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Guidelines and Instructions RMC 57-2011 New Bir Itr Form 1701 November 2011

Who Shall File This Form

This return shall be filed 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 Philippines.

2.) A resident alien, non-resident citizen or non-resident alien individual engaged in trade, business or practice of profession within the Philippines.

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.) An individual engaged in trade or business or in the exercise of their profession and receiving compensation income as well.

All individuals, estates and trusts above required under the law and existing issuances to file this return should also fill up Part VIII hereof. Said individuals, estates and trusts shall declare such income subject to final tax and those exclusions from gross income under Section 32(B) of the Tax Code, as amended.

Married individuals shall file a return for the taxable year to include the income of both spouses, computing separately their individual income tax based on their respective total taxable income. Where it is impracticable for the spouses to file one return, each spouse may file a separate return of income. If any income cannot be definitely attributed to or identified as income exclusively earned or realized by either of the spouses, the same shall be divided equally between the spouses for the purpose of determining their respective taxable income.

The income of unmarried minors derived from property received from a living parent shall be included in the return of the parent except (1) when the donor’s tax has been paid on such property, or (2) when the transfer of such property is exempt from donor’s tax.

If the taxpayer is unable to make his own return, the return may be made by his duly authorized agent or representative or by the guardian or other person charged with the care of his person or property, the principal and his representative or guardian assuming the responsibility of making the return and incurring penalties provided for erroneous, false or fraudulent returns.

When and Where to File and Pay

1. For Electronic Filing and Payment System (eFPS) Taxpayer

The return shall be e-filed and the tax shall be e-paid on or before the 15th day of April of each year covering income for the preceding taxable year using the eFPS facilities thru the BIR website http://www.bir.gov.ph.

2. For Non-Electronic Filing and Payment System (non-eFPS) Taxpayer

The return shall be filed and the tax shall be paid on or before the 15th day of April of each year covering income for the preceding taxable year with any Authorized Agent Bank (AAB) located within the territorial jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered. In places where there are no AABs, the return shall be filed and the tax shall be paid with the concerned Revenue Collection Officer (RCO) under the jurisdiction of the RDO where the taxpayer is registered.

In case of “NO PAYMENT RETURNS”, the same shall be filed with the RDO where the taxpayer is registered/has his legal residence or place of business in the Philippines or with the concerned RCO under the same RDO.

3. For Installment Payment

When the tax due exceeds Two Thousand Pesos (P2,000), the taxpayer may elect to pay in two equal installments, the first installment to be paid at the time the return is filed and the second, on or before July 15 of the same year.

4. For Non-Resident Taxpayer

In case taxpayer has no legal residence or place of business in the Philippines, the return shall be filed with the Office of the Commissioner or Revenue District Office No. 39, South Quezon City.

Gross Taxable Compensation Income

The gross taxable compensation income of the taxpayer does not include SSS, GSIS, Medicare and PAG-IBIG Contributions, and Union Dues.

Taxable Income

Taxable income means the pertinent items of gross compensation and/or business income specified in the Tax Code of 1997, as amended, less the deductions and/or additional exemptions, if any, authorized for such types of income by the Code or other special laws.

Premiums on Health and/or Hospitalization Insurance

The amount of premiums not to exceed Two Thousand Four Hundred Pesos (P 2,400) per family or Two Hundred Pesos (P 200) a month paid during the taxable year for health and/or hospitalization insurance taken by the taxpayer for himself, including his family, shall be allowed as a deduction from his gross income: Provided, That said family has a gross income of not more than Two Hundred Fifty Thousand Pesos (P 250,000) for the taxable year: Provided, finally, That in the case of married taxpayers, only the spouse claiming the additional exemption for dependents shall be entitled to this deduction.

Personal and Additional Exemptions

Individual taxpayer, whether single or married, shall be allowed a basic personal exemption amounting to Fifty Thousand Pesos (P50,000).

In the case of married individuals where only one of the spouses is deriving gross income, only such spouse shall be allowed the personal exemption.

An individual, whether single or married, shall be allowed an additional exemption of Twenty Five Thousand Pesos (P 25,000) for each qualified dependent child, not exceeding four (4). The additional exemption for dependents shall be claimed by the husband, who is deemed the proper claimant unless he explicitly waives his right in favor of his wife.

“Dependent Child” means a legitimate, illegitimate or legally adopted child chiefly dependent upon and living with the taxpayer if such dependent is not more than twenty-one (21) years of age, unmarried and not gainfully employed or if such dependent, regardless of age, is incapable of self-support because of mental or physical defect.

In the case of legally separated spouses, additional exemptions may be claimed only by the spouse who has custody of the child or children: Provided, That the total amount of additional exemptions that may be claimed by both shall not exceed the maximum additional exemptions allowed by the Tax Code.

Exemption Allowed to Estates and Trusts

There shall be allowed an exemption of Twenty thousand pesos (P 20,000) from the income of the estate and trust.

Part IX – Items 108 to 123

The filling-up of these fields are optional. The figures placed therein should be properly documented and/or substantiated. For purposes of the Bureau’s investigations, figures placed therein will be presumed true and correct. If left blank, it will be presumed that the taxpayer has no such income

Change of Status

If the taxpayer marries or should have additional dependent(s) as defined above during the taxable year, the taxpayer may claim the corresponding personal or additional exemption, as the case may be, in full for such year.

If the taxpayer dies during the taxable year, his estate may still claim the personal and additional exemptions for himself and his dependent(s) as if he died at the close of such year.

If the spouse or any of the dependents dies or if any of such dependents marries, becomes twenty-one (21) years old or becomes gainfully employed during the taxable year, the taxpayer may still claim the same exemptions as if the spouse or any of the dependents died, or as if such dependents married, became twenty-one (21) years old or became employed at the close of such year.

Allowable Deductions

A taxpayer engaged in business or in the practice of profession shall choose either the optional or itemized deduction (described below). He shall indicate his choice by marking with “X” the appropriate box, otherwise, he shall be deemed to have chosen itemized deduction. The choice made in the return is irrevocable for the taxable year covered.

Optional Standard Deduction (OSD) – A maximum of 40% of their gross sales or gross receipts shall be allowed as deduction in lieu of the itemized deduction. This type of deduction shall not be allowed for non-resident aliens engaged in trade or business. An individual who opts to avail of this deduction need not submit the Account Information Form (AIF)/Financial Statements.

Regular Allowable Itemized Deductions - There shall be allowed as deduction from gross income all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on or which are directly attributable to, the development, management, operation and/or conduct of the trade, business or exercise of a profession including a reasonable allowance for salaries, travel, rental and entertainment expenses.

Itemized deductions include also interest, taxes, losses, bad debts, depreciation, depletion, charitable and other contributions, research and development, pension trust, premium payments on health and/or hospitalization insurance.

Special Allowable Itemized Deductions – There shall be allowable deduction from gross income in computing taxable income, in addition to the regular allowable itemized deduction, as provided under existing regular and special laws, rules and issuances such as, but not limited to ‘Rooming-in and Breast-feeding Practices under RA 7600, Adopt-a-School Program under RA 8525, Senior Citizen Discount under RA 9257, Free Legal Assistance under RA 9999.

Tax Relief Availment

Taxpayer availing of any tax relief under the Tax Code and/or any prevailing special laws [e.g., Income Tax Holiday (ITH), preferential income tax rate, income tax exemption, additional special deductions, etc.] must completely fill up Part VII hereof.

Fair market value

“Fair market value” as determined in accordance with Section 6(E) of the Tax Code, as amended, shall be used in reporting the non-cash income and receipts in Part VIII.

Individual whose compensation income has been subjected to final withholding tax

The term "individual whose compensation income has been subjected to final withholding tax” shall include aliens or Filipino citizens occupying the same positions as the alien employees, as the case may be, who are employed by regional operating headquarters, regional or area headquarters, offshore banking units, petroleum service contractors and sub-contractors, pursuant to pertinent provisions of Sections 25 (C), (D), E) and 57(A), including those subject to Fringe Benefit Tax (FBT) under Section 33 of the Tax Code, as amended, Republic Act No. 8756, Presidential Decree No. 1354, and other pertinent laws.

Penalties

There shall be imposed and collected as part of the tax:

1. A surcharge of twenty five percent (25%) for each of the following violations:

a) Failure to file any return and pay the amount of tax or installment due on or before the due dates;

b) Filing a return with a person or office other than those with whom it is required to be filed;

c) Failure to pay the full or part of the amount of tax shown on the return, or the full amount of tax due for which no return is required to be filed, on or before the due date;

d) Failure to pay the deficiency tax within the time prescribed for its payment in the notice of Assessment (Delinquency Surcharge).

2. A surcharge of fifty percent (50%) of the tax or of the deficiency tax shall be imposed in case of willful neglect to file the return within the period prescribed by the Tax Code and/or by rules and regulations or in case a false or fraudulent return is filed.

3. Interest at the rate of twenty percent (20%) per annum, or such higher rate as may be prescribed by rules and regulations, on any unpaid amount of tax, from the date prescribed for the payment until it is fully paid.

4. Compromise penalty, pursuant to existing/applicable revenue issuances.

Excess Withholding Tax

Over withholding of income tax on compensation shall be refunded by the employer, except if the over withholding is due to the employee’s failure or refusal to file the withholding exemption certificate, or supplies false or inaccurate information, the excess shall not be refunded but shall be forfeited in favor of the government.

Attachments Required

1. Account Information Form and the Certificate of the independent CPA duly accredited by the BIR except for taxpayers who opted for the Optional Standard Deduction. (The CPA Certificate is required if the gross quarterly sales, earnings, receipts or output exceed P 150,000).

2. Certificate of Income Tax Withheld on Compensation (BIR Form No. 2316).

3. Certificate of Income Payments Not Subjected to Withholding Tax (BIR Form No. 2304).

4. Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307).

5. Duly Approved Tax Debit Memo, if applicable.

6. Waiver of husband's right to claim additional exemption, if applicable.

7. Proof of prior years' excess credits, if applicable.

8. Proof of Foreign Tax Credits, if applicable.

9. For amended return, proof of tax payment and the return previously filed.

10. Authorization letter, if filed by authorized representative.

11. Proof of other tax payments/credit, if applicable.

12. Proof of Tax Payments for the First Three Quarters

13. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax at Source (SAWT), if applicable.

14. Statement of Management’s Responsibility (SMR) for Annual Income Tax Return.

15. Schedules of the following which must be part of the Notes to the audited Financial Statements:

a. Sales/Receipts/Fees

b. Other Taxable Income

c. Cost of Sales/Services

d. Taxes and Licenses

e. Itemized Deductions (if taxpayer did not avail of OSD)

f. Other information prescribed to be disclosed in the Notes to Financial Statements

Note: All Background information must be properly filled up.

§ All returns filed by an accredited tax agent on behalf of a taxpayer shall bear the following information:

A. For CPAs and others (individual practitioners and members of GPPs);

a.1 Taxpayer Identification Number (TIN); and

a.2 Certificate of Accreditation Number, Date of Issuance, and Date of Expiry.

B. For members of the Philippine Bar (individual practitioners, members of GPPs);

b.1 Taxpayer Identification Number (TIN); and

b.2 Attorney’s Roll number or Accreditation Number, if any.


Guidelines and Instructions RMC 57-2011 New Bir Itr Form 1701 November 2011

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