Return for Onerous Transfer of Real Property Classified as Capital Asset (both Taxable and Exempt) Description This return is filed by all persons (natural or juridical) whether resident or non-resident, including Estates and Trusts, who sells, exchanges, or disposes of a real property located in the Philippines classified as capital asset as defined under Sec. 39 (A)(1) of RA 8424 for the purpose of securing a Tax Clearance Certificate to effect transfer of ownership (title) of the property from the seller to the buyer.

Form 1706 Capital Gains Tax Return for Onerous Transfer of Real Property Classified as Capital Asset (both Taxable and Exempt) Description However, filing of the return is no longer required when the real property transaction involves the following: - it is not classified as a capital asset - not located in the Philippines - disposition is gratuitous - disposition is pursuant to the Comprehensive Agrarian Reform

Where to File Form 1706 To be filed with the RDO having jurisdiction over the place where the property being transferred is located.

When to File Form 1706 Filed within thirty (30) days following each sale, exchange or disposition of real property – In case of installment sale, the return shall be filed within thirty (30) days following the receipt of the 1st downpayment and within thirty (30) days following each subsequent installment payment – One return is filed for every transfer document regardless of the number of each property sold, exchanged or disposed of.

Form 1707  Capital Gains Tax Return for Onerous Transfer of Shares of Stocks Not Traded Through the Local Stock Exchange Description  This return is filed by a natural or juridical person, resident or non-resident, who is not exempt under existing laws for the sale, barter, exchange or other onerous disposition intended to transfer ownership of shares of stocks in domestic corporation classified as capital assets, not traded through the local stock exchange.

When and Where to File Form 1707  Filed within thirty (30) days after each cash sale, barter, exchange or other disposition of shares of stock not traded through the local stock exchange. –  In case of installment sale, the return shall be filed within thirty (30) days following the receipt of the first down payment and within (30) days following each subsequent installment payment.

Form 1707-A  Annual Capital Gains Tax Return for Onerous Transfer of Shares of Stock Not Traded Through the Local Stock Exchange Description   This return is filed by every natural or juridical person, resident or non-resident, who is not exempt under existing laws for sale, barter, exchange or other disposition of shares of stock in a domestic corporation, classified as capital assets, not traded through the local stock exchange.

When to File Form 1707-A For individual taxpayers, this final consolidated return is filed on or before April 15 of each year covering all stock transactions of the preceding taxable year. –  For corporate taxpayers, this form is filed on or before the fifteenth (15th) day of the fourth (4th) month following the close of the taxable year covering all transactions of the preceding taxable year.

Income Taxation End of presentation...