1. Year-End Adjustment PURPOSE: WHEN: TAX DUE = TAX WITHHELD
On or before the end of the calendar year, prior to the payment of compensation for the last payroll.
If terminated, on the day on which the last payment of compensation is made.

2. YEA-Annualized Method
STEP 1 - Determine the taxable regular and supplementary compensation paid to the employee for the entire calendar year;
STEP 2 - If the employee has previous employment/s within the year, add the amount of taxable compensation paid to the employee by the previous employer.

3. YEA-Annualized Method
STEP 3 - Deduct from the aggregate amount of compensation computed in Step 2 the amount of the total personal and additional exemptions of the employee; Personal Exemptions: Single - P50,000 Married P50,000 Additional Exemption: P25,000 for each qualified dependent

4. YEA-Annualized Method
STEP 4 - Deduct the amount of premium payments on Health and/or Hospitalization Insurance of employees who have presented evidence that they have paid the same during the taxable year. Note: The deductible amount shall not exceed P2,400/annum or P200/month whichever is lower and total family gross income does not exceed P250,000 for the calendar year.

5. YEA-Annualized Method
STEP 6 - Determine the deficiency or excess, if any, of the tax computed in Step 5 over the cumulative tax already deducted and withheld since the beginning of the current calendar year.

6. Annualized Withholding Tax - Formula
Gross Compensation (prev. + present) Pxxx Less:Non-Taxable/Exempt Compensation xxx a)13th month pay & other benefits xxx b)Other non-taxable benefits xxx c)SSS, GSIS, PHIC, Pag-ibig and Union Dues (Employees share only) xxx xxx Less: a) Personal and additional exemption xxx b) Health/Hosp. Premium payment xxx xxx Taxable Compensation Income xxx Tax due xxx

7. INCOME TAX TABLE OVER BUT NOT OVER AMOUNT RATE OF EXCESS OVER
10, , % ,000
30, , , % ,000
70, , , % ,000
140, , , % ,000
250, , , % ,000
500, over , % ,000
33% in 1999
32% in 2000 and thereafter

8. BASIC CONCEPT OF YEAR -END ADJUSTMENT
Compensation Income-net A B C 230, , ,000 50,000 50,000 50, , , ,000 32,500 32,500 32,500 32,500 30,000 34,500 0__ 2,500 (2,000)
Compensation Income-net Less: Exemption (single) Taxable Income Tax Due Less: Tax Withheld Jan-Nov EVEN PAYABLE REFUNDABLE

9. Sample Problem 1
Mr. Dexter, head of the family with a qualified dependent brother receives P12, (net of SSS, Philhealth, HDMF) as monthly regular compensation starting January 1, 2002, he filed his resignation effective June 30, The tax withheld from January to May was P2,900.

10. Computation:
Total compensation (Jan. - June) P73, Less: Personal Exemption 50, Net Taxable Compensation P23, Tax Due P 1, Tax Withheld from Jan. to May 2, To be refunded on or before 6/30/02 (P1,100.00)

11. Sample Problem 2
Mr. Jacob, married with 2 qualified dependent children received P18,500 monthly compensation (net of SSS, Philhealth, HDMF employees contributions). Taxes withheld from Jan. to Nov. were P8,

12. Computation:
Total Compensation (Jan - Nov) P203, Add: Dec. compensation 18, Gross Compensation P222, Less: Personal/additional exemption 150, Total Compensation P 72, Tax due P 8, Less: Tax Withheld 8, Collectible W/tax for Dec. salary P

13. Annual Information Return
Manual Submission - 3 copies of 1604CF/1604E Including the alphalist of employees and income payees.
Diskette/CD & Submission thru

14. Where to file? B I R Revenue District Office
West- Bonifacio St. Davao City
East – Torres St., Davao City

15. Annual Information Return
WAGES EXPANDED
What to use: CF E
+ alphalist + alphalist
When to submit: On or before on or before
Jan. 31 ff year March 1 ff year
Where to submit: RDO RDO
Retention yrs same

16. THE END