You are on page 1of 8

INCOME TAX ON INDIVIDUAL TAXPAYERS

Mr. Barvilla, a taxpayer, had the following data for taxable year 2009: He received
gross compensation income of P 520,000 from Iloilo Domestic Airlines as a pilot. He is
married with three qualified dependent children. His wife stays at home, taking care of
the children. The family decided to secure health, hospitalization, and insurance
premium of P 10,000 for the year.
Compute for the income tax due assuming Mr. Barvila, the taxpayer, is a: (a) resident
citizen, (b) non-resident citizen, (c) resident alien, (d) non-resident alien engaged in
business, and (e) non-resident alien not engaged in business.
For letters (c), (d), and (e) assume that Mr. Barvilla is an American citizen, and his
country allows a Filipino citizen working in their country a basic personal exemption of P
45,000 for married individuals and an additional of P 10,000 per dependent.
Answer:
93,500

(a) 520,000 50,000 75,000 = P 395,000 (Taxable Income)


(b) Same as (a), P 93,500
(c) Same as (a), P 93,500
(d) 520,000 45,000 = P 475,000 (Taxable Income)
(e) 520,000 x 25% = P 130,000 (final tax)

ITD = P

ITD = P 117,500

Notes:
There is no allowed deduction for health & hospitalization insurance premium
because the gross family income exceeded P 250,000
If the only source of income is within the Philippines, the tax due on whether the
taxpayer is a resident citizen, non-resident citizen, and resident alien will be the
same
The Non-resident alien engaged in business is entitled to Basic Personal
Exemption, P 50,000 or the exemption offered in his/her country, whichever is
lower
The Non-resident alien not engaged in business is subject to 25% final tax on
gross income

Mr. Paulma, single parent, with a qualified child, and a non-resident citizen who works in
Taiwan as the operations manager of a manufacturing firm has the following information:
Gross Income

Income from the Philippines

Compensation income
Gross income from
business
Business expenses
Other income

Income derived from


Japan
330,000

360,000

150,000

250,000
30,000

120,000
40,000

Compute for the income tax due.


Answer:
65,000

Taxable Income = P 360,000 250,000 + 30,000 50,000 25,000 = P

Income Tax Due = P 7,750


Note:
A non-resident citizen is taxable only on income within (subject to schedular tax
rates)
Mr. Mondejar, single and a resident citizen, works as a manager for a manufacturing
firm in Caloocan City. His data includes income derived from abroad:
Gross Income
Compensation income
Gross income from business
Business expenses
Other income
Interest income from allied bank
Gain on sale of land held as a
capital asset. SP P 2M; FMV P 2M;
Cost P 1.4M

Philippines
72,000
110,000
120,000
5,000
16,000

Japan
0
30,600
30,300
10,000
0

600,000

Compute for: (1) Income tax due, (2) Final tax, and (3) Capital gains tax.
Answer:
50,000

(1) TI = P 72,000 + 110,000 + 30,600 120,000 30,300 + 5000 + 10,000


TI = P 27,300 ITD = P 2,230
(2) FT: P 16,000 x 20% = P 3,200
(3) CGT: P 2,000,000 x 6% = P 120,000

Notes:
A resident citizen is taxable for income both within and without
Other income is subject to normal tax (schedular tax rates)
The interest income on a bank deposit is subject to 20% final withholding tax for a
resident citizen
The capital gains tax is equal to 6% of the selling price or fair market value,
whichever is higher

Mr. Wong, married, with two dependent children, is a citizen of China & is currently
residing in the Philippines. He had the following data on income from within and outside
the Philippines for the taxable year 2009:
Dividend from a domestic corporation
Dividend income from a foreign corporation
(Philippines)
Capital gain on sale of inherited land in the
Philippines (SP: 5M)
Nat income from business (Japan)
Net income from business (Philippines)

40,000
25,000
250,000
500,000
300,000

Compute for: (1) Income tax due, (2) Final tax, and (3) Capital gains tax.
Answer:

(1) P 300,000 + 25,000 50,000 50,000 = P 225,000

Income Tax Due = P 43,750


(2) FT: P 40,000 x 10% = P 4,000
(3) CGT: P 5,000,000 x 6% = P 300,000
Notes:
A resident alien is taxable only on income within, subject to both P 50,000 basic
personal exemption and additional exemption (P 25,000 per qualified dependent)
For a resident alien taxpayer, a dividend from a domestic corporation is subject to
10% final withholding tax, and a dividend from a resident foreign corporation is
subject to normal tax
Mr. Sarmiento, single, is an entrepreneur engaged in the manufacture of Filipino
handicrafts made of native raw materials for domestic and foreign buyers. He supplies
his stores in Japan managed by his cousin, Mr. Tiano. In 2009, the data on the income
and expenses of Mr. Sarmiento are as follows:
Gross Income
Gross income from
business
Business expenses
Other income

Income from the Philippines


560,000

Income derived from Japan


250,000

250,000
20,000

120,300
10,000

Mr. Sarmiento also paid P 25,000 for insurance premium on health and hospitalization.
Compute for the income tax due assuming Mr. Sarmiento, the taxpayer, is a: (a) resident
citizen, (b) non-resident citizen, (c) resident alien, (d) non-resident alien engaged in
business, and (e) non-resident alien not engaged in business.
For letters (c), (d), and (e) assume that Mr. Sarmiento is a Japanese citizen, and his
country allows a Filipino citizen working in their country a basic personal exemption of P
50,000 and an additional of P 10,000 per dependent.
Answer:
(a) 560,000 + 250,000 250,000 120,300 + 20,000 + 10,000 50,000 =
P 419,700 (TI)
Income Tax Due = P 100,910
(b) 560,000 250,000 + 20,000 50,000 = P 280,000 (TI) ITD = P 59,000
(c) Same as (b), P 59,000
(d) Same as (b), P 59,000
(e) 560,000 + 20,000 = P 580,000 x 25% = P 145,000 (final tax)
Notes:
Only a resident citizen taxpayer is taxable on income both within and without
A non-resident alien not engaged in business is subject to 25% final withholding
tax on gross income within

Mr. Honorario sold to a direct buyer, shares of stocks of Magnesium Corp, a domestic
corporation, held as capital asset. The selling price was P 250,000 and the cost of the
property to the seller was P 100,000. Compute for the capital gains tax.

Answer:
P 250,000 100,000 = P 150,000 (CG)
= P 10,000

CGT: (50,000 x 10%) + 5,000

When shares of stocks of a domestic corporation held as capital asset is


sold to a direct buyer,
the gain on sale is subject to 5% tax on the first P
100,000, and 10% on the excess.

Mr. Alelis sold his shares of stocks of Pepito Corp, a domestic corporation, held as
capital asset, thru the facilitation of Mr. Broker, the broker, upon payment of P 15,000.
The shares were purchased for P 150,000 and the related expenses of the purchase were
P 12,000. Compute for the capital gains tax assuming that the selling price is P 450,000.
Compute for the capital gains tax.
Answer:

P 450,000 15,000 (150,000 + 12,000) = P 273,000 (CG)


CGT = (273,000 100,000) x 10% = 5,000 = P 22,300

Ms. Estillore received an annual gross compensation income of P 260,000 in 2009 as


caretaker of Bulacan Poultry Farm. Compute for the taxable income assuming the
taxpayer is a:
(1) NRC, single, with a dependent child
(2) NRAEB, head of the family with three qualified children (assuming the country
where this kind of taxpayer is a citizen provides a personal exemption of P 34,000
for a head of the family)
(3) NRANEB, married, with five qualified children
Answer:
Gross Income
Basic Exemption
Additional Exemption
Net Taxable Income
Income Tax Due

(1) NRC
260,000
(50,000)
(25,000)
185,000

(2) NRAEB
260,000
(34,000)
226,000

(3) NRANEB
260,000
-

P 33,750

P 44,000

P 65,000

Mr. Lim, an unmarried surgeon with two qualified children, presented his quarterly data
for 2009.
Sales
Cost of Sales
Operating
Expenses

First Q
350,000
120,000
20,000

Second Q
105,000
290,000
90,000

Third Q
335,000
100,000
20,000

Fourth Q
350,000
110,000
20,000

Compute for the quarterly income tax due (tax liability).


Answer:
Sales
Cost of Sales

1st Q
P 350,000
120,000

2nd Q
P 455,000
410,000

3rd Q
P 790,000
510,000

4th Q
P 1,140,000
620,000

Gross Profit
Operating
Expenses
Net Income
Personal
Exemption
Net
Taxable
Income

230,000
20,000

45,000
110,000

280,000
130,000

520,000
150,000

210,000
-

(65,000)
-

150,000
-

370,000
100,000

210,000

(65,000)

150,000

270,000

Income Tax Due


Quarterly
Payments
Tax Still Due

40,000

25,000

56,000

(40,000)

(40,000)

(40,000)

P 40,000

(40,000)

(15,000)

16,000

Notes:
Quarterly income tax liability is computed on a cumulative basis
A negative income tax still due is actually a tax refund
o However, in actual practice, no refund is given on a quarterly basis
The basic and personal exemptions are only deducted on the 4 th quarter
cumulative taxable income

Mr. Rubinos, a businessman from Iloilo City, married and with a child, presented his
quarterly data for 2009. He is engaged in selling fruits.
Sales
Cost of Sales
Operating
Expenses

First Q
250,000
150,000
60,000

Second Q
245,000
130,000
50,000

Third Q
235,000
120,000
60,000

Fourth Q
250,000
110,000
40,000

Compute for the quarterly income tax liability.


Answer:
1st Q
P 250,000
150,000
100,000
60,000

2nd Q
495,000
280,000
215,000
110,000

3rd Q
730,000
400,000
330,000
170,000

4th Q
980,000
510,000
470,000
210,000

40,000
-

105,000
-

160,000
-

260,000
75,000

40,000

105,000

160,000

185,000

Income Tax Due


Quarterly
Payments

4,000

15,500

27,500

33,750

(4,000)

(15,500)

(27,500)

Tax Still Due

4,000

11,500

12,000

6,250

Sales
Cost of Sales
Gross Profit
Operating
Expenses
Net Income
Personal
Exemption
Net
Taxable
Income

Mrs. Diesca is employed as a sales manager. Her husband is unemployed for three
years now. They have four children; the eldest is 25 years old, and the second is 20.
Compute for the income tax payable / refundable for the taxable year 2011 given the
following information:
Monthly Salary
Monthly Allowance
Annual Commission
Withholding Tax

P 18,000
3,000
120,000
60,000

Answer:
Gross Income
Basic Personal Exemption
Additional Exemption
Net Taxable Income
Income Tax Due
Withholding Tax
Tax Refundable

P 372,000
(50,000)
(75,000)
247,000
49,250
(60,000)
P 10,750

Notes:
Gross Income = [(18,000 + 3,000) x 12 months] + 120,000 = P 372,000
Only three children are qualified dependents (Age < 21)
The wife is entitled to the additional personal exemption since the husband is a
non-income earner
The withholding tax is deducted to the Tax Due to arrive at the Income Tax Payable
/ refundable
Ms. Chan, a neurologist, single and with a dependent father, presented his quarterly
data for 2009.
Sales
Cost of Sales
Operating
Expenses
Interest Income
from Bank
Deposit
Honorarium
Gain on sale of
land (CA), SP 2M

First Q
350,000
120,000

Second Q
285,000
120,000

Third Q
335,000
110,000

Fourth Q
350,000
110,000

20,000

190,000

20,000

20,000

2,000

5,000

20,000

15,000

5,000

20,000

600,000

Compute for the quarterly income tax dues.


Answer:
Sales
Cost of Sales
Gross Profit
Operating

1st Q
P 350,000
120,000
230,000
20,000

2nd Q
635,000
240,000
395,000
210,000

3rd Q
970,000
350,000
620,000
230,000

4th Q
1,320,000
460,000
860,000
250,000

Expenses
Operating
Income
Other Income
Personal
Exemptions
Net
Taxable
Income
Income Tax Due
Quarterly
Payments
Tax Still Due

210,000

185,000

390,000

610,000

15,000
-

15,000
-

20,000
-

40,000
50,000

225,000

200,000

410,000

600,000

43,750

37,500

98,000

157,000

(43,750)

(43,750)

(98,000)

43,750

(6,250)

54,250

59,000

Notes:
Quarterly tax liability is computed on a cumulative basis
Honorariums are subject to normal tax (schedular tax rates)
A dependent parent is not a qualified dependent for income tax purposes
Interest income from bank deposit is subject to 20% final withholding tax, and is
therefore not part of taxable income subject to normal tax
The sale of land held as a capital asset is subject to 6% Capital Gains Tax on the
selling price or fair market value, whichever is higher; therefore, the gain on sale
is not part of taxable income subject to normal tax

Ms. Demegillo, single with a dependent mother, and a businesswoman, presented her
quarterly data for the year 2009. (Assume there is a tax credit of P 10,000 accumulated
in 2008)
Sales
Cost of Sales
Operating
Expenses
Interest
Income
(N/R)
Misc. Income

First Q
250,000
100,000
60,000

Second Q
585,000
110,000
180,000

Third Q
490,000
190,000
100,000

Fourth Q
310,000
160,000
120,000

10,000

2,000

15,000

8,000

5,000

5,000

5,000

Compute for the quarterly income tax dues.


Answer:
Sales
Cost of Sales

1st Q
250,000
100,000

2nd Q
835,000
210,000

3rd Q
1,325,000
400,000

4th Q
1,635,000
560,000

Gross Profit
Operating
Expenses
Operating
income
Other Income
Personal
Exemption
Taxable Income

150,000
60,000

625,000
240,000

925,000
340,000

1,075,000
460,000

90,000

385,000

585,000

615,000

15,000
-

17,000
-

37,000
-

50,000
50,000

105,000

402,000

622,000

615,000

Income Tax Due

15,500

95,600

164,040

161,800

(15,500)

(95,600)

(164,040)

(10,000)

5,500

80,100

68,440

(2,240)

Quarterly
Payments
Tax Credit
Tax Still Due

Notes:
Interest income on notes receivable and miscellaneous income are included in net
taxable income subject to normal tax (schedular tax rates)
A tax credit is a tax refund on the previous year, and subsequently deducted to
the Tax Due of the current year to arrive at the Tax Still Due (Tax Liability)

~ FIN ~