ABM Grade 12 Modules and activities! 2022-2023

FABM2 part2 reporting

INCOME TAXATION

The two biggest classification of income taxpayers are individuals and corporations.

For income tax purposes, Individuals can be further classified into four, namely:

a. Resident citizen - is a Filipino citizen and lives or resides in the Philippines.

b. Non-resident citizen is a Filipino citizen but does not reside in the Philippines.

c. Resident alien is a citizen of another foreign country but resides in the Philippines during taxable year.

d. Non-resident alien (NRA) is a citizen of another foreign country and does not reside in the Philippines.

They can be further classified as one who is either:
1. Engaged in trade or business (NRA-ETB)
2. Not engaged in trade or business (NRA-NETB)

KINDS OF INCOME

Individuals can earn from at least three kinds of income:

1. Compensation Income
This is the income received by employees working for different companies. This is usually in the form of salaries, bonuses, and allowances.

2. Business Income
This is the income generated by entrepreneurs (business) or by different professionals like lawyers, doctors, and accountants (professionals income). They do not work as employees of other people.

3. Passive Income
These are income generated by different investments made by the individuals.

Examples are winning prizes,

For the purpose of compensation income and business income (taken together will be called as gross income), the following formula will be used:

Gross Income - Allowable Deductions = Taxable Income

The taxable income will then be subjected to this schedular rate to compute for the income tax payable to the BIR (Bureau of Internal Revenue).

This is only applicable to residents, citizens, and non-resident aliens engaged in trade or business. NRA-NETB are to be subjected to a 25% final withholding tax from sources within the Philippines.

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Resident citizen ang tawag sayo kapag filipino citizen ka, at dito ka naninirahan at nag tatrabaho sa pilipinas. so both income mo within and outside the Philippines ay papatawan ng tax.

Non-resident citizen naman ang tawag sa mga Filipino citizen individual pero hindi dito naninirahan at nagtatrabaho sa Pilipinas. Ang example ay OFW

Resident alien naman ang tawag sa mga foreigner na dito naninirahan at nagtatrabaho sa Pilipinas during taxable year. pero matatawag lang silang resident alien kapag nanirahan sila dito sa Pilipinas for 6 months or 180 days.

non-resident alien naman ang tawag sa mga foreigner na hindi naninirahan at nagtatrabaho sa Pilipinas.

so ang non-resident citizen, resident alien, and non-resident alien, yung mga income lang nila within the Philippines ang papatawan tax.

so yung income nila outside the Philippines is hindi kasali, kase may sariling tax law din naman ang ibang bansa na applicable sa generated income nila from that county.

so itong four individuals, they can further classified as one who is either.

engaged in trade or business, meaning meron silang business dito sa Pilipinas.

not engaged in trade or business. meaning at walang silang business dito sa Pilipinas.

Ang compensation income is ito na yung income or pera na natatanggap kada buwan ng mga employees, na nag tatrabaho sa companies or government. so ang compensation income is pwede siyang in the form of salaries, bonuses, and allowances.

so ang business income is ito na yung income or pera na kinikita mo kapag may business ka. at pwede din siyang tawaging professional income kapag professionals ka like lawyers, doctors, and accountants who are not working as employees of other people.

ang passive income naman is ito na yung pera na makukuha mo na hindi mo na masyadong kailangang mag effort. kapag halimbawa, tumaya ka ng lotto tapos nanalo ka, or kapag sumali ka ng contests at nanalo ka may makukuha kang pera. so yung na tinatawag na passive income.

Passive income is unearned income that is acquired automatically with minimal labor to earn or maintain. and according to google, investing can be considered passive income kapag may nakukuha kang dividend or interest from that investment.

Over, not over is ranges ng taxable income

Tax is yung perang ibabawas sa taxable income or yan na yung tax na kukunin ng bir.

Compensation income 100,000
Business income 200,000
Total Gross income 300,000
Less:
Allowable deductions 75,000
Taxable Income 225,000
125,000 (50,000)
100,000

So para makuha ang gross income or total gross income, i add mo lang yung compensation income at business income mo. Then minus or less mo yung Allowable deductions para makuha mo yung taxable income mo.

Ang taxable income is ito na yung kabuoang income mo na papatawan ng tax.

Tapos para malaman mo kung ilan yung tax na kukunin doon sa taxable income mo. Gagamitin itong schedular taxable table

Ang excess over, kapag may natira pa doon sa taxable income mo na hindi na pa napapataan ng tax, jan mo titignan then yang plus yan na yung additional na kukunin na tax ng bir.

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