Last Updated on March 21, 2019 by Marie Bautista
The TAX REFORM ACCELERATION AND INCLUSION (TRAIN) repealed several sections of the Tax Code including the Personal and Additional Exemptions. These guidelines are applicable for taxable year 2017 and below only. Read about TRAIN #TaxReformNow here.For detailed FREQUENTLY ASKED QUESTIONS (FAQ) on the TRAIN LAW for INCOME TAX FILING ON INDIVIDUALS (EMPLOYEES/SELF-EMPLOYED/PROFESSIONALS, go here.
I often get this question from my readers:
“I have been working for three years and I have never filed an Income Tax Return. Should my employer give me my Income Tax Return? They just give me a copy of BIR Form 2316 at the beginning of the year. As an employee, shouldn’t I be required to file my Income Tax Return?”
An income tax return is one of the reports filed by both Filipinos and foreigners who are deriving income on or before the fifteenth (15th) day of April of each year covering the income for the preceding taxable year.
For an individual earning purely compensation income, you need to file BIR Form 1700.
Related: I am an employee. How can I get my TIN?
However, if you received purely compensation income from only one employer in the Philippines for the calendar year and your income tax has been correctly withheld by your employer (tax due equals tax withheld), the BIR Form No. 1604C/F filed by your employer to the BIR shall constitute as your Income Tax Return and that the BIR Form 2316 shall serve the same purpose as if BIR Form No. 1700 has been filed.
This means that your BIR Form 2316 is your Income Tax Return.
TOPICS:
Who Are Required to File an Income Tax Return?
Who Are Not Required to File an Income Tax Return?
Who Are Exempt From Filing Income Tax Returns?
What is BIR Form 2316?
What is Substituted Filing of Income Tax Return?
How is Substituted Filing Different From Non-Filing?
Who are qualified and under what conditions will substituted filing of BIR Form No. 1700 apply?
Who are not qualified for substituted filing of BIR Form 1700?
What would be presented in case an income tax return is required?
Who are required to File Income Tax Returns?
You should file your income tax return, if:
You are a Filipino citizen living in the Philippines, receiving income from sources within or outside the Philippines, and if—
- You are employed by two or more employers, any time during the taxable year.
- You are self-employed, either through conduct of trade or professional practice.
- You are deriving mixed income. This means you have been an employee and a self-employed individual during the taxable year.
- You derive other non-business, non-professional related income in addition to compensation income not otherwise subject to a final tax.
- You are married, employed by a single employer, and your income has been correctly withheld—the tax due is equal to the tax withheld—but your spouse is not entitled to substituted filing.
- You are a marginal income earner.
- Your income tax during the past calendar year was not withheld correctly—if the tax due is not equal to the tax withheld.
You are a non-resident citizen—if you are a Filipino who works or resides abroad—receiving income from sources within the Philippines. (You are taxable only for the income you earn from the Philippines.)
You are not a Filipino citizen but you receive income from sources within the Philippines, regardless of your residency. (You are taxable only for the income you earn from the Philippines.)
WHERE SHOULD I FILE MY INCOME TAX RETURN?
Except in cases where the Commissioner of Internal Revenue permits, the income tax return shall be filed with an authorized agent bank, Revenue District Officer, Collection Agent or duty authorized Treasurer of the city or municipality in which such person has his legal residence or principal place of business in the Philippines, or if there be no legal residence or place of business in the Philippines, with the Office of the Commissioner.
Who Are Not Required to File an Income Tax Return?
You are not required to file an income tax return, if:
- You are a minimum wage earner.
- Your gross income (total earned for the past year) does not exceed your total personal and additional exemptions.
- Your income derived from a single employer does not exceed P60,000 and the income tax on which has been correctly withheld.
- Your income has been subjected to final withholding tax.
- You are qualified for substituted filing. Requirements:
- You are employed by a single employer during the taxable year.
- You earn purely compensation income from that single employer.
- Your tax due at the year’s end equals the tax withheld by the employer.
- If you are married, your spouse also complies with the above conditions.
- Your employer files the annual information return (BIR Form No.1604-CF).
- Your employer issues BIR Form No.2316 to every employee.
Who Are Exempt From Filing Income Tax Returns?
However, there are certain individuals who are exempted from filing in
- You are a non-resident citizen who is:
- A Filipino citizen not residing in the Philippines, but who has established with the BIR that you wish to remain living outside the country.
- A Filipino citizen who leaves the Philippines during the taxable year to reside abroad, either as an immigrant of for permanent employment.
- A Filipino citizen who works and earns income abroad.
- A Filipino citizen previously considered a non-resident citizen.
- You are an overseas Filipino worker whose income is derived solely from sources outside the Philippines.
- If you are Filipino citizen working as an overseas seaman, your vessel must be engaged exclusively in international trade.
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What is BIR Form 2316?
BIR Form 2316 is a certificate to be accomplished and issued to each employee receiving salaries, wages and other forms or remuneration by each employer indicating therein the total amount paid and the taxes withheld therefrom during the calendar year.This Certificate in turn should be attached to the Annual Income Tax Return (BIR Form 1700 – for individuals receiving purely compensation income, or BIR Form 1701 for individuals with mixed income).
Filing Date
BIR Form 2316 shall be issued to payee on or before January 31 of the succeeding year in which the compensation was paid, or in cases where there is termination of employment, it is issued on the same day the last payment of wages is made.
What is Substituted Filing?
Substituted filing is when the employer’s annual return (BIR Form 1604C/F) may be considered as the “substitute” income tax return (ITR) of employee inasmuch as the information provided in the income tax return (BIR Form 1700) would exactly be the same information contained in the employer’s annual return (BIR Form 1604C/F).
How is Substituted Filing Different From Non-Filing?
Under substituted filing, an individual taxpayer required under the law to file an income tax return, will no longer have to personally file his income tax return but instead the employer’s annual information return filed will be considered as the “substitute” income tax return of the employee inasmuch as the information in the employer’s return is exactly the same information contained in the employee’s return. “Non-filing” is applicable to certain types of individual taxpayers who are not required under the law to file an income tax return. An example is an employee whose compensation income does not exceed P60,000 from one employer for the taxable year and whose tax withheld is equivalent to the tax due.
Who are qualified and under what conditions will substituted filing of BIR Form No. 1700 apply?
Substituted filing applies only to individual who meet all the following conditions:
- The employee receives purely compensation income (regardless of amount) during the taxable year,
- The employee receives the income only from one employer in the Philippines during the year,
- The amount of tax due from the employee at the end of the year equals the amount of the tax withheld by the employer,
- The employee’s spouse also complies with all three conditions,
- The employer files the annual information return (BIR Form No. 1604C/F),
- The employer issues BIR Form 2316 version to each employee.
Who are not qualified for substituted filing of BIR Form 1700?
The following individuals are not qualified for substituted filing:
- Individuals deriving compensation income from two or more employees concurrently or successively at anytime during the taxable year,
- Employees deriving compensation income, regardless of amount whether from a single or several employers during the calendar year, the income tax of which has not been correctly withheld (i.e., the tax due is not equal to the tax withheld) resulting to a collectible or refundable return,
- Individuals deriving other non-business, non-profession-related income in addition to compensation income and otherwise not subject to final tax,
- Individuals deriving purely compensation income from a single employer although the income tax of which has been correctly subjected to withholding tax, but whose spouse is not entitled to substituted filing.
- Non-resident aliens engaged in trade or business in the Philippines deriving purely compensation income and other business or profession-related income.
What would be presented in case an income tax return is required?
BIR Form 2316 is a statement signed by both the employee and the employer and serves the same purpose as if BIR Form No. 1700 has been filed
You can also opt to file an Income Tax Return (BIR Form 1700) for purposes of:
- Promotion (PNP/AFP),
- Loans,
- Scholarship,
- Foreign Travel Requirements
- and others.
