INCOME TAX RETURN

INCOME TAX RETURN

 Definition:
It is the income of a person that he/she shall pay to the BIR (Bureau of
Internal Revenue) depending the on how much he/she earns annually.
 INCOME TAX RETURN
•WORDS TO REMEMBER!
GROSS INCOME
ALLOWABLE EXPENSES aka “PERSONAL
EXEMPTIONS”
TAX DUE
TAXABLE INCOME
ALLOWABLE DEDUCTION
 INCOME TAX RETURN
 GROSS INCOME:
It is the annual income of an employer or employee.
 ALLOWABLE EXPENSES:
These are the separate taxes we pay that is excluded from the
taxable income we pay.
 TAX DUE:
It is the payment due we have to pay annually to the BIR.
 TAXABLE INCOME:
It is the difference of the Gross Income minus the Allowable
Expenses.
 ALLOWABLE DEDUCTION:
These are taxes we pay to some public or private firms or
insurance company for that is excluded from the taxable
 INCOME TAX RETURN
 ₱ 50,000(ALLOWABLE EXPENSES):
Single, Married, Widow

INSURANCE COMPANY or
FIRMS(ALLOWABLE DEDUCTION):
SSS, PHIL HEALTH, PAG – IBIG
 HOW TO COMPUTE?
 PROBLEM SAMPLE:
 Mr. Fisher is a single man and an employee of the
Manila Heart Center in Manila. His yearly salary is ₱
480,000. He pays ₱ 20,000 for his SSS, Phil Health,
and Pag – Ibig yearly. How much does he have to pay
for his tax1:due?
Solution
GROSS INCOME – (ALLOWABLE DEDUCTION + ALLOWABLE EXPENSES) = TAXABLE INCOME

₱ 480,000.00 ₱ 50,000.00 (ALLOWABLE EXPENSES)

– ₱ 70,000.00 + ₱ 20,000.00 (ALLOWABLE DEDUCTION)

₱ 410,000.00 ₱ 70,000.00 (A.E. and A.D.)

 HOW TO COMPUTE?
Solution 2: Compute for the range percentage of TAXABLE
INCOME
₱ 410,000.00 (TAXABLE INCOME)TAXABLE INCOME PERCENTAGE
RATE
To compute we have to equally
distribute the amount of the ₱ 10,000 – 5% = ₱ 500
TAXABLE INCOME through the chart
provided on the right side. ₱ 30,000 – 10% = ₱ 3,000
₱ 10,000 (5%)
₱ 70,000 – 15% = ₱ 10,500
₱ 30,000 (10%)
₱ 70,000 (15%) ₱ 140,000 – 20% = ₱ 28,000
₱ 140,000 (20%) ₱ 250,000 – 25% = ₱ 62,500
+ ₱ 160,000 (25%) ₱ 500,000 – 30% = ₱ 150,000
₱ 410,000

Hence ₱ 160,000 falls under

the range 0f 25% because it is
between
₱ 140,000 and ₱ 250,000
 HOW TO COMPUTE?
Continuation..
Solution 2: Compute for the range percentage of TAXABLE
INCOME
₱ 10,000 (5%) ₱ 10,000 (5%) = ₱ 500

₱ 30,000 (10%) ₱ 30,000 (10%) = ₱ 3,000

₱ 70,000 (15%) ₱ 70,000 (15%) = ₱ 10,500

₱ 140,000 (20%) ₱ 140,000 (20%) = ₱

28,000
+ ₱ 160,000 (25%)
₱ 160,000 (25%) = ₱
₱ 410,000 40,000
₱ 10,000 x .05 = ₱ 500 HOW TO COMPUTE
₱ 30,000 x .10 = ₱ 3,000 FOR THE
PERCENTAGE OF THE
₱ 70,000 x .15 = ₱ 10,500
₱ 140,000 x .20 = ₱ 28,000
“TAXABLE
INCOME”
₱ 160,000 x .25 = ₱
40,000
 HOW TO COMPUTE?
olution 3: Add all the computed PERCENTAGE
₱ 10,000 x .05 = ₱ 500 ₱ 500.00
₱ 30,000 x .10 = ₱ 3,000 ₱ 3,000.00
₱ 70,000 x .15 = ₱ 10,500 ₱ 10,500.00
₱ 140,000 x .20 = ₱ 28,000 ₱ 28,000.00
+ ₱ 40,000.00
₱ 160,000 x .25 = ₱
40,000 ₱ 82,000.00

“₱ 82,000.00”TAX
DUE that Mr. Fisher
has to pay
 JOURNAL
 PROBLEM SOLVING:
 Mr. Howard is a hard working single man and a
Health Worker at St. Lukes Hospital. His yearly salary
is ₱ 240,000. He pays ₱ 20,000 for his SSS, Phil
Health, and Pag – Ibig yearly. How much does he
have to pay for his tax due?
5pts: Given: (GROSS INCOME, ALLOWABLE EXPENSES, and
ALLOWABLE DEDUCTION)
5pts: Complete Solution: GROSS INCOME – (ALLOWABLE
DEDUCTION + ALLOWABLE EXPENSES) = TAXABLE INCOME
(Computation of the distribution of Percentage of the TAXABLE
INCOME)
5pts: FINAL ANSWER(TAX DUE)