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How to File an Income Tax Return

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 people aspire to gain income from multiple sources, such as through 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, that corresponds to an income tax rate. According to the BIR, the annual income tax return “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 them 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 inside the Philippines. Again, employees of companies are still required to file an ITR, but their taxes are usually taken care of by their employers.

In specifics, 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 inside the Philippines.

What are the methods of filing an ITR?

There are many ways you can file your ITR, 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 your 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 RDO. 
  • Electronic Filing and Payment System. Also known as the eFPS, you will have to enroll through the BIR e-Lounge first before you can use this system to settle your tax dues.
  • Electronic BIR Forms. These are also known as eBIRForms. 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. However, do note that this method will still require you to visit an authorized agent bank of your RDO to pay your taxes.

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