![\"Employer](\"http:\/\/scp-ph.com\/blogsite\/wp-content\/uploads\/2018\/12\/Employer-Compensation-Expense-Tax_-About-New-York-States-New-Payroll-Tax-Complete-Payroll-300x200.png\")
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Compensation income is an income which arises from an employer-employee relationship. This includes income such as:<\/p>\n
\u2022 Salaries
\n\u2022 Wages
\n\u2022 Emoluments and honoraria
\n\u2022 Commissions
\n\u2022 Taxable bonuses and fringe benefits
\n\u2022 Transportation Allowance and like
\n\u2022 Non-monetary compensation
\n\u2022 Director\u2019s Fees
\n\u2022 Taxable Pensions
\n\u2022 Retirement Pay<\/p>\n
Compensation income is taxable unless otherwise exempted by the express provisions of laws and regulations or that such income is subject to other tax types (e.g., fringe benefits). The following compensation income are not subject to income tax as they are expressly provided by law to be exempted:
\n\u2022 Compensation Income of Minimum Wage Earners
\n\u2022 De Minimis Benefits subject to limitations
\n\u2022 Retirement Benefits
\n\u2022 Pensions
\n\u2022 13th month pay and other benefits subject to limitation
\nTo arrive at the amount of compensation income which will be subject to income tax, the following is allowed as a deduction:
\n1. Contribution to SSS, PHIC, HDMF and other union dues<\/p>\n
The allowed deduction of the contribution is only up to the mandatory amount of contribution on SSS, PHIC, HDMF and union dues. Excess of the contribution of more than the mandatory amount is not allowed to be deducted.<\/p>\n
2. Personal Exemptions<\/p>\n
a. Basic Personal Exemption<\/p>\n
The basic personal exemption granted to taxpayers is equal to Php 50,000.<\/p>\n
b. Additional Personal Exemption<\/p>\n
The additional personal exemption is equivalent to twenty-five thousand pesos (P25,000) for each qualified dependent of an individual taxpayer.<\/p>\n
Qualified dependents are the following:<\/p>\n
I. Children
\n\uf0fc Legitimate, illegitimate or legally adopted
\n\uf0fc Not more than 21 years old, unless incapable of self-support because of mental or physical defect
\n\uf0fc Chiefly dependent upon and living with the taxpayer
\n\uf0fc Unmarried
\n\uf0fc Not gainfully employed<\/p>\n
II. Persons with Disability
\n\uf0fc Filipino citizen
\n\uf0fc Within the 4th degree of consanguinity or affinity of the taxpayer
\n\uf0fc Not gainfully employed
\n\uf0fc Chiefly dependent upon and living with the taxpayer<\/p>\n
3. Health and Hospitalization Insurance Premium<\/p>\n
The amount of premiums allowed to be deducted should not exceed Php 2,400 per year or P200 per month during a taxable year. Provided, that the said family has a gross income of not more than P250,000.<\/p>\n
The taxable compensation income can be computed as follows:
\nGross Compensation Income XX
\nSSS, PHIC and HDMF Contribution (XX)
\nNet Compensation Income before Personal Exemptions XX<\/p>\n
Basic Personal Exemption (XX)
\nAdditional Personal Exemption (XX)
\nHealth and Hospitalization Insurance Premium (XX)
\nTaxable Compensation Income XX
\nx Tax Rate (based on tax table) x%
\nTax Due XX
\nTax Withheld per BIR Form No. 2316 (XX)<\/p>\n
Tax Due and Payable XX<\/p>\n
Tax Rates<\/p>\n
Employees earning purely compensation income from a single employer are not required anymore to file an annual income tax return. The employer\u2019s annual information return filed will be considered as the substitute income tax return of the employee in as much as the information in the employer\u2019s return is exactly the same information contained in the employee\u2019s return. This is called \u201csubstituted filing\u201d.
\nEmployees earning compensation income from two or more employers shall file an annual income tax return using BIR Form No. 1700 on or before April 15 of the following years. This is also the same for employees earning other taxable income aside from compensation income.
\nDISCLAIMER
\nThis article is intended to equip the taxpayers or their bookkeepers in complying with the Bureau of Internal Revenue\u2019s (BIR) and other Government rules and regulations. It is not intended to teach the taxpayers the details of tax planning and avoidance or to commit tax evasion or any fraudulent tax activities. Certain advice, comments and opinions expressed in this article are based on specific situations, limited available definitive tax and other government rulings and the actual experience of the authors, and may not apply to the reader\u2019s specific tax or business concern and should not be used to avoid tax under the National Internal Revenue Code (NIRC) or applicable tax laws and other government regulations without consulting an accountant or lawyer or secure a BIR ruling before using any suggested advice or strategy.<\/p>\n
References:
\nwww.bir.gov.ph
\nRevenue Memorandum Circular No. 1-2003<\/p>\n","protected":false},"excerpt":{"rendered":"
Compensation income is an income which arises from an employer-employee relationship. This includes income such as: \u2022 Salaries \u2022 Wages \u2022 Emoluments and honoraria \u2022 Commissions \u2022 Taxable bonuses …<\/p>\n","protected":false},"author":4,"featured_media":151,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0},"categories":[3],"tags":[75,76,78,38,79,80,74,77],"_links":{"self":[{"href":"https:\/\/scp-ph.com\/blogsite\/index.php?rest_route=\/wp\/v2\/posts\/150"}],"collection":[{"href":"https:\/\/scp-ph.com\/blogsite\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/scp-ph.com\/blogsite\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/scp-ph.com\/blogsite\/index.php?rest_route=\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/scp-ph.com\/blogsite\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=150"}],"version-history":[{"count":1,"href":"https:\/\/scp-ph.com\/blogsite\/index.php?rest_route=\/wp\/v2\/posts\/150\/revisions"}],"predecessor-version":[{"id":152,"href":"https:\/\/scp-ph.com\/blogsite\/index.php?rest_route=\/wp\/v2\/posts\/150\/revisions\/152"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/scp-ph.com\/blogsite\/index.php?rest_route=\/wp\/v2\/media\/151"}],"wp:attachment":[{"href":"https:\/\/scp-ph.com\/blogsite\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=150"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/scp-ph.com\/blogsite\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=150"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/scp-ph.com\/blogsite\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=150"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}