How do you earn your income? A majority of people make a living by gaining employment at a company. By working at a company, you’ll be able to earn compensation income. Those who make a living solely through compensation income usually don’t have to worry about filing their own income tax returns, as their employer handles it for them. However, many aspire to earn income from multiple sources, such as freelancing. If you’re thinking of doing the same, you must first learn about the basics of filing an income tax return.
What is an Income Tax Return?
Income tax refers to the tax on any salary or income, regardless of its source, corresponding to an income tax rate. According to the Bureau of Internal Revenue (BIR), the annual income tax return (AITR) “summarizes all the transactions covering the calendar year of the taxpayer.”
Individuals and enterprises alike must pay their taxes on or before April 15 every year. It’s crucial to follow this deadline to the letter. Depending on the severity, purposely missing your ITR could either result in a fine or a few years of imprisonment. Ensure that you stay on top of your income tax if you’re required to file it yourself.
Who is required to and exempted from filing an ITR?
As a general rule of thumb, all Filipino citizens with a source of income are required to file an ITR. Aliens and foreigners only need to file an ITR for any sources of income within the Philippines. Again, employees of companies are still required to file an ITR, but their taxes are usually taken care of by their employers.
Specifically, those who are required to file an ITR include:
- Freelancers
- Self-employed individuals
- Those who have a practice of profession
- Those who have businesses of their own
- Domestic businesses that receive money from both domestic and international sources
- Foreign companies that earn income in the Philippines
Those who are not required to file an ITR include:
- Those who earn minimum wage.
- Those who earn solely from compensation income
- Overseas Filipino workers
- Non-resident Filipino citizens who do not earn income from anywhere within the Philippines
What are the available forms for filing an ITR?
There are different forms available for taxpayers depending on their source(s) of income:
For individuals:
- BIR Form 1700. For individuals earning purely compensation income and with two or more employers within a year.
- BIR Form 1701. For individuals engaged in trade/business and/or with mixed sources of income (e.g., employment and business/side profession).
- BIR Form 1701A. For individuals earning income purely from a business/profession. Used by those under graduated income tax rates who availed the optional standard deduction as a method of deduction, regardless of the amount of sales/receipts and other non-operating income; or the 8% flat income tax rate whose sales/receipts and other non-operating income do not exceed ₱3 M.
For non-individuals such as corporations and partnerships:
- BIR Form 1702-EX. For corporations, partnerships, and other non-individual taxpayers with an exempt rate.
- BIR Form 1702-MX. For corporations, partnerships, and other non-individuals with a mixed or special rate.
- BIR Form 1702-RT. For corporations, partnerships, and other non-individual taxpayers, subject only to the regular income tax rate.
Requirements/Attachments for Filing of ITR
According to the guidelines for Calendar Year 2023, the requirements are as follows:
- Filing Reference Number (FRN) as proof of eFiling in the eFPS (for eFPS Users/Filers)
- Tax Return Receipt Confirmation as proof of eFiling in the eBIRForms (for eBIRForms Users/Filers)
- Proof of Payment/Acknowledgement Receipt of Payment
- Certificate of Independent CPA, duly accredited by the BIR, if applicable
- Unaudited or Audited Financial Statements (AFS), if applicable
- Notes to AFS
- Statement of Management Responsibilities (SMR)
- BIR Form No. 2307- Certificate of Creditable Tax Withheld at Source, if applicable
- BIR Form No. 2304 – Certificate of Income Payments not Subjected to Withholding Tax, if applicable
- Signed copies of BIR Form 2316 – Certificate of Tax Withheld on Compensation if a mixed income earner
- System-generated Acknowledgement Receipt or Validation Report of electronically submitted Summary
- Alphalist of Withholding Taxes (SAWT) through esubmission@bir.gov.ph
- Duly approved Tax Debit Memo
- Proof of Foreign Tax Credits, if applicable
- Proof of Prior Year’s Excess Credits, if applicable
- Proof of Other Tax Credits/Payments, if applicable
- Proof of Tax Exemptions or Special Rates, if applicable
- BIR Form No. 1709 – Information Return on Transactions with Related Party, if applicable
Filing an ITR
You can file your ITR in many ways, making it easily accessible for everyone. However, do note that you may be required to use a specific method, depending on your circumstances.
Manual Filing
Manual filing is still a viable option for those who prefer the method. First, you can prepare for filing in advance by finding the needed BIR forms online. You will then have to go to the Revenue District Office or Tax Filing Center with your accomplished BIR forms and settle your taxes with an accredited bank of the Revenue District Office.
Electronic Filing and Payment System (eFPS)
eFPS is the electronic processing and transmission of tax return information, including attachments, and taxes due thereon to the government made over to the internet through the BIR website.
Electronic BIR Forms (eBIRForms)
eBIRForms was developed primarily to provide taxpayers with an alternative mode of preparing and filing tax returns that is easier and more convenient (BIR), To accomplish your taxes in this method, you must go to the BIR website, click eServices, and look for the eBIRForms Package. You can then download it to fill out your tax forms and submit them to the Online eBIRForms system.
Payment
The BIR on March 28, 2025, advised all taxpayers to ‘pay as you file’ the 2024 ITRs on or before April 15, 2025, using the BIR eLounge facility in the RDOs. The facilities will also be open to assist taxpayers with no internet access in filing their ITRs. Taxpayers can pay via:
- eFPS
- ePayment Channels (ePAY)
- Authorized Agent Banks (AABs)
- Bank of Commerce
- Bank of the Philippine Islands
- China Banking Corporation
- Citibank, N.A.
- CTBC Bank (formerly Chinatrust Corp.)
- Deutsche Bank
- Development Bank of the Philippines
- EastWest Banking Corporation
- Hong Kong and Shanghai Banking Corporation
- Land Bank of the Philippines
- Metropolitan Bank & Trust Co.
- MUFG (formerly Bank of Tokyo-Mitsubishi UFJ, LTD)
- Philippine Bank of Communications
- Philippine National Bank
- Philippine Veterans Bank
- Philtrust Co.
- Rizal Commercial Banking Corporation
- Security Bank
- Standard Chartered Bank
- Union Bank of the Philippines
- Authorized Tax Software Providers (ATSPs)
- JuanTax
- Taxumo
- PMTI Pay Tax
- ETax Point Bookkeeping Edition
- ETAX.PH
- TaxWhizPH
- Anantaks
- MyTaxWhizPH Digital Solutions Inc.
- RAS Ultimate Bookkeeping Solution (Talapoint Systems Corp.)
- Medtax
Disclaimer: The content of this blog is for informational and educational purposes only and should not be considered as legal advice. While we strive to provide accurate and up-to-date information, the blog does not create an attorney-client relationship. For legal concerns or specific legal guidance, please consult a qualified lawyer.
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Author/s: Patricia Mae L. Minimo and Melissa P. Mendiola
About the author: Patricia Mae L. Minimo is the Firm’s writer. She is a Communication graduate from the University of the Philippines – Baguio with a major in Journalism and a minor in Speech Communication.