Tax Filing Tips for First-Timers

10
Mar
2017

Manila, Philippines – It’s tax season again. For workers in the Philippines, this means filing their annual tax returns to the Bureau of Internal Revenue (BIR). But with the growing segment of millennials in the workforce and the rising popularity of freelancing and start-ups, it’s no surprise that most workers are new to the concept of filing taxes. For first time tax filers, here are some tips from business consultancy Pinnacle Sources to help make the process simpler and more stress-free.

1. Know your status as an income earner

If you have a job and you receive compensation, then you are required to file income tax returns (ITR). All Filipino citizens living in the Philippines and receiving income are required to file an ITR. Also required to file ITRs are corporations, partnerships, and non-individual taxpayers in the country, and non-Filipino citizens and Filipino citizens living or working abroad and earning income from the Philippines.

The good news for employees in the Philippines is that it is common practice for employers to file their ITRs for them. However, business owners, freelancers, and other money earning non-employees have to file ITRs for themselves.

Some individuals are exempted from filing ITRs, among whom are minimum wage earners, individuals whose income have been subjected to final withholding tax, individuals whose gross income for the past year does not exceed their total personal and additional exemptions and individuals who are qualified for substituted filing.

2. Prepare early and be aware of tax deadlines

Avoid long lines and tax penalties by filing your taxes weeks before the deadline. As a taxpayer, you need to know your income classification (fixed income, mixed income, self-employed or professional), your personal exemptions (PHP 50,000 for each taxpayer) and your additional exemptions (PHP 25,000 for each qualified dependent child, not exceeding four children). Of course, you need to determine your annual gross income from all your income streams for the given tax year.

Gather all the documents that apply to your situation and prepare early. Remember that the deadline for filing of your ITR is on April 15, 2017 for those with no payment and April 17, 2017 for those with payment. Failure to file before the deadlines may result in surcharges, an interest rate of up 20% per year on any unpaid amount of tax, and a compromise penalty of up to PHP 50,000. Filing at the last minute also makes you desperate and susceptible to ill-advised quick-fixes like “fixers.”

3. Beware the phishing scam

There have been documented increases in tax scams during filing season when most people and businesses are vulnerable. Phishing is an attempt to “fish for” or obtain sensitive information and personal data for defrauding purposes. By pretending to be from the BIR, scammers send emails to taxpayers, luring them to click on a link, which actually infects their computers with malware. The scammers can then access confidential information such as usernames, passwords and even credit card details from taxpayers. The best way to avoid this is to always keep your guard up and to check if the email address is valid by calling BIR at their hotline 981-8888.

4. Report all your income

Honesty is the best policy when it comes to reporting your income, which is not limited to your salary. Report your earnings from all income streams including non-wage income, whether or not a tax form or an official tax statement is released. To overlook this could mean a case of fraudulent return and a surcharge of 50% for the taxpayer. 

5. Seek assistance

Filing tax returns is no easy task. The process is complicated and can be overwhelming to first-time tax filers. If you start facing difficulties in the process of filing your ITR, it may be advisable to enlist the help of professional tax preparers rather than face the penalties of tax fraud and tax evasion.

Pinnacle Sources Global Consultancy, Inc. is a company that offers tax filing services for individuals and businesses. They provide end-to-end solutions, from business registration to tax and accounting services. With their team of skilled Certified Public Accountants, Pinnacle Sources can not only help with your periodic compliance to the BIR and other local government units, but also with payroll, maintenance of books and accounting, preparation of Government remittances and collections, bank reconciliation and many more.

“We know how hard it can be for new business owners and freelancers to enter the uncharted territory of taxation and accounting. We want to make it simple for them by providing affordable solutions catering to their specific needs, and serving them flexibly with a smile and a heart,” shared Pinnacle’s Managing Director Christine Li

A testament to their outstanding commitment to service is their growing list of clients, numbering over a hundred in industries stretching from agriculture to business process outsourcing to public relations.

To find out more of our services, give us a call at +63 02 576 9089 or  +63 02 751 7047 or email us at accounts@pinnaclesources.com

 

 






    CATEGORIES