Filipino Online Workers Guide To Paying Taxes

 

Filipino Online Workers Guide To Paying Taxes

In this world nothing can be said to be certain, except death and taxes. – Benjamin Franklin

A lot of online workers have been getting away with NOT paying taxes. I understand that many of us justify not giving our hard-earned money to corrupt government officials. Why pay taxes when you know most of what you’re paying will just line the pockets of greedy and corrupt politicians?

But paying taxes is each Filipino citizen’s obligation. Contrary to popular belief, taxes don’t just go to dirty politicians’ pockets. They also go to building schools, bridges and hospitals. Not paying taxes actually hurts the people who need it most– like students, patients, and farmers– more than it punishes corrupt officials.

With the recent barrage of high profile stories in the media about online workers earning millions, the BIR is looking for ways to catch and punish people who don’t pay taxes. It won’t be long before the BIR finds an online worker and makes an example of him.

Besides helping those who need it most and avoiding becoming a public example, paying your taxes also makes it easier for you to obtain a loan, credit card, passport or visa because these applications all require your tax documents.

Think about it this way– filing and paying your taxes NOW will protect you from the wrath of the BIR in the future.

As Easy As RFP?

#2

The TV ads make it all look so easy. Just register, file and pay.

But the truth is the BIR is still working on how to categorize online workers. We’re not employees in a traditional sense. In some ways we are business owners but most of us don’t operate the same way most businesses do. It’s this limbo situation that complicates the tax system for online workers and discourages many from filing.

To make things easier, we consulted with a BIR certified accountant who has a lot of experience with online workers. Not only did he explain in great detail how online workers can register, file and pay, he also taught us how to compute taxes, so you only pay exactly what you owe; no more no less.

You must pay taxes. But there’s no law that says you gotta leave a tip.– Morgan Stanley advertisement

Disclaimer: The advice below is for people whose income is mainly from their online job. Those who have regular jobs or businesses in addition to their online job would fill out the following forms differently. We are not tax experts and the best person to talk to would be your bookkeeper or accountant.

Getting your Taxpayer Identification Number (TIN)

#3

The first step to registering as an online worker is getting your tax identification number or TIN. If you already have a TIN, you’re good to go! You don’t need to get a new one.

If you don’t have a TIN yet, you can easily get one through the BIR e-registration system. Once you secure your TIN, you need to pay a Registration Fee of P500 to Authorized Agent Banks (AABs) within your tax area. You can also pay through the following BIR-accredited payment facilities:

Once you have the receipt, you can go to your local BIR office to obtain your TIN card.

With your TIN card in hand, you can begin the process of registering as a self employed individual.

Online Worker Registration

Below are the documents you need to prepare. To make things easier, we’ve put them into a checklist for you to use as you prepare your documents.

  • NSO certified birth certificate,
  • NSO certified marriage certificate (if married),
  • community tax certificate (cedula)
  • Certification from your barangay captain (to certify your address)
  • BIR Form 1905 (for those who already have a TIN and used to work in an office, to change your Regional District Office)
  • BIR Form 1901 (registration form page 1 and page 2)
  • BIR payment form (Form 0605)

To better understand how things work, let’s follow Jose, an online worker, as he registers and pays his taxes.

Forms, Forms, Forms

#4

The hardest thing in the world to understand is the income tax. –Albert Einstein

It’s understandable how a great mind like Albert Einstein found it hard to comprehend income tax. Quantum physics is easy compared to the mountain of paperwork we have to fill out just to register, file and pay our taxes.

Thankfully, our imaginary online worker, Jose, is going through the registration process and is kind enough to show us the ropes.

One of the things people find most challenging about the Filipino tax system is the complicated forms. Jose is making the process easier for us by filling out the form with his imaginary information in red ink, so we’ll have a good idea of how to fill out our own forms.

Certificate of Registration (Form 1901)

First thing Jose needs to fill out is Form 1901. When filled out, Jose’s form will look like this:

form 1901 - 02

Since Jose earns exclusively through his online job, he’s considered a self-proprietor/independent contractor. These are the taxes that he has to declare:

form 1901 - 03

As an independent contractor, Jose needs to issue receipts for any transaction over P25 and keep a disbursement book of his business expenses.

form 1901 - 04

Jose is married and working. He needs to declare these as they impact his deductible. He and his wife will also be filing their annual income taxes jointly. If Jose were single, he could skip this part.

Jose and Maria have one child and they agreed that Jose should be the one to declare their son, Juan, as a dependent. Jose does this because parents are entitled to additional exemptions per child (up to 4 children.)

form 1901 - 06

To pay for his Certificate of Registration (COR), he’ll have to fill out BIR form 0605 (a.k.a. Payment Form) in triplicate to pay for it. The COR costs P500. Jose will also have to pay an annual fee every January to renew his COR.

The Payment Form (Form 0605)

Filipinos who are used to paying their own taxes will be familiar with form 0605 because it’s the form you have to fill out to pay for almost every kind of tax. Basically it’s like an invoice from the BIR that you have to fill out yourself.

Below is how Jose fills out his 0605 as he pays for his COR.

form 0605 - 01

Since he’s using the 0605 to pay for his COR, he only has to fill out the fields below.

form 0605 - 02

As you can see, he’ll be using this form again in the following months to pay for his percentage and income taxes. But for now, this is all he needs to fill out on form 0605 (plus signature).

Once he has his 1901, 0605 and other documents ready, Jose can go to his local BIR office and submit them.

The Run Around

After submitting the documents and forms listed above, Jose will have to attend a seminar conducted by the BIR examiner in order to get his COR. The seminar usually lasts from 1 to 2 hours. After the seminar, the BIR examiner will give Jose the date when he can claim his COR.

To be safe, Jose brought his book of accounts with him to the seminar so he could register it. He’ll be using that book of accounts to document his business expenses and earnings.  He needs to register a new book for every fiscal year.

Once Jose receives his COR, he’ll bring a photocopy of the COR and form 0605 he filled out to pay for his COR to a BIR accredited printing press to have his receipts printed. (The local BIR branches have this list. You just have to ask for it). The printing press will give Jose 12 booklets (each containing 100 receipts) which will last him 5 years. On average, a printing press will charge between P1,000 to P1,500 for 12 booklets.

 

UPDATE!

One of our commenters is nice enough to allow us to share more information here. Thank you Francis!

“As an online worker, I get a professional tax receipt (PTR) every year from my local municipality/city for Php300. A PTR allows me to practice my online profession anywhere in the Philippines, unlike a business permit that’s costly and limits you only to your registered place of business.

Register at your nearest BIR office as a professional taxpayer using your PTR as one of the supporting documents.

I only declare what goes to my bank account as my gross sales/income when I file tax returns. My proof of sale/income is the official receipts (OR) I issue for BIR compliance. My foreign clients don’t need those receipts, so I just throw away the client’s copy of the OR. On the OR, I only write the amount that was actually credited in my bank account.

I don’t bother myself with deductions, I just choose the optional standard deduction (OSD) to avoid confusion and headaches in deducting expenses when filling income tax returns.”

Let’s Talk About Taxes, Baby!

#5

Now that Jose has his COR, he is a registered taxpayer. As an online worker, these are the taxes he has to pay with the accompanying forms that he will need to fill out:

Monthly Percentage Tax (3% of gross revenue)

  • Forms: 2551M and 0605
  • Due Date: Every 20th of the month, pay at partner banks

Quarterly Income Tax (based on net income)

  • Forms: 1701Q and 0605
  • Due Date: April 15, Aug 15, and Nov 15

Yearly and Final Quarter Payment of Income Tax

  • Forms: 1701 and 0605
  • Due Date: April 15 the following year

Annual Registration Fee (COR Renewal)

  • Forms: 0605
  • Due Date: On or before January 30 every year

Let’s say Jose, an online worker, earns P10,000 per month. He just finished his registration in January and is going to start paying his taxes. Based on the table above he needs to pay a percentage tax every month and his income tax every quarter.

Your Monthly Taste of  (Percentage) Tax

Online workers are exempt from VAT, which qualifies Jose for 3% percentage tax.

form 2551m - 02

So each month, Jose has to pay the government 3% of his total earnings that month. That’s 3% of P10,000 which is equivalent to P300/month. He needs to pay this every month (on or before the 20th) and he can pay at the partner banks. (Listed with your local BIR office)

He’ll need his trusty 0605 to pay his percentage tax. It’s pretty much the same as the 0605 he filled out above but with some differences since he’s now paying for his percentage tax and not for his COR.

form 0605 - 03

He’ll also need to fill out the BIR form 2551M every month. Below is what Jose’s 2551 looks like.

form 2551m - 01

The calculated percentage tax will be reflected here:

form 2551m - 03

Monthly Percentage Tax E- Update

BIR now has e-forms that would allow taxpayers to print pre-filled form containing their information, saving you time writing and computing it yourself. This blog post contains detailed information on how to install the software, use it, and have the forms printed.

Quarterly Income Tax Crisis?

To compute Jose’s quarterly tax, we first need to deduct Jose’s work expenses.

Since Jose earns P10,000 per month,  this means he has a quarterly income of P30,000.

Deductibles can be declared in 2 ways: the optional standard deductible (OSD) and the itemized deductible.

For the optional standard deductible, you can automatically declare 40% of your gross as your deductible. The advantage of opting for OSD is you don’t have to itemize your expenses, the BIR doesn’t have to audit your expenses, and is easier to compute.

So if Jose chooses OSD, every quarter, he can automatically deduct P12,000 from his P30,000. This means for the next 3 quarters, his tax will be deducted from P18,000, not P30,000.

Jose can also choose to declare itemized deductibles. This can be cumbersome and requires you to keep receipts, so it’s best to consult with a bookkeeper/accountant if you decide to itemize. However, if you have a lot of deductibles, you can end up saving money using this option. Below are examples of Jose’s itemized deductibles:

  1. His percentage tax. Since he already paid it, we can deduct P1,200.
  2. If this is Jose’s 1st time paying taxes as a self employed individual, he can declare the expenses he incurred during registration. That’s P1,500 for the receipts, P500 for the annual registration, and let’s say P1,000 for the NSO certificates, forms, and registration books.
  3. His SSS, Philhealth and Pag-ibig for that month. Let’s say for SSS, it’s P1,500 for 3 months. For Philhealth and Pag-ibig, it’s P600 for 3 months.
  4. Whatever expenses he incurred in order to do his job. This includes his internet expenses. Let’s say he monthly internet bill is P1,500. He uses it mainly for work but shares it with his family. He estimates that 2/3 of his monthly internet usage is for work, so he declares a P3,000k.
  5. And let’s say that for electricity and the depreciating value of his computer he declares a cost of P500 per month. So for 1 quarter, that’s P1,500/month.

When we total Jose’s itemized deductibles, we reach a total of P11,400.

Let’s use the OSD as Jose’s deductible because it’s higher and is a nice round number– P12,000.

Jose’s quarterly income  –            Jose’s OSD          = Jose’s taxable income

P 30,000                       —           P 12,000              =             P 18,000

Since Jose’s taxable income is P 18,000, this means he qualifies in the P 10,000 to P 30,000 category. To compute his taxes due, we’ll use the formula on the table below.

form 1701q -03

Tax Due:

P 500     +             10%( P18,000 – P10,000)               =             P 1,300

So every quarter, Jose has to pay P1,300.

For the 1st quarter, he has to pay that amount on or before April 15.

For the 2nd quarter, he has to pay on or before Aug 15.

For the 3rd quarter, he has to pay on or before Nov 15.

And to pay this every quarter, he has to fill up and file BIR form 1701q

form 1701q -01

For simplicity, we’ll focus on Jose’s side and not include his wife’s quarterly income tax. Since Jose’s wife is employed, her boss will handle the processing and filing of her taxes. We will include her info only when it becomes relevant to Jose’s taxes.

form 1701q -02

And of course, he as to fill out a 0605 to pay for his quarterly tax. At the bottom of that table, he’ll put the amount and sign the form.

form 0605 - 05

He’ll have to do this process 3 times a year. For the 4th quarter, he’ll be filing for yearly income tax which he will pay April the following year.

 Who’s Afraid of the Big Bad (Annual Income) Tax?

Let’s say it’s now the following year and Jose has to pay his annual income tax. Here’s when the computation changes since the tax computation is now based on the yearly income. We now take into consideration Jose’s personal exemptions.

All Filipinos are entitled to a basic personal exemption and additional exemptions. Marital status no longer matters. Regardless of whether you are single, married or head of the family, you are entitled to a P50,000 deduction from your gross income yearly. And for every child (up to 4 children), there’s an additional P25,000 exemption.

Let’s say that Jose is a married man with 1 child. This qualifies him for a yearly personal exemption of P50,000 for his married status and P25,000 exemption for his child. This gives him a total personal exemption of P75,000 per year.

Since he earns P10,000, his yearly income totals at P120,000.

Take away the personal exemption of P75,000, he now has a taxable income of P45,000.

Take away his OSD (40% of P45,000) which is equivalent to P18,000, his taxable income is now P27,000.

form 1701 - 01

This means Jose falls within the P10,000 to P 30,000 bracket. Now all we need to do is compute the taxes based on the table above.

P500 + (10% * (P27,000 – P10,000)) =  P2,200

And since he’s paid for the past 3 quarters, P3,900. This means we can deduct those payments from his income tax.

P 2,200 – P3,900 = -P 1,700

As you can see, by paying taxes every quarter, the government now owes Jose P 1,700. He can actually have this surplus deducted from his income tax next year. He can also have his monthly percentage taxes deducted from his quarterly income taxes to reduce the amount he pays every month so he won’t be paying in excess.

form 1701q -04

When this happens, Jose will only be paying P400 per quarter. That means his annual income tax computation will look like this:

Tax Due = P 2,200 – P1,200 (his 3 quarterly income taxes – monthly percentage tax) – P900 (the monthly percentage tax for the last quarter)

Tax Due = P 100

Compared to the 1701q, the 1701 is longer and much more complicated so we won’t show a sample of Jose’s form here. Suffice to say that regardless of whether Jose chooses to take the itemized deduction or the standard optional deduction, he will need an accountant or bookkeeper to help fill out the form since the 1701 requires the signature of an accredited tax agent.

Tax Payment and Filing E- Update

Turns out that BIR now has an online filing and payment system. Once you have your COR, you can register here: BIR Electronic Filing and Payment System. Once your registration is approved, you have to go to your RDO to have it activated. Once you have an active account, you should be able to input your information in the appropriate forms and it also automatically computes for you. I’m in the process of having this done. Will provide more information on how it works as soon as I’m done with the registration itself. Thank you Mommy Azalea for the tip!

Here We Go Again! (COR Renewal)

Every year, Jose will need to register as an independent contractor/ self-employed worker. Luckily for him (and for us), he only needs one form for this– the 0605.

form 0605 - 02

No need to re-fill another 1901. Jose just needs to bring his COR, 0605, and receipt to renew his tax payer status with the BIR.

Model Filipino Online Worker is a Tax Payer

#6

And as you can see, paying taxes doesn’t have to be expensive.

It is a tedious, cumbersome, and at time complicated, but once you have everything in place, the process becomes easier. And with this guide, we hope we’ve helped demystify the process of registering, filing, and paying taxes as an online worker. If you don’t want to handle your taxes by yourself, you can always hire an accountant, bookkeeper, on retainer to do the bookkeeping for you.

Model citizens pay their taxes and there’s no reason why online workers can’t be model citizens too. Paying taxes allows us to do our share in helping to make our country a better place. Paying taxes also gives us the right to give corrupt politicians the finger the next time they spend OUR taxes.

 

Comments

  1. Lynnell Emmanuel D. Neri says

    Wow! Thank you! It clarify everything. Now, I know that paying taxes is not that expensive at all.

    But I do have a question, does registering a certificate need to have a business permit or anything? I can use a name aside from own name as the name for every transaction?

    • Julia Jasmine Sta Romana says

      According to our consultation with the accountant, it would depend on your city’s local business ordinances. Some cities would require a business permit from the local government while some only require a barangay registration of micro-business. It would be best to consult with your local BIR certified accountant for more information on local ordinances.

          • Kathrine Negosa says

            Hi, I’m an online teacher and I want to travel abroad. One of the things they ask is my ITR but I don’t know where to start. Because of this post I have an idea of what to do thought the company that I work for already deduct tax from my salary but they don’t provide an ITR. However, they give us Form 2307 which has the breakdown of the tax that I already paid. So now, I don’t know where to start.

    • Julia Jasmine Sta Romana says

      We asked our consulting accountant and he said that as long as there’s an exchange of goods and services for money, that salary is taxable, even if it’s in dollars.

  2. Miles Biay says

    does the monthly percentage tax applicable to all online workers or to only those who have online shops/or are online sellers?

  3. says

    This is so crystal clear! So, paying taxes isn’t that expensive at all like we always thought. Let’s all be responsible citizen virtual assistants. Thanks, Julia!

  4. Lori says

    Hello! Thank you so much for publishing this article. I think this is very helpful to a work-at-home professional. I just want to ask help regarding my case. I’m a full-time online ESL tutor and my company withholds 10% of my monthly earnings , and provides a copy of BIR 2307 (quarterly). According to my company, BIR classifies us as Professionals (though we’re not PRC-licensed teachers) and not as Business owners. Could you also show us the procedures from registration, to renewals (if there’s any), until the filing of annual ITR? There’s much confusion in filing our ITR and every tutor has different experiences regarding this. Some were required by BIR to get COR, and some were not. Thank you very much for your help! – Lory

    • Julia Jasmine Sta Romana says

      You’re welcome Lori! I believe we were able to cover most of the information you are looking for here but I will update this article regularly as soon as we receive updates from the BIR. But as far as we know (based on what our accountant has told us) online workers who are not employed in a company are required to register for a COR. =)

      • Viena says

        Hello, so I have the same case as Ms. Lori above. Since they are withholding 10% of my tax every month, does this mean that I do not need to file my monthly percentage tax (3%)? Thanks!

          • cathy says

            viena, i am also a professional and i pay my own taxes and ive learned though the years how to do it but also made some mistakes i had to pay for, as in penalties, anyways… you must pay your monthly percentage tax (3% of gross income) and quarterly income tax and annual income tax. the 10% withheld tax can be used as money to pay for the annual or quarterly income tax.

    • says

      I understand how you feel. To be completely honest, the process is a bit tedious because of all the paperwork.

      Just think of this this way, you’ll need an ITR when applying for loans with banks, getting a credit card, or applying for visa if you want to go abroad. Filing and paying your taxes now will make it easier if you have plans to take out a loan or go abroad in the future.

  5. Ma. Clarice Lao - Itumay says

    I am wondering if I go itemize my expenses. Will it cover my entire meralco and pldt/ internet bill since it is used both for personal and business purposes? Should the bills have to be under my name?

  6. henry nollora says

    Wow! This really is very helpful. I didn’t even know that an online worker has to pay taxes.

    This is great info. Thanks!

  7. Gil says

    Thank you for this very informative article. I’ve been looking for something like this ever since. It’s very helpful. I have a question though. I currently work as a full-time home-based online worker and has worked in an office setting before so my employer got to file my ITR, but when I shifted to home-based work I was not able to file my ITR because I was at a loss on how to go about it and to be frank was only earning a bare minimum. I don’t have a fixed income and there are times I only earn four-digit income in a month. My question is – isn’t there any exception for minimum wage earners? Also, since I haven’t filed my ITR for the past few years, and should I decide to file now, will I be prosecuted for tax evasion??

    I hope you can shed some light to my inquiries. Also, I would like to meet up with fellow online workers here in person to personally go through the process of filing ITR. The gap in my ITR makes me scared to go to the BIR office for fear that I might be questioned and fined. Please help. Thanks a lot.

    • says

      Hi Gil!

      The first thing you should look into is where your TIN is registered. If you used to work in a place far from home, you may need to change your RDO first. In this case, you’ll need to change your RDO using form 1905. But if you’re based in NCR, you can do this online through their website. Its only after you have transferred your RDO to your current address before you can register.

      Now, about your taxes. The rates do adjust according to income and if you check the tax tables, if you earn under P10,000 you can be exempted from taxes. And if you don’t have income for a month or a quarter, you can declare a certificate of no income.

      As for being prosecuted for tax evasion, it’s not likely. From what our accountant has told us, it’s more important for the BIR right now to encourage people to file and pay for taxes than to prosecute small taxpayers.

  8. Dee says

    Thank you so much for this very helpful information. Will the BIR able to determine how much you are earning in a monthly basis or this depends on how much you declare? Also what if I can only present 3 receipts for just this year, will that suffice? Also, since I am only registering now, will they also ask me to pay those previous years since I started doing online work?

    Thanks a lot!

    Dee

    • says

      You’re welcome Dee! Now, about your questions:

      Will the BIR able to determine how much you are earning in a monthly basis or this depends on how much you declare?
      It will depend on how much you declare, through your receipts.

      Also what if I can only present 3 receipts for just this year, will that suffice?
      Yes. For example, if there are months that you have no income, you have to declare that. You can ask a BIR accredited accountant for information on how to do that.

      Also, since I am only registering now, will they also ask me to pay those previous years since I started doing online work?
      According to our accountant, if you want to declare your previous earning, you will have to pay taxes for them. But for the best advice for your circumstances, please consult a BIR accredited accountant

      • Nimfa says

        Hi Julia! First of all, thanks for this very useful & informative article. I’ve got a question. In some cases you are advising to consult a BIR accredited accountant. Where can we find them? If we consult them, will they charge us consultation fee? Hoping to receive an answer, thanks!

  9. Regine says

    Hi Julia,

    Super thank you for this article! Dami kong natutunan and it really helps me to understand more about taxes. I really need an ITR because of VISA, kaya medyo eager na ko magbayad ng tax even though I’m not earning that much. May hindi lang po clear sa akin (if you don’t mind) Need po ba talaga every month and quarterly ang pagbabayad ng tax? Or kung nagbabayad na po ako every month, no need na to pay quarterly (and vice versa)?

    Thank you! :)

    • says

      Hi Regine!

      Actually, it will depend on how you compute for your tax. According to our accountant, ginawa sya yung monthly percentage tax and quarterly income tax to make it easier for you to pay your taxes kasi mas maliit sya. If you deduct your monthly percentage tax payments from your quarterly income, liliit or mawawala yung babayaran mo sa quarterly PERO lalaki ng konti yung babayaran mo sa annual.

      For best results, consult an BIR accredited accountant or bookkeeper. They’ll be able to help you adjust your tax payments to make it easier and more convenient.

      • Regine says

        Thanks Julia!

        Also, I’d like to ask if need ba talaga ng receipts, ledger? Kasi I don’t really issue receipts to clients because they’re all outside the country. Pano po kaya yun?

        Warm Regards,
        Regine

        • says

          Hi Regine!

          You still need to issue receipts as proof of income. Dun i-base yung income mo sa kung ano ang nakalagaw sa resibo. You don’t need to send the receipt but do need to issue receipts for any transcation above P25.

          • ehya says

            Hi Ms. Julia,

            follow up ko lng sa questions nya. if ibang bansa ang client then dollar ang payments. is there a need na may ibabangang attachments or reference sa i-issue mong official receipt. maari bang ibang amount ang ilagay sa receipts compared sa halaga ng service you provide?

            Thanks

  10. Dude says

    Hi Julia,

    This is very detailed and finally with a guide on how to fill up the forms properly.

    I got my COR on October 17, 2014, when will I start paying for Monthly percentage tax, and Quarterly tax? I don’t have my receipts printed yet.

    I hope you can help me because tomorrow will be the deadline. Can I file non income for the third quarter?

    Thanks and will be waiting for your reply.

  11. Maria says

    Hi Julia!

    I love your blog, very informative and easy to follow! :) Now I can start planning about paying my taxes. Although, I have a question if how much po ba ang charge sa pag-avail ng services ng bookkeeper or accountant?

    Thank you and hope to hear from you soon!

    • says

      Hi Maria!

      Bookkeeper/accountant services would depend on where you are and who you know. Based on our research, a bookkeeper on retainer can cost between 1k-2k per month. An accountant would cost more on retainer. Hiring them for one time jobs would depend on the kind of work you need them to do (organizing your books, computing, etc).

  12. pol says

    thanks so much for this! so informative and helpful 😀
    i went to RDO 53B earlier and when i was going to submit 1901, the lady told me that i need to submit a contract/certificate to prove that i am indeed working online/freelancing. and she did not ask for any IDs/birth certificate etc (reason she cited: i already have a TIN). she told me that all i needed to show/submit was the contract + 1901.

    i guess it depends on the RDO/officer huh?

    • says

      Yes, in a way it also depends on the office. Our accountant admits na now all RDOs (even BIR workers) are aware of the new rules and don’t implement them consistently. But I think the certificate she is referring to is the certificate from your barangay. Parang micr-business registration. Just a certification from your barangay captain that you work from home/home-based worker.

      • pol says

        hello again. i submitted the printed email that my “employer” sent me (stating that i am “hired” and will work online/home-based, and how much i’m getting paid monthly) and the BIR officer accepted it. i now have my 2303 and receipts but unfortunately, they misspelled my family name on the certificates (thank goodness the spelling’s correct on the printed receipts)!

        i have another question as this will be my 1st time paying the monthly percentage tax, this might sound silly hehe. when paying the monthly percentage tax (or even the monthly and annual income taxes), do i have to go to my RDO? or do i just pay at the accredited bank and that’s it? thanks again

    • says

      Hi Grace!

      Ibang usapan naman yan. If you choose to declare that income, your taxes could change coz they will add that to your income from your job. In this case, it would be best to consult with an accountant or bookkeeper because that added income will affect how you file and pay your taxes.

  13. Irene Ramos says

    Thanks for all these information. The example though is if you’re getting a fixed amount of pay every month. Is the computation the same way if you get different amount on a monthly basis? I am an online worker and never get the same amount of pay every month. So this is confusing for me. Thanks for your help!

    • says

      Hi Irene!

      If your income changes month per month then your monthly percentage tax would change per month and quarterly income tax would also vary. The same computations still apply (3% gross for monthly percentage, the tax table for quarterly), even with the changing income, but you just need to make sure you keep track of how much you earn to make sure.

      And if there are months that you have no income, you have to get a form from the BIR to declare that you didn’t have income for that month. You’ll need this to exempt you from payments. This is very important because failure to declare non-income will result in penalties.

  14. Margie says

    Hello there Julia,

    Thanks for this very helpful guide! I have a question since I’m working online and I’m earning dollars but diff each month, meaning every when paying quarter tax vary on the salary you earn in a certain month? same computation applies..thus this mean i’m exempted in paying the 3% in paying VAT/percentage tax? since amount paid is dollar then deposit to my account is already converted into peso which apply which is the actual rate of exchange dollar to peso..

    ****We have processed your payment request submitted on 22-Nov-2014.
    Amount paid: $200.00 USD
    Amount you should receive: 12042.51 PHP (*)
    Bank account: Bank of the Philippine Islands account ending in ****
    Exchange rate on 10-22-2014 12:06 UTC: 43.7901 PHP/USD****

    Also since my client is not releasing invoice for the proof of payment/salary of mine so can release a receipt of payment? I mean pwede ba ako mismo ang mag release ng recibo stating my paid salary.. please help me with this.. let me know..

    Thanks Much,

    Margie

    • says

      Hi Margie!

      You’re welcome! Now, about your questions…
      I have a question since I’m working online and I’m earning dollars but diff each month, meaning every when paying quarter tax vary on the salary you earn in a certain month? Yes, your quarterly tax would vary if you’re earning different amounts every month.

      same computation applies..thus this mean i’m exempted in paying the 3% in paying VAT/percentage tax? Percentage tax is not VAT, it’s a business tax. But it would be best to ask your accountant or bookkeeper on whether you are exempted from this tax. But on our consultation, online workers are covered under that tax.

      Also since my client is not releasing invoice for the proof of payment/salary of mine so can release a receipt of payment? I mean pwede ba ako mismo ang mag release ng recibo stating my paid salary.. Yes, you can release your own receipt stating your own salary.

      Hope my answers helped. But for the best advice that would suit your case, please consult an accountant or bookkeeper.

  15. Margie says

    also Quarterly Income Tax due is Due Date: April 15 (2014), Aug 15(2014), and Nov 15(2014) and Yearly and Final Quarter Payment of Income Tax Due Date: April 15 the following year.

    Question: Example I already paid Quarterly tax , April 15 (2014), Aug 15(2014), and Nov 15(2014) on this date so by the the following year(2015) I will pay the Annual tax which is also Due in April 15 (2015)so thus this means the following year(2015) I will pay twice “the Annual tax(2015) + the 1st quarterly tax of 2015 “? let me know.. thanks

    • says

      I know it’s a bit confusing. I was confused by this at first =) I think the best way to answer this is through an example.

      Let’s say you registered January 2015.

      On April 2015, you’ll pay your 1st quarterly income tax.
      On Aug 2015, you’ll pay your 2nd quarterly income tax.
      On Nov 2015, you’ll pay your 3rd quarterly income tax.

      On April 2016, you’ll pay your 2015 annual income tax (minus your 3 quarterly income taxes) AND your 1st quarterly income tax for 2016.

      Does it make sense? Does it help?

      • Pines says

        Hi Julia,
        This blog is the most friendly and very informative one I’ve encountered (FINALLY!!!)

        I am also a bit confused of this process :(

        I WANT to be good citizen for my country and I WANT to pay my tax properly.
        Problem is, I don’t know how. so I researched a LOT but i really find it very complicated and so confusing because there are TONS of forms from BIR (and oh! # of pages too). it’s overwhelming. I think this is one reason why other people would give up even if they really want to RFP haha. (I almost..) good thing that I’ve encountered this BLOG before reaching my limited patience. I’m on the verge of giving up. 😀

        I was a regular employee for 5 years and my employer did everything for me.Also the registration of my TIN was technically done by them. I only receive my ITR readily available for me. I was issued with TIN no. and ID card (I must thank them!!).
        But I changed my job now. i currently work as job contract employee (or self-employed category). This company issues 2307 when request is made.
        I need an ITR so I asked them to give me but they said i should file it to BIR myself.

        At first, i was a bit shocked because it seems i am disoriented. but I did my random research and found out that I SHOULD file before the deadlinesssss.
        How can do it when i only found out about this in the middle of the year?
        a. will i be penalized for not beating the deadline?
        b. can i still file for 1701Q1 (even if it’s already 1701Q2 filing now)
        c. if i have to do some process such as changing registration from employee to self-employed and cannot beat the Aug 15 deadline for 1701Q2, what would happen?
        d. Can i just file 1701 directly without filing 1701Qs?

        Please help me on this.
        I really wanna RFP right taxes and hopefully this won’t be taken against me by BIR if i was not able to comply in the past due to lack of info dissemination.

        Thank you in advance Ms. Julia!:) God bless you and your career!
        Pines

        • says

          Hi PInes!

          I’m glad my post was helpful. I’ll try to answer your questions the best thta I can but it would be best to consult with an accountant or bookkeeper so you’ll have solutions specific to your situation

          How can do it when i only found out about this in the middle of the year?
          a. will i be penalized for not beating the deadline? As far as I know, di naman. Sayang lang co the registration fee is for an entire year. regardless of whether you pay sa January or August, it’s the same price so mas sulit na magpa-register as independent contractor ng January.
          b. can i still file for 1701Q1 (even if it’s already 1701Q2 filing now). It’s your prerogative. But I strongly recommend you consult an accountant for this as there might be some penalties involved.
          c. if i have to do some process such as changing registration from employee to self-employed and cannot beat the Aug 15 deadline for 1701Q2, what would happen? as far as I know, wala naman penalty.
          d. Can i just file 1701 directly without filing 1701Qs? Yes, pwede direct.

  16. Margie says

    also bit confuse on section above stating that government owe Jose of 700php bit not clear can you site an example which it will deduct to your quarterly payment?
    I mean minus the 700.. Thanks.. in this point I get confuse =) Thanks.. please

      • Margie says

        Hi Julia,

        Thanks for getting back. so that means i will place the 700 in #38A? para ma credit sya? hmm so computation will be ..

        1,300 – 700 = 600 is the total payable? by the way san nakuha ung 900 sa form nah #38K? and also ung 400 na payable ni Jose is for that certain quarter lng ung ung 400 or 400 na lng e pay nya for each quarter? (1st, 2nd & 3rd)..

        lastly if -700 ung annual income meaning no need to pay nah? but you need to get the receipt? .. sorry if madami akong tanong.. :)

        Thank you very much Julia! Hope you can answer my query..

        regards,

        Margie

        • says

          Phew, ang dami nga, hehehe.

          Okay, I’ll try to answer the all.

          First, let’s put this in context muna. Let’s say the P700 is Jose’s excess tax in 2015. He can deduct in the following year either in one of his quarterly payments or in the 2016 annual income tax.

          Now, for most of the blog post, I presented one way to compute for Jose’s taxes. A computation that resulted in P700 excess at the end of the year. But I also presented another way to compute for Jose’s taxes. A computation that would not result in excess payment.

          In this alternate computation, Jose deducts his monthly percentage taxes from his quarterly income taxes, so he only pays P400 per quarter instead P1,300. In this case, he pays less in each quarter BUT he has to pay an annual income tax of P1,100.

          To summarize
          Scenario 1: Jose pays a higher quarterly income tax and pays in excess of P700 that he can deduct for the next year.
          Scenario 2: Jose pays a low quarterly income but he has to pay P1,100 at the end of the year as his annual income tax.

          These 2 scenarios represent the different ways you can compute for your taxes to make it easier for you to pay. Some people prefer to pay higher taxes per month if it means not having to pay an annual income tax (you still need to file it to make the excess valid). While some prefer to pay lower monthly and quarterly taxes per month even if it means they have to pay a bit more at the end of the year.

          How you compute for your taxes would depend on your circumstances, which is why we often say that you need to consult a bookkeeper. I remember you mention that your salary would vary every month. And in that case, to get the best computation, you would need to consult one. What we present here is just an example with a very rigid circumstances and the computation is just to help you understand the process. For best results, please consult a tax professional.

          Did that help? Did my explanation answer your question?

  17. ericell cabrera says

    can you provide me an excel file of the new BIR forms needed specifically the 1601C, 1601E and the 2551M?? Thank you

  18. Kish says

    Hi Julia,

    I really appreciate your blog since I’ve been thinking to pay my taxes. But I do not know how.
    I just have a question though. Is it possible to exempt from the 3% percentage tax?

    Thank you!

    Kish

    • says

      Hi Kish!

      Glad the blog post helped. About the exemption from 3% percentage tax, I’m sorry but I don’t know the answer to that. The person who can best answer that would be your accountant or bookkeeper. He or she would be the person best qualified to tell you if you are exempted from paying percentage tax or not.

      • Kish says

        Thanks Julia. Do you have an idea if we can pay just once a year? If so,how can we compute if we just pay every April 15th?

        Also, if the quarterly starts on April 15th, are we still paying for the monthly? So it’ll be monthly tax + quarterly tax?

        And for the quarterly tax + the annual tax? Since they are on the same date?
        I’m sorry, these questions are bugging me. I just wanted to make sure I know something before going to the BIR. As we know, some officers are different from others.

        Thanks alot!

  19. says

    Hi Jasmine,

    Thank you for this article, I have registered last July and I’m still a bit confused about some areas and this helped me. Anyway, would you mind adding a tutorial for the books of account or ledger? Just I still find that part confusing. Thanks!

  20. Weng says

    Thank you so much for this info, question though. Is it necessary to file for quarterly income tax? I was hoping I could just do the monthly and then annual income tax.

  21. Jenny says

    This is the best detailed post for paying the online freelancer’s taxes! I am relieved undestanding the processes, forms and the costs of registration and how to pay taxes. Narealize ko di pala ganun kamahal ang magbayad ng tax compared sa regular employees. Thanks Jasmine!

    Ask ko lang sa lahat, paano ba maghire ng accountant na may alam about sa itemized deductions sa online freelancing? Saan ba sila mahahanap?

    • says

      You’re welcome Jenny! Masaya ako at nakatulong to =)

      As for hiring an accountant, you can go to the Philippine Institute of Certified Public Accountants. They have local chapters all over the Philippines. There you can ask for a list of accountants that they can recommend.

  22. Jenny says

    Hi Jasmin,

    Sorry for this, pero ok lang ba pakireject or pakidelete yun comment ko kanina as (Jenny).

    Please eto na lang yun i-approve na post kase nandun kase sa comment yun picture ko ^^ Thanks in advance! Here’s my comment:

    This is the best detailed post for paying the online freelancer’s taxes! I am relieved undestanding the processes, forms and the costs of registration and how to pay taxes. Narealize ko di pala ganun kamahal ang magbayad ng tax compared sa regular employees. Thanks Jasmine!

    Ask ko lang sa lahat, paano ba maghire ng accountant na may alam about sa itemized deductions sa online freelancing? Saan ba sila mahahanap?

  23. Don says

    Hi po,

    I started working in an online company last 2013 and found out just this year na I need to pay taxes. In short d po ako naka file ng ITR last April 2015. However, may full time job I was hired last June , 2014. Moreover, my online company only issues 2307 withholding us 10% of our total income.

    So i went to the BIR sa lugar namin and the BIR officer said na forget the Year 2013 and apply for a COR this year and declare a mixed income. They also required me to change my Tin from my current RDO tin to a different place where I do my online business.

    Funny thing is sabi niya wala akong penalty at pinaparequire ako mg apply ng DTI, occupational permit sa city hall etc. Please help me po clarify.

    If my online company withholds me 10% and I should just be paying 3% according to your article then why is that? Sorry din ako sure.

    • says

      Hi Don,

      The example is presented in the article is that of an independent contractor. The online employer does not withhold any income tax, which is why the example I presented had to register, file, and pay monthly percentage taxes and income taxes.

      To be completely honest, I’m a little confused by your story. You have an online job and a full-time job?
      Online job started 2013 and full-time job 2014?

      If that’s the case, your tax situation would be more complicated and I strongly recommend you consult with an accountant or bookkeeper for this case.

  24. says

    Hi, thank you so much for this – it is very helpful!

    Im a bit confuse though in the Annual Income Tax computation. Since your example falls on the 10,000-30,000 bracket, shouldn’t the 27,000 be deducted by 10,000? Since in the tax table it says 500+ 10% of the excess of 10,000?

    So it should be P500 + (10% * P17,000) = P2,200? Maybe im just confused with all these numbers. hehe

  25. Min says

    Hello,
    I got my TIN through the BIR e-registration system in 2012 but I haven’t paid the P500 registration fee yet til now. What to do? Thanks.

      • Josel Armea says

        Hi Ms. Julia,

        Thanks for making this site forum available for everyone especially for self-employed like me too. I just have a few questions and they are numbered in order not to confuse you. Thanks for the response in advance.

        1. I`m a homebased English Teacher (Independent Contractor) and have just registered as Self-employed professional at BIR. My COR was released/stamped on March 3, 2015 (Temporary cert). Such date was the “ink stamp” one just above the Documentary Stamp. However, there was also statement below the trade name and tax type ” *** ONETT: 09/06/2014 Business Registration; 02/18/2015 ” . They accepted my papers on 02/18/2015 so maybe it is the registration date? When should I pay the Percentage tax then, 20th day of the month following March 3,2015 or following Feb. 18, 2015?

        2. I am now using the offline e-BIR form because I heard that AABanks don`t accept the manually printed form anymore. Below are the list of deductibles in OSD option of 1701Q (e-form), SHOULD I fill out the 38C, 38E, and 38G at the same time? I am receiving 2307 from the company so I just filled out 38G but filling out the other two seem redundant.

        38 Less: Tax Credits/Payments
        38A/B Prior Years’ Excess Credits 38A 38B
        38C/D Tax Payment/s for the Previous Quarter(s) 38C 38D
        38E/F Creditable Tax Withheld for the Previous Quarter(s) 38E 38F
        38G/H Creditable Tax Withheld per BIR Form 2307 for this Quarter 38G 38H
        38I/J Tax Paid in Return Previously Filed, if this is an Amended Return 38I 38J
        38K/L Other Payment/s Made (please attach proof of payment-BIR Form No. 0605) 38K 38L
        38M/N Total Tax Credits/Payments (Sum of 38A,C,E,G,I & K/38B,D,F,H,J & L) 38M 38N
        39

        3. How about for the 2nd quarter? Which field items above I should fill out?

        :) Thanks for the response in advance.

        Joe

        • says

          Hi Joe!

          I’ll try to answer what I can but I would recommend it would be best if you consult with a bookkeeper.

          1) When should I pay the Percentage tax then, 20th day of the month following March 3,2015 or following Feb. 18, 2015? It would depend on when you start earning (when you started issuing your receipts). The amount and date of your receipts is where you will base your monthly percentage tax.

          2) 38A/B Prior Years’ Excess Credits 38A 38B – Yes if you and your spouse had tax credits from last year
          38C/D Tax Payment/s for the Previous Quarter(s) 38C 38D – Yes if you and/or your spouse paid your previous quarterly income tax

          38G/H Creditable Tax Withheld per BIR Form 2307 for this Quarter 38G 38H
          38I/J Tax Paid in Return Previously Filed, if this is an Amended Return 38I 38J – consult with the company that provided your 2307

          38K/L Other Payment/s Made (please attach proof of payment-BIR Form No. 0605) 38K 38L – your registration payments would qualify here

          38M/N Total Tax Credits/Payments (Sum of 38A,C,E,G,I & K/38B,D,F,H,J & L) 38M 38N – just take the total of everything you listed above.

          3. How about for the 2nd quarter? Which field items above I should fill out? – It’s basically the same as with the first quarter.

          • pauline says

            hello julia.. my boss has a due payment on nov.15 2015 for quarterly income tax.. but it is sunday.. so i should pay on the 16 of this month nov.2015 but i forgot to pay.. do i have any penalties now if i will pay on the 17th of nov. 2015..?

  26. Joy says

    Hi,

    Thanks for the great infos here. I’ve just started my online business. And I have only one receipt issued (645 pesos) for December. Do I still need to pay the 3 % percentage tax?

  27. Len says

    I have questions sis, pls help me…
    I already have TIN since 2000 pa, when i was an employee, but stopped working for very long years, only on year 2009 when i started my freelance online work in oDesk.
    Then only this coming year I have decided to register as self-employed professional…

    Questions:
    1. Since I already have TIN (but no issued TIN card), can I pay first the 500pesos registration fee at BIR accredited agent bank before going to my RDO and file the requirements, and file BIR Form 1905 for registration information update ( from employee-to self-employed professional)? Pls I need your response… your response will greatly help me…..

    • says

      HI Len!

      Yes, you can already register BUT you have to double check with the BIR where your RDO is (regional district office). The RDO is the place where you registered your TIN and your taxes would filed/paid. If you’re going to register as a self-employed individual, you might be asked to transfer your RDO (from your old office to where you will be working). If that is the case, you may need to request a transfer of RDO.

  28. Mac says

    Hi, nabasa ko po yung comment ni ‘pol’ regarding sa certificate from barangay. Nagresearch ako and I found this article http://www.nanaynotebook.com/2011/07/woes-of-business-registration-in.html. Pero since magreregister ako as Professional and not Single Proprietorship kelangan ko pa rin ba ng certificate from barangay?

    Also, nag register ako ng TIN online and after ko makuha yung TIN ko may kasamang 1901 form pero yung 1901 form na yun is different sa form na nilink nyo. Yung 1901 form na nareceive ko is January 2009 while yung nandito sa post at sa bir website is January 2000. I’m not sure kung ipprint ko ba dapat to or magffill up ulit ako sa BIR using may TIN number.

    Eto yung screenshot nung form: http://ibin.co/1n0VfE0aSAF3

    And thank you po sa pagpost ng article, very helpful. thumbs up :)

      • Mac says

        Nagsearch ako ulit and eto yung nakita ko “if you choose to not register a trade name and only choose to use your name as the registered name, you don’t need to submit DTI certificate”. So I think di ko na kelangan ng Mayor’s permit and DTI. Nakita ko rin sa 1901 form ko na yung business name na nakalagay is yung full name ko.

  29. Katz says

    Hi!

    Thank you very much for this blog post! Napakalaking tulong niya.

    I wonder though kung OK lang mag-declare ng income without proof of receipt? Let’s say I am issuing receipts this year pero last year wala akong na-issue na receipts kasi hindi naman na-require ng client. Can I just come up with a figure dun sa forms ko?

    Thanks in advance!

  30. Pio Benedicto says

    Hello po!

    This coming April 15 will be the first time I will pay my quarterly income tax (I just started working this month) and I am still cannot quite comprehend just how to go about paying my tax as a self-employed individual, that is, until I stumbled upon this very informative article of yours. Thank you very much for posting this the examples given really made it easy to understand. haylabyu po :* hahahaha

  31. Pio Benedicto says

    Hello po!

    This coming April 15, will be my first time ever to pay for any sort of income tax (I just started working this month) and I still cannot quite comprehend just how to go about paying my taxes as a self-employed individual, that is, until I stumbled upon this very informative article of yours. Thank you very much for posting this! The examples given really made it easy to understand. haylabyu po :* hahahaha

  32. zeegee says

    hello

    gusto ko pong itanong kung ano pong gamit nyo sa pag-isyu ng receipt through online? kumuha po ba kayo ng Authority To Print form to use digital invoicing system po ba na accredited ng BIR? o ini-scan nyo nalang po ba yung receipt na job-ordererd by BIR tapos ini-email sa client?

    thankyou for this website mam! :)

      • zeegee says

        pano po pagrecord nyo sa reciept pag halo-halo ang type of currency.. minsan po my USD, CAD, EURO at Pounds ang bayad ng clients online,,,, kino-convert ba sa PHP based on the exchange rate at that time ang ilalagay sa resibo or yung mismong currency ng client? ok po ba sa BIR pag sa reciept ay USD tapos sa book of accounts ay PHP? or dapat bang PHP lahat for consistency?

  33. says

    Hello! :)

    I’ve been working from home now and I file my own income tax. However, I have never received any tax refund. How do I get this back? When I was working for a conventional office, the company would give it to us automatically. Your help would be greatly appreciated. Thanks in advance!

    • says

      According to our accountant, it’s possible to get a refund but difficult. Especially if you’re filing as a sole proprietor and the refund isn’t that much. The more practical course is just to have your excess payment deducted in your next payment. But if you really want to get a refund, I strongly suggest you ask for advice from an accountant or the BIR for this.

  34. raf says

    I am working remotely online (regular employee) for an AU based company.
    if I file these documents do I still need to give them a proof of income?

    Thanks a lot for this article really helped out a lot!

    • says

      If you are a regular employee, you shouldn’t have a problem. As an employee one of your company benefits would be to have your company withhold and pay your taxes for you. And the proof of this would be your ITR.

      But if your company does not do this for you, then under Philippine law, you are considered an independent contractor and you would have to register, file, and pay taxes as I described in the article.

      • Sari says

        Hi! Thank you so much for this article!! I have the same scenario as Raf. Is it legal to use OSD in our tax computation? I would just like to clarify because as a regular employee, we don’t have actual clients and we don’t issue OR. Should we just make receipts to comply with BIR requirements?
        Thanks in advanced!

  35. says

    Hello. Thanks for this guide. Guess what, we already had our Certificate of Registration last month (and we are still processing our receipts). Indeed, BIR offices have different set of requirements. In fact, in our place, we are required to pay for a Professional Tax Receipt (PTR) for P300. However, there was one time when my friend was asked with a Mayor’s Permit… but as advised by one of the BIR employee, we processed his application the following day, and everything went well…

    Julia, can you help us? We don’t know how to put entries in our book of accounts. We are asked with only 2 book of accounts: a ledger and a columnar. We are totally clueless as to how we are going to record the salary we got in the book of accounts. Please please help us… Feb 20 is almost running near…

    • says

      Hi Jin,

      It would depend on your arrangement with your accountant. Based on our research here in Davao, it would cost around P1k – P3k per month. But you could haggle, like only hire them to process your papers or only during your annual filing, etc.

      • Mike says

        Can you please expound? What would be the best thing to hire them for, just annual filing? I don’t fully grasp the process yet.

        • says

          Please read through the article again for clarification.

          If your questions is regarding hiring accountants/bookkeeper, you can hire them on retainer (pay them every month) to do everything for you. If you can’t, you have the option of only hiring them once a year to help you with your annual income tax.

  36. Teea says

    This article was helpful! But I was looking for an answer on how’s the process for online jobs which already WITHHELDS TAXES from workers’ salaries. I hope someone can help me.

      • Fritzie Jouvelle Tuada says

        It’s same case with me. My company withholds tax. Do I need to file quarterly too, pay percentage tax, pay an Annual Registration Fee (COR Renewal)?

        • says

          If your company already withholds tax, you don’t need to pay percentage tax, quarterly, etc. You do have the option of filing your taxes once you receive form 2316 from your employer. You don’t need to pay any extra, just file it.

  37. Kath says

    Hi,

    This article is really informative, thanks a lot! Anyway, I just want to ask the name of the printer that offers that kind of price? I’ve been getting higher prices for 10-20 booklets for 2000-5000.

    I hope you can also create an article about filling in a Journal and a Columnar since I’ve been trying so hard to understand and know their difference from each other.

    Thanks

  38. Nica Gerona says

    Hi I’d like to know if you are working under a family business under what category of a taxpayer you should enlist? Also, if your salary would around 5k a month?

  39. Kien says

    Hi Julia,

    I have some question;

    1. I already signup eTIN but i forgot my TIN and im not sure kung tama bayong mga information na na-provide ko. Ngayun pwedi bang mag signup ako uli ng new eTIN number?

    2. Can I itemized my internet bill, phone bill, electric bill? kasi ginagamit ko lng naman ito for clients or for my online job.

    3. In odesk we already deducted of 10% of our total paid. Kailangan parin ba namin mag bayad ng Tax?

    4. Saan ko e issue ang receipt? to odesk/elance? to my clients? or to my self?

    5. I already working online for 3 years. Ngayon lng ako nag decide to file a tax. Kailangan kurin ba bayaran anf last 3 year?

    Thank you.

    • says

      Hi Kien!

      1. Unfortunately, you can’t get a new TIN number. But you can ask your local BIR for help to find your TIN using your name. =)

      2. Yes, but it’s best to consult an accountant/bookkeeper in order to do this correctly.

      3. The 10% that odesk deducts from you is not for taxes. It’s their fees. It’s how they earn. So yes, you still have to pay taxes.

      4. You issue the receipt to you client but you don’t need to send it. You can just send a digital copy (if they ask for it) or keep it for your records.

      5. Not necessarily, unless you wish to declare it. But it’s best to consult an accountant for advice regarding this.

  40. Peter San Juan says

    Hi,

    Im from Rizal, if I register and started to pay tax for couple of months and relocated to Laguna, do I have to register again?

    Peter

  41. Leo Velasco says

    Hello Julia,

    I’ve been doing freelance work since 2008 and i never filed a single ITR.tsktsk. not that i intentionally avoided paying taxes but i was just not aware of the process. i actually thought im free of any tax liabilities since most of companies that i work with deduct around 11% from my salary for tax.recently i registered my business and thats when i realized i should actually pay around 30-32% annually. Now, i have to apply for a Schengen visa and one of the requirements is the ITR.is it ok if i pay for this years ITR only? will they see on their records that i have tax liabilities and require me to pay everything .This is just really stressing me right now. accounting freelance work will be hard, but to account all the transactions since 2008 will be a nightmare. and i just cant afford to pay them. I also needed to submit latest itr next month but i read that filing is still on april. can i go to bir and file even if its not april yet. i dont know how it works.

  42. Bryan says

    Hi! may tanong po ako regarding taxes. For example po annually ako nagbabayad ng tax. tapos 40% OSD ang pinili ko. Ibig po bang sabihin nun, hindi ko na pwedeng ideduct ang monthly percentage tax sa annual taxable income ko dahil naka 40% osd na ako? help naman po. naguguluhan talaga ako.

    another question po, need ko ba talaga magregister sa dti, at kumuha ng business permit? aside dun sa COR ng bir?

    Thanks.

    • says

      HI Bryan,

      You can still deduct the monthly percentage tax from the tax you are about to pay.

      About the DTI, yes, you would need to register.

      But it would be best if you consult your accountant/or bookkeeper.

  43. Mark says

    Thanks so much for this article! I’ve been reading about freelance tax for a long time and I always get turned off once it becomes uber complicated. Your step by step process and especially your examples with exact figures are a big help! Thanks again and God bless :-)

  44. Ryan says

    Hi Julia,

    I’m just wondering ma’am if you have an idea about the BMBE Act (Barangay Micro Business Enterprise Act) that exempts registered micro business owners for the income tax, and as a, considerably, business owners, can online workers maximize this law?

    And do you have an idea on how to file this incentives for income tax exemption?

    Thank You Ma’am! Your blog is answer to all our prayers 😀 hehe!

    Regards,
    Ryan

  45. Crunky says

    hello.. thanks for all the information i have learned. basing on the computations from this website, i have also tried to use a higher figure. I used 30,000. (this is not my salary but i just want to make a different scenario not so far from experience) As an online teacher, i don’t know exactly how much i will receive the next month due to delayed payments, and withdrawal of students (others don’t continue to study anymore. Don’t know if it matters but i have no employer. My students pay me directly.) Let’s say I opted for OSD. so 90000- 36000 = 54000 (quarterly income- OSD= taxable income). My category is 30,000 but not over 70,000. Basing on the formula- P 2500 + 15%( 54,000 – 30,000 ) = P6100. So i need to pay this amount quarterly. Am i right?

    Now for my Annual Income Tax, i am going to follow the formula again.
    I am single and no dependent so i am only entitled to a P50,000 deduction from my gross income yearly. So let’s say i earn 360,000 a year (basing on 30,000 a month) minus 50,000 is 310,000. Take away again the 40% OSD (124,000) so my taxable income is 186,000. This part, i am not sure if i am doing it correctly. I am under 140,000 – 250,000. so P22500 + (25% * (P186,000 – P140,000)) = P34,000. and since Iv’e paid for the past 3 quarters, P18,300, my annual income tax is P15,700. Is my calculation correct?

    I hope to read a reply from you soon. I desire to pay my tax accordingly and so i am eagerly learning. Thank you very much.

    • says

      Hi Crunky!

      Yes! Tama yung computations mo. But you should also remember na deductable yung monthly percentage tax mo, so pwede pa yan bumaba. Yung monthly percentage tax mo at 30,000 is P600. Multiply 600 by 12 months, you get P7,200. Pwede mo pa ma-deduct yan from your annual income tax na P15,700. So ang babayaran mo nalang is P8,500.

  46. BenG says

    Hi ma’am,

    First of all, thank you po sa article nyo kasi ang dami kong tanong na nasagot nitong article. Ang dami ko na kasing na-search pero dito ko lang nakita yung ganito ka-detailed na explanation.

    Pero meron lang po akong gustong linawin at additional questions, kung pwede? Bale yung questions po ay tungkol sa isang registered business na sole proprietorship, and at the same time I’m working din online.

    1. Pwede bang hindi magbayad ng 1701Q every quarter at sa halip, magbabayad ka na lang ng 1701 para sa buong taon?

    2. Between OSD and Itemized Deductions, pipili ka lang ng isa dito, right? Kung OSD ang napili mo which is 40% of Gross, hindi mo na kailangan pang i-submit yung mga resibo gaya ng sa internet bill, electricity, etc?

    3. Kahit ba sa registered business pwedeng OSD lang ang piliing deduction or kailangan yung Itemized?

    Thank you po in advance!

    Regards,

    BenG

    • says

      Hi BenG!

      I’ll try to answer your questions the best way that I can. But I still strongly recommend that you consult am accountant or bookkeeper since they would know best on how to handle your situation.

      1. Based on my consultation with the accountant, pwede naman. But paying quarterly would make it easier on the pocket and easier to keep track.

      2. Pag OSD,yes, di mo na kailangan magpakita ng resibo. Assumed na kasama na dun sa 40%.

      3. Depende yun sa anong klaseng business. In this case, it’s best to consult your accountant.

      Hope I’ve been able to help!

      • Mike says

        “1. Based on my consultation with the accountant, pwede naman. But paying quarterly would make it easier on the pocket and easier to keep track.”

        Does this mean pwede mo rin skip lahat, monthly and quarterly, and only pay yearly? And bakit “easier on the pocket” pag nag bayad ka ng monthly/quarterly/yearly instead of just yearly?

        • says

          Does this mean pwede mo rin skip lahat, monthly and quarterly, and only pay yearly? – Yes, you have the option of doing this.

          And bakit “easier on the pocket” pag nag bayad ka ng monthly/quarterly/yearly instead of just yearly? – Think of quarterly payments as “installment” payments on your tax. The tax you pay every quarter ultimately adds up to your annual income tax. If you pay just once a year, you’re paying a lump sum. If you pay per quarter, you pay tingi-tingi.

  47. raf says

    Hi thank you so much for your reply,
    I think we need the help of an accountant for us to file our taxes (esp. the annual income tax)

    do you anyone who you can refer to us?

    Thanks!

  48. raf says

    Hi,

    Also to follow up on my previous comment,
    I managed to ask an accountant i found online and he/she can process my ITR 2316 and gave me the amount I need to pay for taxes, how is this different with the forms mentioned above?

    I’m currently working for a company(home based full time) based in Sydney, Australia.

    Thanks!

  49. Angel says

    Hello! I have been a freelancer since 2012 and I am now planning to register as a taxpayer. Say, I plan to declare my earnings since 2012, which specific taxes do I have to pay? The percentage tax, quarterly ITR or annual ITR? Kase based sa understanding ko, dine-deduct din naman yung pecentage tax at quarterly ITR dun sa ITR, tama ba?

    I know late registration or filing is subject to penalties so before pursuing my registration, gusto ko muna sanang i-compute how much tax, I need to pay. Thanks. :)

  50. Claire says

    Hi, may tanong po ako. Wala po kasi akong TIN, then I started working last September 2014 pa. My employer did not ask for my TIN, so hindi ko na rin na-process yung pagkuha nun. But then every payroll, they deduct taxes from my salary. My question is, pwede ko bang kunin lahat yung dineduct nila na tax sa salary ko, since I’m leaving the company na? Ang point ko naman kasi is hindi naman nila naihulog lahat yun sa BIR since wala akong TIN. And if ever man na makuha ko yung lahat ng tax ko, hindi ba yun against the law since ide-declare daw ako nung company na “zero” (I don’t know what they mean with that.).. Hope matulungan mo po ako kung ano ang gagawin ko. Thank you in advance! :)

  51. Lisa says

    Hi,

    I just want to point out that since Percentage Taxes are supposed to be deducted as an itemized deduction under “Taxes and Licenses”, then you cannot deduct that from the Income tax payable.

    So while your first example is correct, the second example where you deducted the Monthly Percentage Taxes from the Quarterly Tax payable is incorrect.

    • Lisa says

      Also to add: Personal deductions are actually deducted AFTER deducting the OSD.

      So using your example above, the annual income was 120,000, after OSD the taxable income becomes 120,000-(.4 x 120,000) = 72,000.

      Then you can apply the personal deductions, so: 72,000 – 75,000 = -3,000. Further applying the quarterly taxes you already paid, then that becomes: -3,000 – 3,900 = -6,900. Even considering Percentage Taxes are already integrated in the OSD, BIR actually owes Jose so much more in credits :)

  52. k cerv says

    Hi,

    any info on how to fill out the 1700 ebirform? I was told that the info would come from my 2316 but not sure which is which info to fill up – the job aid just indicates – fill out if applicable..

  53. k cerv says

    Hi,

    Not sure why my inquiry did not post.. I would want to know how to fill out the 1700 eform, was told of a bir rep that what is in my 2316 is what i need to put in the form. but im not sure which info is which – not even the job aid help cause it would only state “if applicable”.

    thanks

  54. Shayne Bacabac says

    Hi, good evening. I would like to ask regarding my TIN. I used to work in Manila specifically in Imus, Cavite. I applied/registered my TIN there but now I am residing in Iloilo City and working as an online tutor. I wanna ask if I need to transfer my registration of my TIN from Cavite to Iloilo?

  55. Shayne Bacabac says

    Hi, good evening. I would like to ask regarding my TIN. I used to work in Manila specifically in Imus, Cavite. I applied/registered my TIN there and worked in a hospital so I am considered as an employee. But now I am residing in Iloilo City and working as an online tutor. I wanna ask if I need to transfer my registration of my TIN from Cavite to Iloilo? And do i need to change my category from an employee to individual contractor? And what steps do i need to follow for the application? :)

    • says

      HI Shayne!

      Now, about your questions…

      Your TIN – you will need to request for a change your RDO (regional district office). Our TINs are registered usually where we first find employment or where we first register. Since you initially worked in Cavite and moved to Iloilo, you’ll need to go to the Iloilo RDO and ask for their help in the transfer.

      Category – Yes, you would need to register as an independent contractor. I provided instructions on it in the blog post =)

  56. Stef says

    Hi, Julia! This is a very helpful article. Thanks a lot! I’m a little confused regarding receipts, though. Is this something I can obtain from the BIR as well? All I can present as proof of income are a bank statement and the payments I received posted on my account through oDesk, if you’ve heard of it.

    Also, on one of the comments, you mentioned that it’s dependent on what is declared. What if I earn, say, 30K per month solely through online freelancing. Is it possible to put a cap on that when I declare my monthly income? Can I declare only 20K on the receipts? And if what I earn is in dollars, will I need to convert it to PHP when filing taxes? Would the daily fluctuation in currency conversions affect it?

    Thanks a lot!

    • says

      HI Stef!

      I’ll try to answer your questions the best that I can. But if you need more information, I strongly suggest you also consult with a bookkeeper or accountant. They’re the experts =)

      I’m a little confused regarding receipts, though. Is this something I can obtain from the BIR as well? – No. What the BIR provides is the permission for you to have receipts printed. What’s different from receipts printed from BIR accredited printers and receipts we just print ourseleves is that the BIR will recognize what you put on the accredited receipts as your proof of income.

      What if I earn, say, 30K per month solely through online freelancing. Is it possible to put a cap on that when I declare my monthly income? – Yes

      Can I declare only 20K on the receipts? – Yes

      And if what I earn is in dollars, will I need to convert it to PHP when filing taxes? – Yes

      Would the daily fluctuation in currency conversions affect it? I don’t think so. The BIR only looks at what is declared in your receipts and books, which is declared in pesos.

  57. Mac says

    Hi, I just want to ask other than the forms when paying taxes what are the other attachments I need to include when paying? This is my first time paying my percentage and quarterly income tax.

  58. Jukie Dean says

    Hello!

    thank you for this very informative article!
    I have a question though, I have been working with an online English company. They asked me to pay 1,500 bond which is refundable if I resign after a year. So if I wasn’t able to complete a year with them, they will ot return the bond.

    Due to some reasons and other problems with this company, I decided to resign. I completed paying the said bond. But they wont give me my salary completely. they told me I would get only half of it. Will I have a stand against this company?

    Also, are these kinds of company registered in BIR?

  59. Rosie says

    Hi! If the company already takes a withholdin tax from your salary, do you still need to file to BIR? And you’re just a freelancer in that company, with no fixed income

    • says

      Hi Rosie!

      I’ll try to answer your question the best I understand. But the best person to ask would be a bookkeeper or an accountant.

      If you’re a freelancer or an independent contractor, you need to file and pay for your own income tax.

      If your company is withholding tax from you, they need to provide you with a BIR form 2316 as proof that the your tax is being withheld and paid on your behalf.

  60. Shaw says

    hi! :) ask ko lang po ung process ng pagffile ng form 2307… Nung nagwork po kasi ako sa alabang nagtransfer ako ng RDO from cavite to makati. Dito po tlaga ako sa cavitw nakatira. Hindi na po ako nagwowork sa Alabang ngaun bale nagtuturo na ako as homebased tutor. Ok lang po ba na ifile ko ung form 2307 dito sa RDO sa cavite? thank you po:)

  61. Zia says

    Hello Julia! Thanks for this blog post, super helpful! Pupunta ako ng BIR tomorrow to register. If I opted for the “40% standard deductible”, do I still need to register a “Cash Disbursement Book” sa Form 1901 ko? Wala akong tiyagang mag itemize ng expenses ko kaya I prefer the automatic 40% deductible.

    • says

      Hi Zia!

      I’m glad you found it helpful. Yes, you still need a cash disbursement book. Even if you opt for the 40% deductible, you still need to list the expenses you incurred with your registration, buying your receipts, your month percentage tax, quarterly income tax etc. This is important because you can add them to your deductibles.

      If you need a more detailed (and more accurate answer) it would be best to consult your bookkeeper or accountant.

  62. Eric says

    Hi!
    Thank you so much for posting this article. It’s really helpful!

    I really want to register soon but there’s only one thing that really concerns me (which is really discouraging) is about the “even you choose the standard optional deduction you still need an accountant or bookkeeper to help fill out the form”.. Or the whole bookkeeping thing in general. Since I’m so clueless about all this, is my only option would be hiring an accountant or bookkeeper? (which I don’t even know how) How does it work? I thought I could just do it all by myself but seems like not.
    I’m really sorry for still being confused. If you could explain that part to me in details that would really be great. Thank you so much! God bless!

    • says

      Hi Eric!

      We often recommend that you still consult a bookkeeper or accountant because we are not tax experts. What we presented here in the article is just once scenario of an online worker. Things would change if your circumstances are different. You don’t need to hire a bookkeeper full-time but it would be best if you consult with one so they could advice you on the best way to deal with your taxes.

  63. siz says

    Hi mam this article is very impormative. I have a question when filing 1701 annual income tax. I’m using the eforms of bir I am confused if I will choose between compensation or business income. Since I was registered as a self employed professional and every quarter the company gave me 2307 for filing of 1701q and 2551m. I’m a little confused on how to fill up this since It was my first time. If ever there would be a refund, what is the process thank you very much and more power

  64. Carolus Mangus XVI says

    Hello po, question lang. Kailangan po ba talaga yung 0605 every time you file 2551M po? I’ve been a taxpayer for six months na po eh, pero hindi ko na-realize at di rin ako pinagsabihan sa bangko na kailangan ko po yung 0605. Thank you!

  65. Gen says

    Hi Julia, thanks for the info. I also have a question. I had 2 employers last year and I wasn’t able to submit/ process a 1905. My current employer already provided me a 2316 for 2014. Should I be worried with anything? Should i do anything? I’m afraid to ask anyone from hr since they might tell me that I have to pay a penalty. Thanks.

  66. Carrie Go says

    Hi Ms. Julia,

    Thank you very much, you are very accommodating and generous to answer all the queries, it’s very helpful. I would like to ask for some help with regards to filing of 1701Q. Ever since, filing of my taxes has been handled by an accountant but the I decided that I want to handle it myself as to avoid open cases kc medyo napabayaan ng accountant ko. Kaya ako na ang personal na nagpa file. In my 2014 1701 (ITR) filing, i had a tax credit amounting to around 8k, if i file my 1701Q for the first quarter of 2015, do i need to put the amount on the portion where it says “38A/B Prior year’s excess credit”. Second question what is the supporting documents I need to attach to support my tax credit?do i need to xerox and attached my 2014 1701?

    • says

      HI Ms Carrie!

      I’m glad you found this blog post helpful. I’ll try to answer your questions the best that I can but I strongly suggest that you still consult with an accountant or bookkeeper to get the best advice suited for your situation.

      i had a tax credit amounting to around 8k, if i file my 1701Q for the first quarter of 2015, do i need to put the amount on the portion where it says “38A/B Prior year’s excess credit”.

      Yes, you do. You’ll need to a photocopy and original copy of your 2014 1701.

  67. isyumaestra says

    Hi Ms. julia,

    I just want to share my experienced last week when filling my itr in RDO43a
    Currently I am working as IT consultant classified by my company as individual payor,
    and monthly they deducting us 10% . Upon filling my ITR-My company gave us 2307 and I ask a bookkeeper to compute my tax. Then I went to the BIR to file my ITR with 1701 form . they ask me to get a number and verify . Upon checking to the personnel at verification–>He check on my TIN and that that I am classified as under local employment. I said that I am now practicing a profession and then told if I process before a 1901 or change status. I never process any change of status or process any form-my service company also not told us to process or inform that it should be done. It was the 1st time, I used to be an employee before, so no idea or information to process that – we just assume and the only thing we know that we are are deducting tax by our service company. They told me that the company should file in behalf of me not mine and the company should give 2316 instead.

    So I ask them what should I do, I was forwarded to the “Officer of the Day” to consult my issues…they ask me I should process change status to professional and requiring me to get a COR and a book. but since I am filling my ITR for 2014 it was late then and they said there’s a possiblities to be penalized because it has been 2 years that my status is that..last 2013, my service company filed on us but with same status but not even detailing the need of the COR or book. I present them the copy of my 1701 for 2013 tag as prof,.They said possibilities that last year it was overlooked and just received by the BIR or bank without verification.

    So, I said there’s no need to get a book and register because starting this year I was already employed by a company. So, they just advised me not to change my status because it will be complicated since my curent is local employment so it’s just the transfer of RDO will do. So , in other words, they advised me not to file for 2014 and since I am not payable, rather, I am refund for an amount of money–the risk and sad to know that I’ll will be no longer refund the money. Well for me it’s ok not to refund, my only concern that my status will be corrected and no issues encounter on the future.
    Since they said for this 2015 a new computing will apply on me under an employee.
    I only abide on the law on filling but since this thing hassle me a week to process , I just follow the advised of BIR, since they know best of what I think. I appreciate also the BIR RDO 43a because they really scan all process checking on what’s going on my status, because my other colleague was able to pass their !&)! to othe RDO with ease, and they said no checking done on them, even in banks that only accepts payment w/o verification.

    What do you think

    • says

      Hi Christine!

      Thank you for sharing your story! This is really helpful and I’m glad your RDO has been really helpful. And yes, it is best that you followed their advice and it’s great that you also consulted a bookkeeper regarding your case.

  68. Miehle Vel says

    Hi,

    I have question po. Pagnagfile po ba ng monthly percentage tax? idededuct ko rin un pagnagbayad ako sa quarterly?

    Thanks

    • says

      HI Miehle!

      According to our accountant, yes, you may have it deducted with your quarterly if you want. But it’s best to consult with a bookkeeper to make sure that you’re doing it correctly according to your circumstances.

  69. Jim says

    Thanks for the great explanation!

    But how about money earned from trading foreign stocks online (or forex, for that matter)? How is this computed? Should each trade be reported? This seems unreasonable and taxes would be way up there especially for day traders.

    In this scenario, the trader resides in the Philippines, but the brokerage is in the US or another country. Nothing I’ve found in BIR circulars or even in our laws.

  70. Joy says

    Thank you so much for the helpful guide!

    Question: What about training courses that we buy to upgrade our skills? Are they deductible?

    Thanks!

  71. Michelle says

    Hi Julia,

    Do I need to go to DTI and city hall first if I choose to pay taxes as an independent contractor (use my name)? No plans of registering a business (sole proprietor), just wanted to know if I can go directly to BIR and follow steps in the blog.

    Thank you,
    Michelle

    • says

      Hi Michelle!

      We actually asked the DTI and they said that you don’t need to register with them if you just work from home or work as an independent contractor. But once set up your own office, you may need to register with the DTI.

  72. Gilbert says

    Hi Mam!

    I find this article very helpful indeed, but with the advent of online filing I wonder if you can put up a step-by-step instruction with pictures on how to go about it. I am a computer literate person but I do find it intimidating to go through the process of online filing. I think this will also benefit other freelancers out there.

    Thank you for considering my suggestion.

    More power and God bless.

  73. mary says

    Hi julia is this also applicable to online sellers who don’t have physical store that sell goods and provide services thanks

  74. Anonymous says

    Hi Ma’am!

    Thanks for the information. It’s very informative and helpful.

    Question: If I registered my business this May 2015, my Monthly Percentage Tax will be paid on June 20, 2015, right? How about for the 1701Q and 1701? Should I consider it as calendar year?

    • says

      Hi!

      I consulted with the accountant and he says that you start paying when you start earning. However, if there are months that you dont have income (for example, you didn’t earn anything in June) you have to declare that you didn’t have any income. Same with 1701q and 1701. But for the best answer, please consult your accountant. He/she would best understand your situation and give the most accurate response.

  75. Sarah says

    Hi. Thank you so much for posting this. Ang laking tulong po. Tanong lang po, pag late mo pong nakuha ang COR mo magkano po kayang penalty ang aabutin nun? Hinahanap ko po kasi sa website ng bir di ko po mahanap. Aabot daw po ng 10K pataas?

  76. Liann says

    Hi Ms Julia,

    Just wanted to clarify about my deductions in my current company.

    In this company I’m currently associated with, they said we are categorized as “self-employed, freelancing professional sharing your expertise with our company” , and I am being deducted 20% tax (10% every 15th and 30th of the month). I just wanted to clarify if this is valid or just. I’m totally confused on these charges and I am really in need for an enlightenment.

    By the way, I’m currently out of the country and really have no other way to confirm this concern, hence, I’m leaving it all to your hands.

    Thank you in advance and God bless!

  77. Novee says

    Hi Julia,

    Can you also post a copy of a filled-out From 1905 for guidance?

    Also, are insurance payments, (i.e. Manulife) tax deductible?

    • says

      Hi Novee!

      Re: insurance payment, please check with your accountant or bookkeeper. He or she would be the best person to answer that question.

      Re: filled out form. The filled out form is actually posted on the article. But please note that the article only presents one very specific scenario of online workers and the example presented here shouldn’t be taken as an absolute guide for everyone. It would be best to consult with your accountant or bookkeeper if you want to accurately fill out your form with consideration to your circumstances.

  78. Joseph says

    Hi!

    Thanks for this wonderful post!

    It’s crystal clear and I would like to say its the best guide on paying taxes here in the PH for freelancers.

    If I have an net income of 100,000.00 per month. I have followed your calculations including deductible expenses and I came up with the following results:

    MONTHLY: PHP 3,000.00

    QUARTERLY: PHP 18,500.00

    ANNUAL (INCOME TAX): 150,120.00

    – PHP 1,200,00.00 (TOTAL)
    – DEDUCTIONS
    – PHP 50,000.00 (PERSONAL EXCEMPTION)
    – PHP 480,000.00 (OSD)
    – PHP 55,500 (TOTAL QUARTERLY PAYMENT)
    – PHP 36,000 (MONTHLY PERCENTAGE TOTAL)
    TOTAL DEDUCTIONS: PHP 621,500.00
    – TOTAL TAXABLE INCOME: TOTAL (1,200,000) – TOTAL DEDUCTIONS (621,500)
    : PHP 578,500.00

    // Since I fall on the over 500,00 bracket, I should compute the 32% of the excess
    // above 500k so;

    ( 578,500.00 – 500,000 ) *0.32) = 25,120.00 + 125,000.00 (according to tax rate)

    // So
    TOTAL ANNUAL INCOME TAX: 150,120.00

    I would like to ask if my computation is right and are there any options to lessen the tax burden? If you can email me then it would be great, I would like to talk to you more about tax rates and doing business., etc. If that’s okay for you, I don’t mind paying you hourly :)

    Cheers :)

    • says

      Hi Joseph!

      Wow! Thank you for the offer. I’m glad that the article was helpful. But I think the best person to consult would be a bookkeeper or an accountant, especially with your high rate. He or she would know more of what deductibles you could qualify for =)

      • Erwin Bantilan says

        Joseph, I think mali ung computation mo sa deduction.. ung quarter and monthly payment.. deduct ata yun sa annual income tax, hindi dun sa percentage bracket computation.. so total annual mo dapat is 103,900 not 150k..

  79. M says

    Hi, I work for a Singaporean company as a regular employee. I work remotely and I travel to Singapore from time to time to meet my boss and to other countries too. Now my question is, do I need to file for an ITR for myself? My friend called BIR sometime before the Apr 2015 deadline and they told her we don’t need to since we are not employed in the Philippines. I’m greatly confused. Help would be appreciated. Thanks!

    • says

      This article mainly focuses on independent contractors or freelancers. In your case, you are employed with a Singaporean company which makes your situation different. It’s great that you consulted with the BIR on this since they would be the people who know best. If you’ve already explained to the BIR your work situation and they have said that you’re exempted then good for you! =)

  80. Joan says

    Hi Mam,

    Very informative. Thanks for sharing. I have a question for u though, 1) I wonder what is the use of the receipt? We’ve been documenting our expenses using book of account so im wondering kung saan gagamitin ung receipt.n anong ilalagay sa receipt? Will bir need that in the future? 2) Can we just pay the monthly n annual tax kc advance nmn ung pang quarterly para d na madami ang papers.hehe. 3) I wonder if u can also create process in paying taxes for small businesses like computer shop, same lng b? Thanks so much.

    Joan

    • says

      Hi Joan!

      I’ll try to answer your questions the best that I can but it would be a lot better if you consult with an accountant or bookkeeper.

      1) I wonder what is the use of the receipt? We’ve been documenting our expenses using book of account so im wondering kung saan gagamitin ung receipt.n anong ilalagay sa receipt? Will bir need that in the future?

      The receipt is the basis of what you put in paper. Basically, everytime you earn money you should issue a receipt. And what’s on the receipt should be what’s in the book of accounts.

      2) Can we just pay the monthly n annual tax kc advance nmn ung pang quarterly para d na madami ang papers.

      Mahirap yun kasi you base your taxes on your income.

      3) I wonder if u can also create process in paying taxes for small businesses like computer shop, same lng b?

      Similar lang sila pero not completely the same. In the case of a computer shop, you probably have to pay rent for the space, register your business with the DTI, etc. When you have an actual shop, better if you have an accountant/bookkeeper to help you keep track.

  81. Rosula says

    Hi. We filed 2551M form online and i believe we need to go to the bank for the payment. Do you know what documents we need to bring/present to the bank? Thank you in advance!

  82. Zee says

    Hi Julia,

    I wish I’ve come across your post months ago. Nonetheless, still very helpful. Thank you so much!

    Anyways, can you please recommend a good bookkeeper in Davao?

  83. annie says

    Hi,

    I am not proud to say that I wasn’t able to pay my taxes in my previous company as a consultant and now I am transferring in a new company as a regular company. Are ITRs required when transferring to a new company? How will I process it and will I get penalties for the unpaid years? Thanks.

    • says

      HI Annie!

      As far as we know (and based on the advice of our accountant), ITRs are not required when transferring to a new company. But it would be best to consult with an accountant for the best answer, since you previously worked as a consultant.

  84. john says

    tanong lang po yung sa form 0605 kelangan din po ba ng triplicate copies pag magbabayad ng monthly, quarterly at annual tax?

    at kelangan ko pa po bang ibigay sa RDO yung copy ng monthly, quarterly at annual tax returns?

    salamat

    • says

      Hi John!

      Thank you for your questions. Okay, now the answers

      Yung sa form 0605 0605 kelangan din po ba ng triplicate copies pag magbabayad ng monthly, quarterly at annual tax? – Ideally yes so you would have your own copy and for filling purposes.

      kelangan ko pa po bang ibigay sa RDO yung copy ng monthly, quarterly at annual tax returns? – Only when you’re audited.

  85. danicami says

    Hi, thanks for the very informative blog. I just want to ask, are other percentage taxpayers also required t o submit the BIR form 0605? Is it submitted together with the 2551M when paying to AABs?

    • says

      Hi Dani!

      Our information is limited to online workers/independent contractors so regarding other percentage taxes, we wouldn’t know. The best person to ask about this would be an accountant or bookkeeper.

  86. Sam says

    Hi Ma’am,

    Tanong lang po, a friend of mine started online job last October 2014. All of her clients are from abroad, ngayon kailangan niya kasi ng ITR for 2014, and on process pa ung pag update ng RDO niya (from previous employer RDO to her home address RDO), Is it okay to file ung ITR niya for 2014 even if hindi pa siya register sa BIR as self employed? Wala pa po siyang COR. And hindi po siya nagbayad ng percentage tax for that year.

    For 2015, she’s processing na ung BIR registration niya, kailangan pa ba niyang magfile ng mga bir returns form January or from the time na lang po na registered po siya?

    Thank you in advance.

    • says

      Hi Sam!

      Ang tanong ko next is nag-file ba sya ng certificate of no income? Kasi kung registered ka pero di ka nakapagbayad ng percentage tax or any tax, you have to file that. Yes, you friend would have to pay penalties. As to how much, it would be best if he/she consult an accountant or bookkeeper for it to get more details.

  87. Algam says

    Hi. Thank you for posting this! After days of both confusion and frustration, I finally found a simplified process for a tax dummy like me. I didn’t want to risk filing unless I understood clearly the process. I have one question, though. I was asked by BIR to obtain an OTR (Occupational Tax Receipt) from the City Hall. My job is purely online (as an ESL trainer) and I work for an average of 4 hrs. a day. Can I contest needing to get an OTR or is it really necessary? Also, how can I issue a receipt with my line of work?

    • says

      Hi Algam,

      Evens as an ESL trainer, you will need to issue an OTR. It’s covered for all professionals who are does not have a PRC license and yes, you will need your receipts when you file for taxes. If you check the blog post, part of the registration process would be having these receipts printed with an accredited printing press.

      Now, how can you issue receipts to your clients since you work online. You don’t have to send them the actual receipts. You can just send them the electronic copies if they ask for it or just create the receipt and keep it for your own records. When you’re audited, the BIR will check your journal against your receipts, which is why if you want to declare your income and you want that income in your ledger, you have to write it in your receipts first then write it in your ledger.

      I know, it’s weird and redundant but that’s how they work =(

  88. Algam says

    Hi! Thank you for posting this. It has been both frustrating and confusing the past days as I was skeptical to file my taxes without clearly understanding the process I need to go through as a contractor (who relies on online job). Sadly, most people that I talked to in my line of work either doesn’t know the exact process or just did the registration and stopped right there. This is such a big help for tax dummies like me.

    Just a few questions, though:

    1.) My RDO asked me to obtain OTR (Occupational Tax Receipt) from the city hall. Going through the article, I did understand that there is a need for a Cash Receipt book and a Cash Deimbursement, as well. However, can I contest getting an OTR? I’ve read another blog that says an OTR is like a Mayor’s/Business permit and isn’t really necessary.

    2.) In our line of work as individual contractors (self-employed), we don’t really get to issue receipts to our clients, especially in my case as an ESL tutor. So, do I just fill-in receipts every time I receive my compensation? Is it then solely for my earnings or is it also for expenses?

    I find this blog the most credible since you were able to inquire closely with a registered BIR Accountant. Thanks.

    • says

      HI Algam!

      I think I answered most of your questions in the previous comment. As to the OTR, yes you will need it and it is applicable. I haven’t been able to put this in the blog post because this process can vary from city to city. In some cities it’s easy to get and OTR and in some, not so much. So it’s best to check with your city hall on how to get your ITR. If they ask you what you do, just say independent contractor or sole proprietor. Most people aren’t familiar with online work yet so they might get confused.

      So, do I just fill-in receipts every time I receive my compensation? – Yes
      Is it then solely for my earnings or is it also for expenses? – Solely for earnings. But you should also fill in your expenses in the ledger, especially if you opt for itemized deductions. Also make sure you keep the receipts.

      Sorry I can’t give better answers. The best person to consult would be an accountant or bookkeeper.

  89. Charmaine O. Marcon says

    Hello. I just want to ask when applying for tin online there are these questions:

    *Do you intend to engage in trade or business? Yes No
    * Do you intend to practice your chosen profession / perform service for a fee as self-employed individual? Yes No
    * Are you at the same time an employee? Yes No

    I’m working as an employee of an IT Company
    It’s for a long-term position

    • says

      HI Charmaine

      I’m confused about your questions. Are you asking on how to answer them?

      The best answer would be the honest answer. The questions won’t affect the process of obtaining your TIN. It’s mainly to help them decide on what category to put you in.

  90. Sonya says

    Hi! I got confused with all the info I got. So I want to ask about a specific situation.
    Like the other who gave their comments, I too am a home based online tutor/ independent contractor. I used to be a local employee, a term used by the BIR personnel I talked with. I resigned in 2014 and became an “official online tutor/independent contractor” last May 30, 2015. The company said it will deduct 10% of my salary if I will have the Sworn Declaration that I am receiving an income of less than 720,000 pesos a year in accordance with Revenue Regulation 30-2003, notarized and stamped by the BIR. If I don’t do this before June 30 they will deduct 15% tax. I went to BIR and they told me to change my status of employment first, because according to their record, I am still a “local employee.” I went back to my company and they said, no tutors have experienced this before. My situation was the first. All tutors before me had no problem and BIR just stamped and accepted the Sworn Declaration without the change of status. Now I’m confused and don’t know what to do. Can you give an advice? Thank you.

    • says

      Hi Sonya!

      To be completely honest, I’m stumped as well. This is the first time I’ve encountered this question. And our accountant friend said that it would be best if you talk with your company accountant or local BIR on how to iron this out. Without all the information available it would be difficult to give an accurate answer. Sorry!

  91. Nic says

    Hi Julia,

    First, I want to say thank you for going out of your way to explain these kinds of things. They are very helpful for freelancers like me. Anyway…

    Much like some of your readers/posters, I am getting into the tax thing quite late. I started working as a freelancer at quite a young age (early college years) and have been making a good amount of money through directing and videography. However, because of the deductions that were there, I honestly thought that was enough tax-wise. Oops. Wrong! Now that I’m sort of moving up “the ladder”, I’d like to properly abide by the law and actually pay my taxes (even if I know part of it will go to the crocodiles in congress/senate and Malacanang- yikes).

    So my question are:

    1. Being a freelancer since 2011 and not having paid a single ITR, how much will I have to pay considering I have no real way to track down my fees of past years?

    2. Will I go to jail or something if I can’t afford them? Will I get penalized? How will I get penalized?

    3. Or is there some kind of trial-by-combat/ amnesty I can avail of?

    I honestly just want to do this right now that I am more knowledgeable about this grown-up stuff but just don’t know where to start. I’m scared that once I actually start paying my taxes, BIR/Mrs. Henares will come knocking at my door whisking me away to some unknown dungeon in Westeros and feeding me to dragons… while having the news posted on Inquirer to make an example out me.

    Anyway, I hope you can help me with this. Where do I start? Where do I begin? I see that your usual reply to cases like mine is to “consult with an accountant/ tax person” but where do I even find him/her? And for my case, what do I do without being penalized or locked up (or is this part completely unavoidable? :( ) And when you say “consult with an accountant/ tax person” does this mean people like me are doomed? Is that the nice way of saying, “sorry buddy, you’re in big trouble… so go talk to someone who may be able to save your butt!” haha.

    Seriously though. I hope you can help someone like me. I just want to do what’s right but don’t know where to begin.

    Thank you so much Julia and I hope to hear from you soon! :)

    • says

      Hi Nic!

      Thanks for the comment! First and foremost, I need to explain that I am not a tax professional. I have consulted with an accountant and bookkeeper on this article (and on most of the questions here) and as much as possible I only answer questions that I understand completely. For everything else, I tell my readers to consult an accountant/bookeeper because they would be the best people to give you the right answers. There’s an accountant in almost every city in the Philippines and here’s a directory of them: http://www.picpa.com.ph/

      Now, about your questions:

      Where do I start? Where do I begin? – You should start by getting your TIN if you don’t have that yet. The procedure is also in the article. You can do it online or go to your RDO.

      1. Being a freelancer since 2011 and not having paid a single ITR, how much will I have to pay considering I have no real way to track down my fees of past years? – This would depend on whether you already have your TIN or not. If you don’t have your TIN yet and you haven’t registered yet as an independent contractor, you don’t need to worry about this. If you already have your TIN and you’ve been registered since 2011, then it’s time to get an accountant.

      2. Will I go to jail or something if I can’t afford them? Will I get penalized? How will I get penalized? Regarding the penalties, it depends. Some penalties are small enough that you can afford to pay them. Some penalties can be negotiated if you make an effort to put things in good order.

      3. Or is there some kind of trial-by-combat/ amnesty I can avail of? Yes, there are amnesty programs.

  92. sweetie says

    Hi,

    I would like to ask if there is any issue or problem with having two jobs with the proper deductions and remittance of taxes. I have 2 employers since it is a need for me to have more than one job because of financial needs for my family. I work at night in a bpo industry and I also work at day time both are full time, both my employer are deducting me exact withholding taxes. Will I be question or will there be any problem in the future? though I don’t have plan of staying long/ keeping in one of my job. This is just temporary bec of financial problem. Some says I might be ask by your office…

    Thank you so much,

  93. Ella says

    Hi po! Ask ko lang po, I have registered online and got my TIN but I haven’t paid the 500php fee until now. Ngayon po ay hinihingan ako ng TIN ng company ko. Okay lang po b na yun ang ibigay ko though di pa ko bayad sa fee? Nagwoworry ako na bka kumuha yung employer ko ng TIN para sa kin at magdoble ang TIN ko. Thanks po.

    • says

      Hi Ella,

      Check the BIR’s website or visit your local RDO to see if your TIN is registered to your name. If there’s no TIN attached to your name, then you can have your employer get your TIN. If the TIN number is already registered to your name, pay the P500 as soon as you can and give it to your employer.

  94. Anne says

    Hi!
    I just want to ask I am trying to get a TIN Number because it is recquired for the job that I am applying online. I went to BIR and told me that one of the requirements is the company certificate but the company does not issue this certificate because they say that I am an independent contractor. What should I do? I really need to finish the requirements as soon as possible. Hoping that you could help me.

    • says

      You don’t need a company certificate to get a TIN number, you can just apply as an individual/independent contractor. And it would be easiest if you apply for your TIN online. Just visit the BIR website for more details.

  95. Nina says

    Thanks so much for this!

    Can you recommend a BIR accredited accountant/bookkeeper with good (affordable) fees for self-employed individuals like us? I understand we also have to pay an accountant a monthly fee, thus another deduction from our income aside from the taxes.

    Thanks!

    • says

      Hi Nina!

      Sorry we can’t recommend anyone since it varies from area to area. You can ask your local BIR for a list of accredited or your local PICPA chapter. Regarding bookkeeper, in our case, we pay our bookkeeper a quarterly retainer’s fee, not monthly. And it depends on the kind of transactions you need accomplished.

  96. Ana says

    Thank you for this article!

    I work as an editor via onlinejobs.ph and get paid below 10k every month since I’m only doing this part-time. I don’t have any other job, just this one. My salary is paid by the employer through Paypal. I already have a TIN since 2011 and I’ve only started working online since last year.

    Is my ‘salary’ taxable?
    Will I be penalized for not declaring my meager income and paying my taxes?

    Your response will be greatly appreciated.

    Thanks!

  97. rose says

    I need ITR, for visa Application, I do have TIN already and have worked for the company as apprentice for 9 months 4 years ago and I think I’m exempted because i earn 4 thou. If i go to BIR now, and declare that I’m working for online job earning not fixed income more than 10 thousand, what should I bring as proof as I received only payment thru paypal..Printing Paypal transaction and showing this as receipt is that ok?..If not how can I obtain receipt as proof of income to them?

  98. says

    You didn’t get a TIN ID or ITR from your former employer? If not, most likely the call center you worked for has your TIN registered at their RDO (regional district office). If you can figure out what RDO your former company belongs to, you can ask that RDO for your TIN.

    • Shary says

      I actually have my tin that I used since I worked.

      what if I have two gig one full time & one part time with different outsourcing company?

      Which RDO will I get ? will it be the full time?

      And once I get the RDO what is the next process.

      Thanks.

        • Shary says

          What are the form will I complete ? I’m hired by outsourcing company to work from home. I can’t say that this is business income since I’m not directly working with clients.

          Please educate me more.

          Thanks,
          Shary

          • says

            That depends. Are you hired by the company as an employee or are you hired as an independent contractor. If you’re hired as an employee, then you won’t have a problem since the company would be the one doing the processing. If you’re hired as an independent contractor, then the procedures of the blog post would be applicable to you.

  99. Shary says

    Hi Julia,

    I actually hired an assistant for myself and I’m paying him every month.

    I believe this will be part of the deductible expenses right? And on the side of the assistant what should be done then, should he do the same procedure as above?

    Will wait for your response.

    Thanks.

  100. Kylie says

    Hi Julia,

    Because I have been employed all my life, just looking at the tons of forms needed and the payments needed to be made, monthly, quarterly and annually, makes me dizzy. I’m caring for my mom (she’s bedridden) that’s why I’m looking at working from home (contractor) in the near future. I have been scouting the net for information I need to know before I jump into the virtual world (this includes paying SSS, Pagibig & Philhealth voluntarily). But don’t get me wrong, this blog is as clear as crystal. Thanks heaps!

    Though, I want to know, is there an option for us to make the payment, say, just quarterly or once every year, perhaps (to save us the trouble of going through it every month or every 3 months since these payments get deducted to the tax amount at the end of the year anyway) for more convenience?

    I hope you can enlighten me.

    God bless :)

  101. Noriel says

    Hi Julia. I have some questions/clarifications.

    You mentioned this on your article: “But the truth is the BIR is still working on how to categorize online workers.”

    Reading you article and a few comments from your readers, I came up with these questions:

    1) If you’re an online worker and your income is generated from an overseas source/employer (ex. US, UK, Europe), are your subject to pay taxes here in the Philippines? If yes, can you cite a BIR law for that? Otherwise, can you clarify please or guide me in relation to your statement above why one should not pay taxes at this moment considering that BIR is still working…

    2) I’m thinking of Overseas Filipino Workers which according to BIR “OFW’s salary from abroad is not subject to income tax”. Are Online Filipino Workers (coincidence aka OFW) getting their salary abroad can enjoy the same benefits?

    Thanks. You answers will greatly help millions of Online Filipino Workers.

    • says

      1) If you’re an online worker and your income is generated from an overseas source/employer (ex. US, UK, Europe), are your subject to pay taxes here in the Philippines? If yes, can you cite a BIR law for that? Otherwise, can you clarify please or guide me in relation to your statement above why one should not pay taxes at this moment considering that BIR is still working…

      My answer is I can’t cite a law because as I have said in the blog post, I am not an expert. I have consulted an accountant for help on this article and we focused mainly on the issue of taxes. If you want the BIR law for this, the best person to consult would be a tax lawyer. But I can assure you that in my consultations with the BIR and accountants, for online workers, that even though our source of income is abroad, we are still considered taxable since we are providing a service and we’re working in the Philippines. OFWs in the other hand, work abroad and the money they send to the Philippines is a remittance, not payment for services rendered.

      2) I’m thinking of Overseas Filipino Workers which according to BIR “OFW’s salary from abroad is not subject to income tax”. Are Online Filipino Workers (coincidence aka OFW) getting their salary abroad can enjoy the same benefits?
      Same answer as above. And to be completely honest, there’s still a continuing debate on this within the online worker communities in the Philippines. If you wish to enjoy the same benefits as OFWs, by all means do so. My motivation behind is article is mainly to provide information for online workers who do want to pay their taxes, since paying taxes provides workers with an ITR, which is needed is you want to apply for bank loans, go abroad, etc.

  102. Anna says

    Hello Julia,

    Me and my husband are both working online. We are planning to register soon. So we need to register in separate?

    We have both personal exemption of 50k right? What is that Spouse part in the form? Will I/he need to declare both our tax on that part?

    • says

      Hi Anna!

      You are both entitled to 50K each yes. You can file jointly or separately, depending on what works for you or which is more convenient. I suggest you consult an accountant or bookkeeper for this since joint filings are beyond the scope of my knowledge.

  103. Charm says

    Hi,

    Thank you for the detailed blog post. It helps a lot.

    However, I have a few questions, the deadline for the quarterly income tax (2nd) is near. I’m quite confused because I’m not sure if I should fill out #35 in the 1701Q form. In your blog, it seems like you’re manually computing the quarterly tax without referencing to the previous quarters?

    In the eBIRForms, if I fill out #35, it will used the previous quarter + the current quarter for my final taxable income. If I will fill out 38C/D, the amount I paid last quarter, the final taxable income won’t match compared to the manual process.

    Example:
    Q1 has a net of 100,000
    OSD is applied so taxable income is 60,000
    tax due will be 7,000

    Q2 has a sudden change in sales, let’s say it went to 50,000
    OSD is applied so taxable income is 30,000
    tax due will be 2,500

    However, if you used the eBIRForms and fill out #35 and #38C/D
    Q2 tax due will be 5,500 even if I already paid 7,000 from the previous month? Are these fields not really necessary or they are used in a different case?

    From what I understand, the Quarterly tax seems to get the average which means they are dependent on each other? I’m quite confused, please do enlighten me. Thank you.

    • says

      However, I have a few questions, the deadline for the quarterly income tax (2nd) is near. I’m quite confused because I’m not sure if I should fill out #35 in the 1701Q form. In your blog, it seems like you’re manually computing the quarterly tax without referencing to the previous quarters? – Yes, you’re right. And the reason I did this is for the sake of simplicity. As I have mentioned in the blog post, I am not a tax expert and I wrote this in partnership with a bookkeeper/accountant. The reason they taught to me this way to make it easier for me to understand the process.

      And from what they explained to me, you can include the previous quarters payments in your 1701Q or in the annual form. I chose the have the deductions on the annual form the make the process more straightforward.

      When you fill up #35 and #38 C/D, you quarterly tax will influence one another since it takes into consideration how much you paid prior. Either the tax could be lower (through deductions) or higher (if there’s a gap).

      From what the accountant explained, these fields are optional. But this option is present because in some cases the taxes maybe lower or paying taxes that way would be more convenient. It would be best if you consult with a bookkeeper or accountant so you’ll be given the best recommendation on how to fill up your form.

  104. Bertz says

    Julia, reading your article has been so timely. I was employed quite a number of years from a number of companies with industries ranging from Animation to Graphics and Web Design. I shifted to being an online worker as a Graphics and Web Designer a few years ago when I got retrenched from my regular job. It was hard for the first few months because I can hardly find clients. Then I got blessed with a US client who referred me to her friends who in turn became my regular clients; all from the US also.

    Now, I got used to the practice where the companies from my regular jobs in the past took care of my tax. After my online jobs started to come in I wanted to pay my tax again. I approached a CPA friend, the accountant of our church, and asked her help to take care of my tax as a sideline. Since she does have several sidelines like that I thought it would be a perfect arrangement. When she learned that all my online work come from the US she told me that my earnings are not taxable. I took her word for it; she being the expert. But I am having a feeling of burden lately about paying taxes; call it ‘guilt-feeling’. So I researched on the net about my particular case. One article affirmed my accountant friend that my earnings from abroad is not taxable since the BIR has no jurisdiction over it (https://maribetholiver.wordpress.com/2013/08/01/why-ph-internet-freelancers-need-not-to-pay-tax-as-self-employed/). I decided not to rest on that info alone and searched some more until I came across your blog. Now I have decided to follow your recommendations and tips and be a good Filipino Citizen by paying my tax.

    It is already August 2015. Is it OK if I start declaring my earnings this August? Will BIR still require me to fill-up my earnings since January when I file my annual ITR? Will BIR also run after the years I have not paid my taxes since turning to being an online worker and be penalized for that? This last question is a BIG reason why I am scared to go to BIR to inquire how to pay my taxes. I am afraid to be questioned why I have not paid taxes after I lost my job and shifted to being an online worker. The thought of being penalized for being a delinquent taxpayer or worst go to jail for being a TAX EVADER petrifies me.

    What kind of Books should I keep? If I opted for Optional Standard Deductible (OSD), what will be the implication be on the Books I keep? Should I bring my Books when I pay my monthly and quarterly taxes?

    Will wait for your answers. Thank you very much for your help.

    God bless!

    • says

      HI Bertz!

      For the most part, you only need a book of accounts to keep track of your earning and expenses. If you opt for OSD, you don’t need to detail your business expenses. But if you opt for OSD, it’s with the understanding that all of your business expenses would be covered by it so you can’t have any additional deductions.

      No, you don’t need to bring your books when you pay your taxes. You just need it for your records in order to be audited.

      Is it OK if I start declaring my earnings this August? Will BIR still require me to fill-up my earnings since January when I file my annual ITR? Will BIR also run after the years I have not paid my taxes since turning to being an online worker and be penalized for that? – Before you start paying taxes, I need to ask, are you registered as an independent contractor/sole proprietor. As I explained in the article, after you get your TIN, you have to register first and you can start declaring your income from the start of your registration.

      • Bertz says

        Thanks for the reply.

        I am not yet registered as an independent contractor/sole proprietor. It was only after reading your blog that I decided to start paying my tax as an independent contractor.

        The way I understood it in the last sentence of your reply, I can start declaring my income once I get registered and have been handed my COR, is that it? So if I get registered in August and start declaring my income for this month, then I will pay my first Quarterly Income Tax on November 15, 2015 that will represent just my August and September 2015 income, is that correct? So, my 2015 ITR will reflect my accumulated income from August to December 2015 only?

  105. Dheniz says

    I have already been employed in the government and I have already been paying BIR taxes as well since I started my job. Recently I just have a second job which is an Online English Tutor and my Employer deducted 10% for BIR tax. Now my question is, is it legal to pay BIR tax twice a month by the same person for having two different jobs? Please help me understand this. I don’t know much about the labor laws because I am not a lawyer. Thank you very much, and more power.

  106. Burn Federipe says

    Hi Julia, clarify ko LNG po, ano po bang dapat kong gawin?
    Year 2007 kumuha ako ng TIN sa rdo 47 ( one of the requirements sa work)
    Nagwork po ako as agent for 1month, and I haven’t receive any income since commission base po .
    Then in the same year , nag study ako and graduated last 2012.
    Started to work in 2012 to 2014 in paranaque (rdo52) ( I’m not aware na kailangan pla itransfer sa new rdo) . Kinakaltasan ako ng tax every month.
    Now, need ko itransfer sa cavite so I went to rdo47 , and filled up 1905. HND natransfer kse po marginal income DW, walang akong tax from 2007-2014 from their record nila. Hnd ko alam na need po pla i close yun.
    Naiistress na po ako dhl
    – kailangan ko DW mgbyad ng penalties.
    (Wala nmn po akong income from 2007- April 2012)
    – magppsa dw ng form 1907 ITR ( hnd ko alam nilalagay ko, kse wala nmn akong mailalagay)
    – kailangan ko ng ipasa yung 1905, 2305 as my requirements to preemployment.

    Please help me.
    Ayaw ko mgbyad ng penalties dhl wala nmn along kinuta ng mga taong yan 😢

  107. Quinn says

    Hello! I keep coming back to your blog whenever I’m confused about which forms to use or how to go about my tax filing and all that stuff. This blog is really very helpful!

    I just have one question though is the form used for the monthly percentage tax different from those online workers who have 10% or so deducted from their income? What do I do in such a case? I hope you can explain to me how to go about that or at least lead me to a clear and reliable site or other such places. :)

  108. Anj says

    Dear Julia,

    I’m really thankful I found this website! I hope you never get tired helping strangers (most especially freelancers) with their tax woes!

    I am writing because I am having trouble filling up form 2551M online. What exactly does Taxable Amount mean? Do I put in the amount BEFORE or AFTER the tax withheld?

    I got a form 2307 from the last freelance job I completed. So I have to fill out the bottom part of the 2551M where there is “Tax Withheld Claimed As Tax Credit” written. Do I just copy the details from the form 2307 given to me? What do I put in the “Applied” box?

  109. Shary says

    Hi,

    Thanks for replying to my previous question.

    I have another question again. What if I was hired by a outsourcing company here in the Philippines as their subcontractor for foreign client would it still be considered independent contractor?

    Would the process of filling the taxes will be the same?

    I appreciate your response.

    Thanks.

  110. Mer says

    Hi Julia! Thanks for putting up this post, it’s been really informative and helpful for all of us. :)

    I’m still trying to get a good grasp of this before I file my application with BIR. I guess the primary thing that’s holding me back is that I travel a lot and my work as a freelancer is location independent. Would it be possible to pay the taxes just annually, instead of paying it monthly and quarterly? From what I understand, this option will be a bit straining on the wallet since it’s going to be lump sum instead of installments. I don’t mind though, it might be more beneficial for me since I would just have to keep track of one date and fix my travel sched around that.

  111. York says

    Hi to all,

    i have seen a lot comments of others in this posts regarding Freelancer and Taxes, i would like to clear up some misconceptions and understanding about Tax and who has to pay, register etc.

    1. Identify if Contractor or Employee Google it makes fun and will change your mind!

    2. Tax Treaty for e.g. this one:
    http://www.austlii.edu.au/au/other/dfat/treaties/1980/16.html

    3. Who is doing Tax evasion vs. Competition Law

    A Company is doing business here and in the US for e.g has a branch here and employees but what about those that operate without branch ? Yep those are the Tax Evaders from Australia – US – Europe, etc. the Freelancer and most of them i meet are considered by law a Employee – you cant register a business as employee !!

    Even if you do so its in general supporting crimes against competition law and foreign tax evaders. Paying tax for something you shouldn’t is considered as dumb.

    Fact: most in Philippines don’t know the law or have no lust to learn it, sadly to see that the BIR is jumping on the wrong boat because they not understand the first question or meaning,
    “Contractor vs. Employee”

    If You Google Contractor vs. Employee it explains what i mean.
    or check out this Australian site:
    http://www.fairwork.gov.au/about-us/policies-and-guides/fact-sheets/rights-and-obligations/contractors-and-employees-whats-the-difference

    Nevertheless think you own a BPO and have 20 employees you pay your tax etc. aside you need all permissions. If a Corporation fails to register and hires Employees without having all permits its done for one reason: TAX Evasion and when you see this in relation to your business with 20 employees well than this is called a unfair advantage. This Tax Evader will not pay any Pay roll or business neither income tax.

    If you like to know more about this have a look at:
    (klick on the left side to open the PDF)
    http://www.klgates.com/how-to-structure-overseas-independent-contractors-07-28-2015/

    Maybe this shades a little light on all the discussion about Filipino and tax paying!

    Cheers

    York

  112. vergara10 says

    Hi, I am currently working in Japan as an IT staff but I have a part time job too in the Philippines. My part time job is teaching English language to Japanese students. Philippine based account. Should I still need to pay taxes to PH government? Please let me know! Thank you!

    • vergara10 says

      Currently working-currently living, still here for the next 3 years. Ang akin lang, hindi ba unfair sa part ko na magbayad ng tax sa PH government dahil wala naman ako sa pilipinas. Thank you sa sasagot :)

    • says

      That depends. Are you hired by the company as an employee or are you hired as an independent contractor. If you’re hired as an employee, then you won’t have a problem since the company would be the one doing the processing. If you’re hired as an independent contractor, then the procedures of the blog post would be applicable to you.

  113. Anonymous says

    About the annual tax return, shouldn’t you deduct the FOUR quarterly taxes you filed instead of just THREE? Or is it the case that the FOURTH QUARTER tax and the ANNUAL TAX are aggregated, which is why you only deduct three quarters instead of four?

  114. Loren Emeterio says

    Hi,

    Would like to seek advice sana how would be my approach on this situation:

    My taxable period starts june 2015 (as online worker in IT) up to now but yesterday my boss told me they want to convert me as fulltime officebased employee to their soon to open office in Taguig. Tentatively, I will stop as self employed online worker by Oct. My plan of changing RDO (previous rdo is taguig also) is pending due to the announcement. Will I still need to change RDO from taguig to san juan (home office) when eventually it will be again taguig? How will be my tax computation quarterly from july up to the nov 15 duedate?

    Thanks in advance!

  115. Nina says

    Thank you for this. Does this also apply to me, I am employed full-time by a US-Company but the nature of my job is online. Some people have told me I only need to file ITR every end of the year. But this article is saying I should be considered self-employed/sole proprietor (by the way, I also have a registered business on the side, so this confuses me even more)…

    I hope you can shed some light. Even CPA’s I’ve talked to have conflicting opinions.

    If I am to file ITR every end of the year, what computation would it be?

    Thanks so much!

  116. phil says

    hello i have a question po. i used to work po in a company as a call center agent.then i resigned pero hindi po ako nkapag pa clear nung nag resign ako, but that was two years ago pa. and two years din akong na istambay. so lahat po ng records ko like philhealth,sss,bir is di na po nacontinue.and im planning po sana mg apply ulit ng trabaho sa ibang company. ok lng po ba na gumawa ng bagong records and hindi ko nlng po ideclare yung previous employment ko last two years. tsaka kasi hanggan training pa lng ako that time pero tumatanggap na po ako ng sahod nun. i hope mtulungan nyo po ako kung ano ba dpat kung gawin. thank you po.

    • says

      Hi Phil,

      As far as I know it would be illegal to have duplicate records. And since it’s clear that you were unemployed for 2 years, there shouldn’t be a problem with your records. But to make sure, please consult an accountant for the best course of action.

  117. jenny says

    Hello po. I’ve been an online freelancer for a year but it’s my first time working with an employer who deducts 2% tax. I only work as a PART-TIME freelancer and I’m applying for a full-time job right now. Will my FULL-TIME employer know I have a PART-TIME job by looking at my taxes. Are they allowed to look at my tax records?

  118. Francino Delima says

    Hi, I’m a self-employed professional with plans to freelance online (oDesk, or English tutorial). I have no TIN yet and I am getting soon. I hold two professional licenses. Would that mean I am going to pay the income taxes of my two professions as well as the 3% tax for online freelancing? Should the applications be filed separately? Thanks.

  119. Miss J says

    Dear Ms. Julia,

    Allow me to post my sentiments here. I just wish the online workers will follow suit instead of just posting comments. Reading is not enough. It would be best for them to visit their BIR office and follow the process. In a nutshell, they cannot file their ITR without BIR registration. Sa mga winiwitholdan ng 10% monthly, you cannot claim it as tax credit because you cannot file your quarterly ITR and annual ITR unless you are registered as self-employed with the BIR. Meaningless din ang computation kung hinde sila registered sa BIR.

    Nice blog, by the way. You were able to explain income tax in a meaningful way.

    • says

      I totally agree. And if you read the blog post, it’s actually specified in the first part that you first have to get your TIN and register as self employed with the BIR. This blog post is simply meant to help people understand the process and shouldn’t be taken as gospel.

  120. Loren says

    as online job worker, if nagstart ang work ng June then you were separated from the company ng end of Sept, ibabalik ba ng buo yung naibayad mong tax? thanks in advance!

  121. aco says

    If I started freelancing January of this year, but registered only today (October), can I still pay for my income tax for the previous months/quarters? May penalties ba? Or can I just file in April 2016 for everything?

  122. Grace says

    Great!
    It’s a very nice information for me that currently need to apply TIN# for my Online Business but still I’m employed in a private company.

    I this case, I can have two TIN# or same TIN# to be used?

    Also by reading this guidelines that very informative already as TIN# applicant/taxpayer still need to attend briefing before it release the BIR certificate of registration

    Thank you!

  123. eloisa says

    Great blog.
    It’s the second time for me to file my 1701Q with payment.
    Confused lang ako kung ano ang dapat ilagay sa Tax payment for the previous quarter-38C at Creditable tax withheld for the previous quarter-38E.
    sa 38C ba ay yung binayaran mo na previous 1701Q payments? Ang 38E ay previous 2307 withheld?
    Pasensya na. Salamat.

    • says

      Yung previous taxes na binayaran ilalagay sa 38C. Yung tax withheld (the one taken by the employer) ang ilalagay sa 38E.

      But it would be best to consult with an accountant/bookkeeper to get the advice best suited for your situation.

      • JOSEL says

        Good eve po. Thank you for this informative and dynamic site. As follow-up question po sa concern about 38E/F Creditable Tax Withheld for the previous quarter(s), my questions are:
        1. Since I am now using eBIRform software V.6, everything is automatically computed, but I would just like to confirm, ang “Creditable Tax Withheld for the previous quarter(s)” po ba eh ang na withhold ni company (considering I am an Independent contracting receiving 2307 form from them every quarter) nung previous quarter? So in case Im filing 1701Q (2nd quarter), 38E – is the 38G of 1701Q (1st quarter)?
        2. In filing Annual ITR (1701), are Creditable Tax Withheld from 1st to 3rd quarter to be summed up? Thanks po.

  124. lyn says

    Hello!

    Learned a lot from your blog post. :)

    I just have a question though. You mentioned that part of the requirements in getting a COR is “BIR Form 1905 (for those who already have a TIN and used to work in an office, to change your Regional District Office)” — just wondering if this applies to my case.

    When I was still a student, I got a TIN number at my home’s RDO 39 (Quezon City) when I applied for a Student Permit/Driver’s License. I, since then, worked in companies located in Mandaluyong, Makati, and Taguig using the same TIN number. I just recently resigned and decided to just work as an online freelancer here at home.

    When registering as a self-employed professional and getting a COR, should I still file form 1905, given that the RDO where I got my TIN and where I will register myself as self-employed is the same?

    Thank you :)

  125. Lyn says

    Hello!

    I just recently resigned as an employee and now wish to register in BIR as a freelancer/self-employed professional. Do I need to file form 1905 before applying for a Certificate of Registration? If yes, how do I go about filling up the form? Thank you :)

  126. Serenity says

    Hi Julia,

    I just want to say thank you for this comprehensive blog. I’m glad to have found a great guide to paying my taxes.

    I hope that every Filipino citizen would do their duty and pay their taxes. A lot are hesitant to pay taxes because they think that it would just go to the pockets of the corrupt government officials. That’s a fact everywhere we go. There will always be people like Janet Napoles. But it is not an excuse to not pay our taxes. If everyone would think the same way, the Philippines will not get out of the quagmire that it’s in. Let God/karma deal with those thieves. Even Jesus said that it is lawful to pay taxes.

    Taxes makes it possible for us to use the roads and sidewalks, study in public schools, get treated in public hospitals, get police protection, and enjoy the other infrastructures built by the government. Taxes are very important.

    This article shows that it’s not really expensive to pay taxes. I hope everyone will be encouraged to do so. Let’s do our bit to help the country. We can do this! :)

  127. Shine says

    Hi Ms. Julia!

    Thank you for this great blog, alot of info.. But I actually had to read the comments more than the whole steps.

    I hope you can help me understand, since ive been reading articles from the net lang about online busines.

    Me and my friend just put up an online events and party organizing business, and just had our first client. But they are asking for an OR since they are a company and needs it for bir purposes daw, or we can provide daw an AR if wla OR. Is an AR just an acknowledgement receipt that doesnt need BIR registration since urgent na nmen kailangan. Or if we are to register to BIR, are we going to be required to pay taxes since we dont have a regular income naman, and it will just depend if someone will get our services? Are we qualified as BMBE and is qualified for tax exemption? Btw, I registered as sole proprietor instead of a partnership because lesser hassle daw. And how about the “books”? I dont have an idea on how to go about that.

    We actually just registered and plan to undergo the tedious process just to provide our client a receipt.

    Ms. Julia, i would greatly appreciate you reply about this. Totally, no knowledge about how to go about this.

    Thanks so much in advance!

  128. Sherry Castro says

    Hello Ms.Julia,

    I have just started working as a fulltime online ESL tutor. I already have a TIN and I’m planning to register as an online tutor at BIR soon. Although, I’m skeptical about it because I don’t know whether online teachers also need to make book accounts, since I earn on a monthly basis. The company already withholds 10% from our monthly salary and provides form 2307. In such case, do I still need to make book of accounts and issue receipts as well. I hope you can enlighten me on this. Thank you very much, I hope to hear from you soon. God bless

    • says

      HI Sherry!

      Since your employer already withholds a portion of your income and provides your with a form 2307, I don’t think it would be necessary for you to register since you would be considered an employee. To be sure, please check with your company’s accounting dept.

  129. Sherry Castro says

    Hello again Ms. Julia,

    Thank you very much for the prompt reply.Sorry to bother you again po. I am considered an independent contractor daw po and not an employee. So since they withhold 10% from my salary every month, do I still need to pay monthly percentage tax and can I just file ITR once a year? Saka po I have a PRC license na po, do I still need to secure occupational permit?Thanks po ulit and pasensya na po sa dami ng questions.

  130. Jane says

    Dear Ms. Julia

    Greetings!

    I just want to ask po reagarding sa 2551M may mali po kc kami na declaration for example po yung month of June nagdeclare po kami ng 157,682 sa 2551M tpos nung nagdouble check na po kami sa mga O.R ang idedeclare dapat nmin ay P162, 282.14 so kulang po sya ng P5,600 sa month of June n dineclare po nmin sa 2551M. ano po kaya ang pwede namin gawin? my penalty need help po. thank you.

  131. Sims says

    Hello po. First, just wanna say how helpful this article is. I, too, is an online worker for more than 5 years now but I have never filed tax before.

    I am an online tutor. My company deducts 10% withholding tax of my monthly wage. So what should I do with that? I mean, how can I declare that the company is already withholding 10% of my monthly income?

    Thanks a lot.

    • says

      HI Sims!

      If your company is already deducting tax, you don’t need to pay your income tax but you would need to ask your company for a copy of the taxes they’ve withheld. That way, if you want to file your taxes you can show that you have already paid through your company.

  132. Grace says

    Hi Ms. Julia!

    You have a great information for us.
    But still I need to know for filing of 2251M what if I have income but I did not issued yet OR to a customer because not yet received the printed OR that time.
    Do I need to declare it as income or excluded it?

    Thank you!
    Grace

      • Grace says

        Hi Ms. Julia

        Thanks for the reply!
        I have another question, if no sales for that month and late filing still have penalty?
        How much?

        Thank you!

          • says

            Thank you so much for explaining all that! It clarifies a lot of things. Would you might if I took your comment in verbatim to update the post? I want to make sure that the post would be accurate. I hope I can also credit you on the update. Would it be okay if I ask for your full name? Or do you have a website or a blog so I can credit you on the corrected information?

  133. Gil says

    Hi Ms. Julia!

    I just want to tell you that I finally got my COR last December 15, 2015, thanks to you.

    My question is – since I registered only last December 15, 2015, am I eligible to file for annual tax return come April 2016? Also, I have no idea what to put on the notebook that I received when I got my COR. What should I put in there? Would you believe that I was able to obtain my COR without them (BIR) giving me a seminar on it?

    Looking forward to your reply and thanks again.

    Sincerely,

    Gil

    • says

      Congratulations Gil!

      Regarding your tax return, since you only got your COR on Dec. 15, 2015, you can file for annual tax on April 2016 but I believe that would only cover December.

      Regarding your notebook, that’s where you should list your income and expenses. In this case, I think it would be better if you consult with a bookkeeper so he/she can help you fill that out. I don’t know much about your work so I’m not sure if I would be giving you the right information on that one.

      Once again, congratulations! Happy to help!

  134. Myra Davies says

    Hi Julia. I want to ask in the form (where there’s a name for the Spouse Name). My husband is a foreigner working in Norway. Do I need to write his name on the form including his TIN no.? He’s working in Norway while I’m working here in the Philippines. Thanks.

    • says

      Hi Myra,

      Yes, you need to fill in his name in the general information section (it’s usually on the front of the form). It’s your option to file jointly or individually. And since your husband is a foreigner, I think it would be best to consult with an accountant or bookkeeper to get more information on how to do it properly.

      • Myra Davies says

        Thank you Julia. I will consult that. I have another questions: I have TIN no. (when I worked before in an office), my questions:
        1) Do I need to attend the taxpayer’s briefing to get my Certificate of Registration? 2) Can I can update my TIN Card with change of status from single to married using my husband’s surname and using the Form 1905?
        3) I’m working as Online Graphic Designer, do I need to show to the BIR Officer my Certificate of Employment that I just got hired.
        4) Lastly, I’m confused with the Books of Account: 1 ledger, linear journal, 1 professional income book, 1 subsidiary purchases/ expenses book and must print the invoices/ receipts printing (booklets of invoice/ receipt on the BIR Accredited Printers >>> Do I need these??? I’m really confuse on this.

        Thank you so much and sorry I have many questions. Thanks and more power Julia!

  135. Lynnell Emmanuel D. Neri says

    It’s January now. I got to renew my certificate of registration which is P500. Do I have to pay again for the Professional Tax? I’m quite saddened by the government because they have different view. Some says I don’t need Mayor’s Permit anymore since I am only home-based, while some says I have to because it’s still business…. Huhuhu. I’m also saddened because when I help my friend to close his registration, he was asked with several requirements – the hardest part is the Certification from the local government that he is now closing his business. They won’t give them that because he did not get Mayor’s Permit. How disappointing is the government. It is us who are doing our best to be responsible by paying taxes, but it is us who is being burdened of not helping. Tsk. Tsk.

  136. Jocriss says

    Hi! I have a question. In case I won a lottery in Nevada, let’s say, a million dollars, should I still pay taxes in PH even if the taxes has been paid in the US?

    • Francis says

      Yes, if you are both a citizen and resident of the Philippines. There is the Philippine-US tax treaty to avoid double taxation. If the tax rate of the Philippines is higher than the US, you pay the remaining balance to the BIR. Consult a lawyer / accountant if needed.

  137. Martin says

    Firstly, I want to thank you for this very informative article :)

    I already have a TIN since 2010 as I worked as an ESL instructor and I have started working online since mid July of 2014.

    I have my own website and sell my own digital tutorial ebooks. The first 6 months (July to December 2014) I was averaging at 12k to 15k every month. Since January 2015 to December 2015 I get sales around 20k to 30k pesos every month since I’m doing this full time. I don’t have any other job, just this one. I am getting paid via PayPal and transfer it to my bank in a form of ‘Remittance’. I also see on bank account that they are automatically deducting ‘Withholding Tax’.

    I also got a house which I’m paying on a monthly amortization.

    I am so worried and confused now about this ‘BIR thing’ since I haven’t register my online business… They (BIR) might question me about how I got a house…

    Will I be penalized for not declaring my income and paying my taxes since 2014?

    Is it still OK to register my online business (like I was still starting out) this month of January 2016? What will I tell them?

    Your expert response will be so much appreciated.

    Thank You.

    Martin

    • says

      Hi Martin,

      Wow, that does complicate things.

      I have to reiterate that I am not an expert. I stated that in the start of the blog post. I consulted with an accountant on a very specific topic. Beyond those circumstances I have very little knowledge on the rest of the Philippine tax system.

      I think it would be better if you consult with an accountant about this. I don’t think there’s anything wrong with you registering your business this year. But regarding everything else, you will need to talk to your accountant on how to go about with things.

  138. Mac says

    Hi, I am currently in the process of renewal. Do I just go fill up my 0605 and pay at the bank or there’s still something else I need to do?

  139. RJ says

    Hi Ms. Julia,

    I’m currently employed (fulltime) in US but I’m working here in the Philippines. My salary is hourly based (USD) and I am required to work 8 hours per day or 40hrs per week. So meaning I don’t receive same salary every month because sometimes there are 21,22,23 working days per month.

    I’m receiving my salary thru PayPal. How can I declare my monthly income if it is not fixed every month? Should I present any income proof to BIR? I don’t have any payslip or monthly invoice. Or can I declare a fixed amount of my income?

    Also can you recommend an accountant for me?

    Thanks,
    RJ

  140. H says

    So I did the math and if I earned 90k a month, I’d pay 28k worth of taxes quarterly.

    The annual tax computation would look like this:
    P162,760 – 84,000 (3 paid quarters) = 78,760.

    Does that mean I have to pay 78, 760 yearly or is that the amount the government owes me? I don’t have an accountant and file taxes on my own.

    • says

      In your initial computation, you need to pay 28k quarterly. And your annual computation is P78,760. You pay P28 for the first 3 quarters of the year. For the last quarter (in April) you’ll pay P78,760 – (P28,000 X 3) = -P5,240. This means the government would owe you P5,240. You can claim this as a deductable in your next quarter tax or next annual tax.

      But this is just from the information you have given me. For the best information, please consult a bookkeeper or accountant. He or she may be able to help you more with this.

  141. Francis says

    Hi,

    If a taxpayer wants to correct errors of figures in his/her 2nd and 3rd quarterly income tax returns for calendar year 2014:

    Does he/she need to file amended return of each of the said quarters?

    Or, does he/she only need to file the amended ANNUAL income tax return?

    Thank you.

  142. pat says

    Hello po, I just want a clarification. Based on my contract though this is a online job I will be deducted with the 10% witholding tax and in case I won’t send in a sworn of declaration it will be 15%. Since we will be tax this way it is mandatory to file for the certification for registration as an Independent tax payer and pay the tax of 3%? It’s like were an employee of a company, so I think there no need to file but the company insist. Will it be unfair if we’re going to file as independent tax payer but debited with the normal employee? Just wondering, seems not right.

  143. Rowena says

    hi, i was working online since May 2012, i started 9k and now 14k, been working for same company, Were on the process of my fiancee visa, how much will be my tax with my 14k salary?

  144. Jasmin says

    Hi there, I just to point out that this line is wrong:

    “So every quarter, Jose has to pay P1,300.”

    If Jose earns 10k every month, with OSD, he has to pay:
    1Q – 1,300
    2Q – 2,100
    3Q – 2,700
    Annual – 2,200 less payments 6,100 so he’ll have
    3,900 credits

    The number works out about the same, but the filing is wrong and BIR will impose a fine.

    On the form 1701Q – for 2Q;
    Item 26 is 30k for the 3months salary.
    Item 35 is taxable income of 1Q (18,000)
    Item 38C/D is tax paid for 1Q (1,300)

    Also, this line:
    “He can also have his monthly percentage taxes deducted from his quarterly income taxes to reduce the amount he pays every month so he won’t be paying in excess.”

    No he cannot do it the way you show it. Percentage tax is part of Item 33, but he cannot use that if he is using OSD.

    • says

      Hi Jasmin! Thanks for pointing this out. But before I make the edits, I have to ask:

      1. How did you compute for the following:

      If Jose earns 10k every month, with OSD, he has to pay:
      1Q – 1,300
      2Q – 2,100
      3Q – 2,700
      Annual – 2,200 less payments 6,100 so he’ll have
      3,900 credits

      Why would his 2Q and 3Q payments be different if he earned the same amount each month. I find that confusing. Can you show the computation for this?

      @. I consulted an accountant with this (several times) and he said that percentage tax can still be deducted with OSD. But you say that you can’t do it with OSD. Why? Does this the monthly percentage tax can be deducted if you don’t take the OSD? And if you opt for OSD does that mean you have to pay monthly percentage tax? But you mentioned that monthly percentage tax is part of Item 33. So he can declare but not deduct?

      Thanks for taking the time to comment. I really want this post to be accurate so your response would be welcome.

      • Jasmin says

        Hi, for the 2Q, he has to declare the 2Q’s earning, as well as the 1Q. He also has to declare the taxes he paid on 1Q.

        Basically on the form 1701Q
        item 26: 30,000 – revenue for 2Q
        item 34: 18,000 – taxable for 2Q, (60% of #26) add
        item 35: 18,000 – taxable for 1Q
        ————
        item 36: 36,000 – taxable income to date
        item 37: 3,400 – tax due – based on the table, less
        item 38c/d: 1300 – tax payment from previous 1Q
        ————–
        2,100 – total amount payable for 2Q.

        Same for the 3Q, he has to declare the 3Q’s earning, as well as the 1Q and 2Q. He also has to declare the taxes he paid on 1Q and 2Q.

        Really I don’t know they do it this way. But it’s the right way of doing the 1701Q.

        On the percentage tax, it’s an allowable deduction. If you’re not on OSD, its part of your other expenses like SSS payments or internet payments or whatever business expenses you have.

        If you’re on OSD, that’s already counted with the 40% expenses, again like the SSS payment and internet payments and what have you.

        • Jasmin says

          BTW yesterday I only skimmed through your annual tax computation (and copied your 2,200) and didn’t notice it till now. Jose’s annual tax should be:

          120,000 – yearly income, less
          48,000 – OSD, equals
          —————
          72,000 – net taxable income, less
          75,000 – personal exemption
          —————-
          0 – so the overpayment is 6,100

          And this line:
          “And of course, he as to fill out a 0605 to pay for his quarterly tax.” Not really required now with the ebirform/efps

  145. Dhenn says

    Hello,

    Ask ko lang I am a full time employee and as well nakaregister ako as professional sa BIR last year ng April. Am I consider mixed-income ba? How would I file my annual income tax ? Thanks.

  146. Kaye says

    Hi! I am not sure if this has been answered already, anyway, I got my TIN number when I worked in Alabang from 2011-2014. However, I resigned and started working as an online employee since 2014. I traveled most of the time, though, so working online was not a full time job. I plan to work full time as an online employee this year, and continue pay my taxes as an independent payor. So I need to get COR again, right? If I register this month (Feb), and decided to pay quarterly, should I pay this April or August 15? Also, do BIR offices do advice on this matter? Since I am totally lost on this, I plan to visit and ask them myself. Otherwise, do you know where I can contact them for advice? Thanks very much in advance! And thumbs up for your very informative article! :-)

    Kaye

    • says

      Hi Kaye! You don’t need to get a TIN but you do need to get A COR as an sole proprietor/independent contractor. You can ask your BIR office regarding it. But based on our experience it might be better to consult an accountant/bookkeeper. They’re often more accommodating. And If possible pay for the consultation so their advice would be more tailored to your needs.

  147. Bea says

    Tanong ko lang kung ang employer ko ay nasa abroad at ibe base lang ako sa Pilipinas and completely wala silang company sa Pilipinad magbabayad pa rin ba ako ng tax?

    • says

      I am working on updating this but it hasn’t been updated yet. I’m waiting for one of the commnenters to confirm that I can use her comments for the update. But if you want to help me update this, I would really appreciate this. I’ll even cite you as a source.

  148. Ednismod says

    Another thing, I don’t issue any receipt at all. The payment for my services are being sent via wire transfer and/or bank transfer. That said, are “Cash Receipt” and “Cash Disbursement” Journals required? I am not registering a business, so I assume that’s unnecessary. Please confirm.

    Thanks!

      • Ednismod says

        First off, this blog is really helpful. My apologies for not mentioning that earlier. Although the situations may differ for each individual, am really glad that there is open board for inquiries such as this.

        On to my concern. I believe receipts are for registered businesses (correct me if I am wrong), something that I am not. You can think of me as a contractor. The company that pays me is based abroad; however, the company is not registered here in the Philippines. Should I be paying as Self-Employed or as a Contractor or my situation is something else entirely? When paying as a Contractor, does that require having to issue receipts. And do we have the same set of rules or calculations based on what you have explained in this blog?

        Please advise. Thank you and more power!

        • Ednismod says

          Hmmm, nevermind. Am guessing that is going to be the Cash Receipt books. What’s the Cash Disbursement books for anyway? Are those for expenses? Expenses do include Internet, Electric, Components used for working online, is that correct?

  149. mgrace says

    Thank you so much for this helpful blog.

    I worked abroad for 3 years. I pay tax abroad as well. Now I need to go back to PH and I never had TIN. My employer abroad would like to keep me to work for them even if I am moving to PH through online work or work-from-home basis. Do I need to file my tax as self-employed online worker?

  150. Trend says

    Hello Ms Julia,

    Kailangan ko po ba talagang mag fill out ng Form 0605 kapag nagpa file nung monthly, quarterly and annual tax returns? I pay sa Metrobank and wala naman silang hinihinging Form 0605. Thanks for checking.

    Trend

  151. Grace says

    hello po :: dito ko nakita ang kasagutan..salamat sa blog na to 😛

    pwede po bang magbigay kayo ng sample kung paano yung sa excess credits?

    paano po ba marefund yung mga excess credits? kailangan po ba ng attachments?

    paano po maavail yun? thanks po.. par sana mabawasan yung babayaran … thanks… feeling ko kasi malaki yung excess sakin e .. thanks and more power … :)

  152. Joana says

    Hi po. Taxable po ba if part time lng po ako..earning lower than the minimum wage..im aware namn po n excepted ang minimum wage earners.. Pro may pinagkaiba po b? Kasi I worked as a part time for 4 months then for 8 months I worked fultym having 600 basic salary and 2500 allowans.. So panu po pagcompute noon. Thanks a lot. Godbless po.

  153. Margie says

    Hello Again Ms Julia,

    Wanted to know if when paying taxes for Quarterly Should I present any income proof to BIR? since I don’t have any payslip or monthly invoice. I mean do I need to show invoice or just declare a fixed amount of my income on the form? also how can I declare my monthly income if it is not fixed every month? let say if I will pay for first quarter: January: 15k , February : 20k , March 18k ,25k and so.. so total for the 3 months salary is 53k how thus I declare that on the form and do need to attached invoice or so? But I dont have any invoices..

    Please help I need your advice before going to BIR :)

    Thanks,
    Margie

      • Margie says

        HI Ms Julia Thanks for your reply of what receipts you are referring ma’am? how it will be possible since my earning is not fix?

        Thanks,

        MArgie

        • Francis says

          Change your mindset from being an employed fixed salary worker to a business person — an independent contractor.

  154. Margie says

    Also ms julia do I really need an accountant even if i use the optional standard deductible? since BIR now have a eBIRForms software.. hope you can answer this :)
    because i’m afraid I cant fine an accountant and afford to pay them :(

    Regards,

    Margie

  155. Louisa says

    This post has been quite helpful and I was hoping you could help me further with my case. I’m a blogger and will be under contract with a brand. They have asked me to get a BIR Form 2303. Upon research it seems to get the BIR Form 2303 I have to get a 1901. I already have a TIN though and I don’t have any intention of setting up a business. This engagement that I have is a one time deal. How do I go about getting a 2303 please? Thank you in advance!

  156. Alvin says

    Hi Mam ,

    I have a question in regard of the declarations of deductables like SSS, Pagibig, Philhealth, Internet payments, Electric bills , I actually quite confused on this, and I am receiving my income every week if you are familiar with Upwork(Odesk) , My income every week is 120 USD but the Upwork will deduct 10% of my income amount and everytime I withdraw my funds in upwork ,, Upwork will charge .99USD per withrawal,,, so do I need to declare the entire amount the 120 USD or the amount that I only received?

    2nd question , can We consider Online Jobs as a business , if yes do I need to get a business permit?

    3rd question where do I register ? in my local like , Municipality? or in the City?

    4th question are the BIR people will required also a proof of income? so if yes can I use the bank staement with every remittance or the withdrawal slip I have every time I withraw online..

    I appreciate the information posted here in your blog , at least now I know I can pay my tax and a good follower of the Philippine tax law ^_^

    Thank you
    Alvin Joseph Valdez

    • says

      HI Alvin!

      Thank you for your question. I will try to answer them to the best of my ability. But please note that the best person to answer this would be an accountant or bookkeeper.

      1. Only declare the amount you received. The 10% Upwork deducts from your salary is not taxes, it’s a fee for their services.
      2. Yes, online jobs is considered as a business. As to whether you need a business permit, it depends on the size of your business. You can register as a micro-business (consult the DTI on that)
      3. Regarding local laws, please consult your local government on how they recognize local work.
      4. Proof of income are your receipts. You don’t need to show them your withdrawal or remittance slips. Just issue a receipt every time you receive payment.

      Again, please consult an accountant or bookkeeper for answers best suited for your situation.

    • Francis says

      As an online worker, I get a professional tax receipt (PTR) every year from my local municipality/city for Php300. A PTR allows me to practice my online profession anywhere in the Philippines, unlike a business permit that’s costly and limits you only to your registered place of business.

      Register at your nearest BIR office as a professional taxpayer using your PTR as one of the supporting documents.

      I only declare what goes to my bank account as my gross sales/income when I file tax returns. My proof of sale/income is the official receipts (OR) I issue for BIR compliance. My foreign clients don’t need those receipts, so I just throw away the client’s copy of the OR. On the OR, I only write the amount that was actually credited in my bank account.

      I don’t bother myself with deductions, I just choose the optional standard deduction (OSD) to avoid confusion and headaches in deducting expenses when filling income tax returns.

  157. Brenda says

    Hi I used to work in philipines and I pay tax quarterly, but suddenly I worked abroad. Do I have backlogs to pay? I suddenly stop paying my tax without any forms submitted when I worked abroad.

  158. Tracy Gawan says

    We are a US business hiring Phillipine employees from OnlineJobs.ph. Are our online employees considered as owning businesses and is this how they should be reporting their income?

    Thank you.

  159. sie says

    hi po… ask ko lang nagtrabaho po ako year 2000 and i got my tin number that year, ngayon po mag oopen po ako ng business and i got my dti and mayors permit na po gamit ang tin number nung working pa po ako… want ko po register sa bir ung business ko… tanong ko lang po kung wala po ba magiging problema kasi po ung tin number ko year 2000 pa at wala naman po akong work 2000-2015, magkakaroon po ba ako ng penalties o wala naman pong magiging problema… worry lang po kasi ako bago me pumunta bir magkaroon na po ko ng idea kung magkakapenalties po ba ako… thanks po

  160. iceley says

    This is very very informative and I’m so happy I found it
    Just a question
    My previous office work was in Manila and now i want to work home from Batangas
    Do i need to transfer my records or can I just start updating it as it is?

      • Alvin says

        This is what happen sa akin,, I am from Cebu City but I need to transfer my TIN from RDO81 to RD080 I followed the PTR which suggested by Francis ,I paid 376.50 including the penalty then I paid 500 php for the registration , make sure you have 3 copies of form 0605 signed from the chief assessment section because the bank will not accept the payment without those signature, then after, they ask me to to attend the seminar and it takes 2 hours and make sure you will ask for the certificate of attendance , photo copy it then you need to purchase a 1 doc stamp 15 php each attach it to the form 0605 and a copy of certificate of attendance after the in charge will give a a piece of paper with the information when you can get your Certificate of attendance, after,,, get an ATP(Authority to print) for your receipt and go to the printing press… as of the the time being I am waiting for the receipts because they said that they will going to forward it to the BIR before I can get it.

  161. Janine Sustiguer says

    Good day! I really find this page so helpful. I just want to ask about tax refund.
    Last year 2015 we had two employers. We were with company A for the period of Jan- Feb of last year. and then we were transferred to company B for the period of March up to Dec of last year.
    Currently, we are with company B. I tried to ask about tax refund, since we were not able to complete the whole year with them and our tax varies every cut-off but we don’t get clear answers from them.
    These are my questions:
    a. are we required to get 2316 from company A? what if we can’t be able to get a copy? since we have an issue with them?
    b. company b told us that if there is a tax return, this will be available in the month of June.

    … thank you in advance for your response Ma’am.

  162. janine says

    Good day! I really find this page so helpful. I just want to ask about tax refund.
    Last year 2015 we had two employers. We were with company A for the period of Jan- Feb of last year. and then we were transferred to company B for the period of March up to Dec of last year.
    Currently, we are with company B. When I tried to ask about tax refund, since we were not able to complete the whole year with them and our tax varies every cut-off but we don’t get clear answers from them.
    These are my questions:
    a. are we requird to get 2316 from company A? what if we can’t be able to get a copy? since we have an issue with them?
    b. company b told us that if there is a tax return, this will be available in the month of june

  163. Ven says

    Hi! Thank you for the article. It is really very informative and helpful. Just a question, do I have to register my online job as a tutor in DTI?

    • Francis says

      What business people usually transact at DTI is business name registration. If it’s better and more practical to use your birth certificate (BC) name as a tutor, you don’t need DTI registration because your BC name is already registered at your civil registrar and the National Statistics Authority (the former NSO).
      If you’re a self-employed tutor, you need to get a professional tax receipt (PTR) at your local municipality / city in order to practice your profession ANYWHERE in the Philippines.

  164. Alvin Ryan says

    Hi, I really find this page helpful. I am currently processing my accreditation with the BIR, as a professional I am told to declare my income via efps (so I enrolled). The problem is I do not know how to file 1701 because I have no operation. Could you please provide a guideline to this matter? Thank you and more power.

    • Alvin says

      Hi Alvin

      I Currently finished my application in BIR as Professional but I never file a form 1701 ,, I only declare what goes to my bank account as my gross sales/income when I file tax returns monthly,

      • Francis says

        Alvin, you are required by law to file 1701 annually and 1701Q quarterly for your income taxes. 2551M or Monthly and quarterly VAT are for business taxes, not income tax. You should have known that when if you attended the required BIR briefing for newly registered taxpayers.

        • Alvin says

          Francis I know, 2551M yes they told me that but the 1701 and 1701Q no , briefing is very quick yes you are right I should have known that in the seminar, the question is did they include this topic to the briefing? No , because if it is .. I should have known that , in the first place I followed all the said requirements and I just CURRENTLY done the application meaning I am still in the process and thank for that information perhaps now I know

  165. Al says

    Hi, thanks for this, It is helpful. I am trying to find my way around this since I am not very good with forms and stuff. I have been working online since 2010.will there be a fee or penalty for all those years i neglected my tax forms? Thank you.

      • Lemuel Manzano says

        Have you registered yourself with the BIR previously? If not, there may be no penalty for those period. But I do suggest that you register now, and comply moving forward.

  166. MIssie Suasi says

    Thanks a lot Julia! This is that time of the year and I am still scratching my head and letting out a deep sigh every turn of the pages so this blog is a huge help. :)

  167. Nervz says

    Hi!

    First of all, this specific blog is very concise and I keep coming back here to read this guide as I would be a first time payer and would not want to miss a thing. So, kudos to you and the team!

    I will be using OSD to simplify things as I will also do my own books and everything else. So, just to clarify:
    1. Monthly percentage tax can be deducted from either the quarterly or annual income tax?
    2. If yes, and I choose annual, then that is 12 x 3% Percentage Tax paid for the last 12 months, right?
    3. If I paid tax in the 1st quarter, can I deduct it from the next quarter’s payable and so on? Or this can only be deducted annually when filing for the annual income tax?
    4. Lastly, when I was employed before, I’ve declared one of my parents as my dependent when she became a senior citizen. Can I still claim this as a deduction aside from my personal deduction? Or this does not matter anymore? Meaning, I can only claim for my personal deduction of 50,000php.

    Your insight would greatly be appreciated.

    Thank you very much.

    • says

      Hi Nervz! I’m glad for your questions. I’ll answer as much as I can based on my understanding. But it would be better if you consult with an accountant or bookkeeper to get the answer best suited for your situation.

      1. Monthly percentage tax can be deducted from either the quarterly or annual income tax? – Yes
      2. If yes, and I choose annual, then that is 12 x 3% Percentage Tax paid for the last 12 months, right? – Yes of you’ve been paying the same amount every month. If not, you need to add the the 12 payments of percentage tax.
      3. If I paid tax in the 1st quarter, can I deduct it from the next quarter’s payable and so on? Or this can only be deducted annually when filing for the annual income tax? You can only deduct them (3 quarter tax payments) from the annual tax
      4. Lastly, when I was employed before, I’ve declared one of my parents as my dependent when she became a senior citizen. Can I still claim this as a deduction aside from my personal deduction? Or this does not matter anymore? Meaning, I can only claim for my personal deduction of 50,000php. – This one I’m not sure. So in this case it’s best if you consult with an accountant.

    • Lemuel Manzano says

      Hi Nervz,

      I’ll answer your 4th question. I don’t think it has been the case with your previous employment.
      For tax purposes, your parents can never be your qualified dependent. They could have been for your dependent for your Philhealth, HMO, or other insurances.

      To qualify as dependent for additional tax exemptions, they must be:
      1. Your legitimate child or is legally adopted,
      2. not more than 21 years, or regardless of age, if incapable of self-support due to disabilities.
      3. unmarried
      4. not employed
      5. living and depending for chief support

      If you have someone who is a qualified dependent based on above, then you can claim them as additional exemption of 25,000 each (but not more than 4), on top of your 50,000 personal exemption.

  168. Nervz says

    Just a follow up, Julie, can you please clarify, too, the right order in computing for the annual income tax? Because I tried your way, which is:

    1. Gross Income
    2. (-) Personal Deduction
    3. (*) 40% (OSD)
    4. (=) Taxable Income

    and that yields a higher taxable income compared to:

    1. Gross Income
    2. (*) 40% (OSD)
    3. (-) Personal Deduction
    4. (=) Taxable Income

    Thanks again and looking forward to your replies.

    • says

      Hi Nervz!

      Yes, I agree that my way would yield a higher taxable income because the OSD is computed from the gross income directly. I consulted with my accountant friend on this f it’s possible to do the computation the other way around (your way) and she insisted that the personal deduction should be removed first before computing for OSD. I’ll try asking her again if there’s another way around it.

      • Nervz says

        Hi Julia,

        Your answers and your time are highly-appreciated. And thank you in advance for trying to find another method in computing for the Annual Income Tax.

        I have another question, if you don’t mind. Actually, this would probably be the same as computing for the Annual Income Tax, but again, when talking about numbers, we should be careful, right? :-) Hence, I would ask anyway to be really sure. So, I would like to know – when computing for the Quarterly Income Tax, which should be deducted first from the last quarter’s income:
        1. The 40% OSD or
        2. the last 3 months Percentage Tax paid?

        Again, thank you very much, Julia. And oh! Apologies for misspelling your name in my previous comment/inquiry. :-)

        • Francis says

          Either choose the 40% OSD or itemized deduction on your 1st quarter income tax return and that will be the ONLY deduction method allowed for the succeeding quarters and the annual income tax of the current year. You’re not allowed to shift from OSD to itemized deduction or vice versa.

          If you chose OSD, then you’re not allowed to deduct percentage taxes. If itemized deduction, you can deduct percentage tax.

  169. Roel says

    Hi can you recommmed to me a BIR certified account that has a lot of experience with online workers that is
    based in Cebu?

  170. BON says

    mam good am ask magtatanong sanaa ako, tama ba na binabawasan ako ng tax kahit hindi pa na file un tin number ko, for almost 4 months na po ako binabawasan ng tax, above minimum po sako mam

    • JLM says

      Hi Bon,

      Who is you employer in this scenario? Is it a local based company?
      It is just right for them to withheld tax based on your income on the time that you receive it. I suggest you process your TIN the soonest. The amount withheld will still be reflected in your account.

    • Riza says

      Hi Bon,
      Tama si JLM, file it soonest and then find out if pumasok ang tax payments mo. Kasi some companies don’t pay the government, either they forget or it gets delayed or they do it on purpose. And if wala ka pang TIN, they can say that it’s your fault not theirs. As my HR tita would say, don’t be fooled, check if it was credited to your TIN. :) But yeah, file first. Madali lang naman yon…supposedly.

  171. Cathy says

    Very informative! I am looking into paying taxes and getting an ITR because it’s one major requirement for banks. I hope that there is an article for those who works for the private sector + an online job.

    • Lemuel Manzano says

      Hi Cathy,

      If you are employed and earning solely compensation income from 1 employer during the year, then you a qualified to a substituted tax filing. Meaning your employer will compute, file and pay your taxes for you. The equivalent of the ITR which you will get is the Form 2316 (Certificate of Compensation / Income Tax Withheld). This serves the same purpose for bank requirements (ie getting a loan)

      If you have 2 or more sources of income, in the case of having online job on the side, then you are now disqualified for the substituted filing. This is when you will have to prepare your own ITR by consolidating all your gross income and allowable deductions to arrive at your taxable income and tax due.

  172. Francis says

    Hi, I am hired on an Australian Business but working here in the Philippines. This means I still need to comply for these tax requirements?

  173. Anne says

    Hello dear,
    Thank you for your article, it actually clears up our concern with how to pay taxes on our own since we were used to just having deductions by the company/employer.
    Anyway,
    Here is the scenario. I want to pay all my taxes for this year starting January 2016. However, I will still apply for registration next month; July.
    Question is, will I get penalty for the unpaid taxes from Jan-June
    Or do I just need to declare payment of taxes from the date of registration, which is July, meaning ang start lang ng bibilangin ko na pagbayad ng tax is from July onwards not January? (since July ako mgreregister)
    If I pay taxes this year, will I get an ITR for the current year by the end of December? or updated naman ang payments mag rereflect online? Thank you so much

    • says

      Hi Anne!

      Thanks for your questions. Unfortunately, this is a bit beyond my scope. It would be best if you consult with an accountant or bookkeeper so he/she can give you the answers best suited for your situation.

    • Riza says

      Hi Anne! I’m not an expert either but I had the same problem. Technically speaking, you can’t pay for the months when you were not yet registered. Kung baga sa business, hindi pa recognized yung business mo so there’s no business name to pay under. What makes it scarier is that may fine ang late payment. Hehe. I’m not sure if BIR has thought about such a scenario but right now there’s only provision for paying what you earned after you’ve registered. No one can stop you though from reporting it as as if you earned it after you’ve registered. Although parang mali naman. I doubt if you’ll have any luck asking BIR staff. Perhaps, attend the seminar. But based on experience, asking just anyone in the BIR office doesn’t help. They’re not very keen on these matters. And yes, maybe ask a good accountant. Although ask two or more if you’re not sure kasi ako, I asked an accountant but was advised not to file! Hindi ko daw kailangan because my US client already pays for my taxes in the US. Genun. So now, I haven’t paid my “back” taxes yet. Although di naman kasi ganun kalaki and I didn’t know that I had to when I started freelancing so I was not able to set them aside. Baka mabaon ako sa utang if I pay for them… But hoping to pay for the ones I’ve earned after I’ve registered.

    • Francis says

      If I were you, I’d start clean from registration date. So far I have not received any notice from the BIR about unpaid taxes prior to my registration a few years ago. If the BIR subjects you to an audit, then follow the legal process with your accountant lawyer.
      But if you really want to pay taxes prior to registration, it’s better to consult an accountant / lawyer.

    • Lemuel Manzano says

      Hi Anne, I hope you have registered and applied by now.

      Just start paying your taxes for all your income earned after your registration date.
      You have to prepare and file your Income Tax Return yourself first before you can pay to the BIR. Not the other way around.
      Your ITR should cover the period from your Registration date up to the end the taxable year.

  174. Ethan Tapales says

    Most people don’t want to pay taxes because yep, it goes to the government’s pockets. Not just officials, but the tax collectors themselves and project managers too. I’d place a link for proof, but that isn’t something we post publicly. We also don’t do public shaming.

    One more reason is the process. It takes too long with too much requirements, and sometimes, these people who process your requirements add additional “fees”. Mind you, these “fees” go to their pockets as well. And going back to requirements, they’re very contradicting. You’re applying for an ID, but requires 2 valid IDs… what? So you’d have to go back and fill out more forms, which require more money to spend and more time to waste.

    Yes, it’s our obligation. Our responsibility to help our own nation. But how can we help it if the people who govern the very same nation we try to improve take advantage of us?

  175. MaUr De Leon says

    Hi! Great article! Thanks so much for this. I have one question though. I’m currently a full-time employee in one of our local companies here in the Philippines and am already paying taxes. I recently applied to and will be working for a US company and since my taxes will be my responsibility and subject to the rules of my company, i’ll have to file for it myself. So I’ll have to pay those taxes apart from the taxes i’m already paying? Please verify. Thanks.

    • says

      HI Maur,

      Just to clarify, so you’ll be working for a local company and a US company. And you’re asking if you’ll have to pay taxes for both? The short answer is yes. The long answer is the local company is probably already deducting your incomes taxes from your salary, so no need to worry about that. The only one you’ll be paying on your own is your salary from the US company. But how much you’re already paying in taxes with the local company can affect how much you need to pay. So it would be best to consult an accountant about that to be sure about your computation.

      • MaUr De Leon says

        Hi Julia,

        Do you know any accountants you can connect me to? Preferably someone who is willing to advise and guide me through the process via email or text/call?

        Thanks.

      • Lemuel Manzano says

        Hi Maur,

        You have to consolidate you income from your local employer and your US employer in your ITR.
        Your local employer have been deducting taxes from you monthly. At the end of the year, they will give you BIR form 2316 (Certificate of Compensation/ Income Tax Withheld).
        The computation would somehow look as follows:

        Local Company Income
        +US Company Income
        -Allowable deductions
        =Taxable Income
        -Personal and additional Exemptions
        X Income Tax Rate
        =Income Tax Payable
        -Income Tax already paid (withheld by local employer)
        =Net Income Tax still due

  176. Mae Anne Ulanday says

    I just want to ask if my salary will have a deduction on income tax.
    My rate per day was P278. I work from Monday to Saturday.
    Im from province of Pangasinan wherein the minimum rate here is P253 but my daily rate now was P278? Does my rate subject to income tax deduction? And may I know the computation table in your website Tax Rate if it is computed Monthly or Annually because our accounting head told that it would be computed Annually?
    Kindly please help me.

      • Mae Anne says

        I don’t have deduction before in my payslip, but because of our new accounting head they told us that from now on we will have an income tax deduction…

        • Lemuel Manzano says

          Hi Mae Anne,

          First, you have to know what is the payroll policy of your company in computation of your EMR (Equivalent Monthly Rate). That is asking what is your divisor/ number of working days in a year?

          After knowing it, that is when you can determine if you are taxable or MWE (minimum wage earner).

          It is okay to compute annually. The tax table above is based on annual amounts.

          Computing tax monthly and annually should give you the same tax due at the end of the year. We annualize the tax computation and make necessary adjustments if needed, that’s why there are sometimes tax refunds at the end of the year. It will only be a matter of timing difference.

  177. Dave says

    Thank you for this wonderful informative post, i never tried to apply for TIN and pay tax since BIR has no right category for us online workers. And so i don’t know how are they gonna implement tax for freelancers. We simply belong to a complicated category of workers that doubles the complication on the processing and filling for it. One of my biggest problem is i need ITR for my personal transactions but i never filled TAX because of those reasons.

    So thank you for clearing this up and giving me proper path to take.

  178. Riza says

    Thanks for this post. I’ve registered before already and have tried paying my tax via the BIR’s online thingie and the bank. But I honestly thought I was only supposed to pay for the local transactions because that’s what the accountant I consulted said. She said my client in the US is already paying my taxes. At that time kaka-register ko palang sa BIR and nagulat naman ako kasi nag-effort pa ako tas di pala kailangan. So I’d just like to clarify that I still have to pay right? And I’ll just do what the others are doing, report the amount that goes in the bank para hassle free! Thanks again!

    • says

      Hi Riza!

      That depends on Whether your employer is also paying taxes (and income taxes) in the Philippines. If he or she is already paying for your income taxes then you don’t need to. If not, you would need to pay taxes. But it would be best to consult an accountant or bookkeeper to avoid taxes.

  179. Eden says

    Thank you for that detailed info..gusto ko magbayad ng tax so i can have my itr..these process and forms may look easy but for me not..nakakalito! May babayaran ka na nga na monthly meron pang quarterly and annual! Kahit sabihing pang maliit ang tax..kahit i alarm ko oa yan sa phone ko there will be instances na mamimiss ko ang pagbayad pag ganun penalty yun.. i once quoted for an accoutant and 20k for service fee pag aayos pa lang ng mga docs..naku!! Sana makaisip ang govt pati na ang bir ng one time process lang ng filing of tax..isang form at one time payment lang every year!

  180. Vhenne Danieles says

    Hi! Good morning! Naisip ko lang po, what if si A nag work from Jan. ~ June 2015 at nag end na ang contract niya, is it necessary ba na maka receive siya ng tax refund whether minimum siya or above minimum? At kung si A ay wala ng work from July 2015 until now, kelangan pa ba niyang mag report sa BIR at mag file ng tax this year 2016 kahit tambay lang siya from July ~ December 2015? Thanks a lot. Your soonest reply will be much appreciated.

    • says

      HI Vhenne,

      If A is working below minimum wage, they’re usually tax exempt. If it’s above minimum wage, there’s a table in the blog post that shows how much the tax would be for month.

      And if A didn’t have work from July to December, all he needs to do is file a Certificate of No Income with the BIR so he won’t have to pay for taxes for that time period.

  181. Love Me says

    Hi Julia,

    Mag file ng monthly then mag file po ng quarter.
    1. Pwede po ba na ideduct ang payment (2551m) sa quarter (1701q)?
    2. If hindi po na deduct ung monthly na bnayad (3months) sa quarter(1701q) ano pong mangyayare sa monthly na binayad?

    Thanks in advance :)

    • Francis says

      Yes, you can deduct it only if you chose itemized deduction, not the 40 % optional standard deduction (OSD).

      • kem says

        Love Me
        1. You cannot deduct your payment from 2551m to 1701Q because they are different taxes.
        2. If your payments from your monthly 1701 were not deducted to their corresponding quarter, you need to amend the concerned quarterly IT return.

  182. Margie says

    Hi, I have read the updated regarding professional tax receipt or PTR. In my case BIR told me to Get a PTR in our local municipality/city. when Filing a tax for Online Worker PTR is not applicable for Online worker since PTR are only for those who has a license profession like Engineers, Doctors, etc. this is what the Head of licencing Dept have explained to me…

    • Francis says

      Margie, try asking for an Occupational Tax Receipt, it’s just like a PTR. The reality is not all municipal / city hall officials interpret the law uniformly.

        • Francis says

          Margie, go to your city / municipal legal officer for their interpretation of that BIR document. If that legal officer agrees, ask him/her to write a note or call the head of licensing explaining their interpretation.

          • Margie says

            Hi Francis,

            Thanks for the info.. hmmm I dont know why on our municipality explained to me that I dont need PTr. by the way do you have a Cash Disbursement Journal and Cash Receipt Journal ? thus it require accountant to sign or can I sign this by my self?

          • Francis says

            Margie,

            If your municipality / city does not require you a PTR or even an OTR, ask them to write an official letter addressed “to whom it may concern” or to your local BIR stating that they don’t require a PTR or OTR for your occupation. Present that letter and that BIR document I posted earlier to your local BIR in case they insist on a PTR / OTR as one of the requirements for your BIR taxpayer registration.

            Regarding books of accounts or accounting journals, I think no one needs to sign it except the BIR officer who registered such books / journals.

            You’re welcome!

          • Margie says

            Hi Francis,

            I have question, are we freelancer required to pay Quarterly or we have an option to pay Annually directly?

          • Francis says

            Margie,

            To avoid open cases, file/pay your quarterly income tax returns (QITR) as well. QITRs help reduce the unpaid balance of your annual income tax.

            If your total annual income tax this year exceeds two thousand pesos, you may opt to pay at least 50% on or before April 15 deadline next year and pay the remaining balance on or before July 15 deadline next year.

            Hope this helps.

  183. Margie says

    Hi Julia,

    for Cash Disbursement Journal and Cash Receipt Journal do we really need to have an accountant for this to sign? also is this done Quarterly to sign? let me know… I cant afford to pay account :( or I can sign by my self??

  184. Vic Latag says

    Hi,

    Thank you for this blog! I’m currently following this while registering in BIR. First, I was asked to get Mayor’s Permit but when I asked about “PTR”, they said that it depends on the City Hall Staffs if they can give us PTR. So yes, I was able to get PTR from City Hall and went back to BIR.
    Right now, my problem is that they are asking me for a Business Address, my family doesn’t have title or tax declaration of the house(current), so I do not know how can I give them a proof of ownership. I asked if Barangay Certification will be fine, but they said that it cannot be used as proof of ownership. Another situation is that, my family owns a lot in a subdivision and currently on the progress of house construction. Can I use the tax dec/land title of that lot even if the house isn’t completed yet?
    Thanks!

  185. Jenny says

    Hi Julia. I’ve been looking for this kind of blog for a long time. Thank you for posting it. However, I am still quite confused regarding the tax rate. I am working as an on-line ESL teacher and the company deducts 10% monthly tax from my earnings. We are considered as independent contractors/professionals according to them that’s why they deduct 10 %. But my question is, let’s say your earnings for the month is just around 8,000, should the company still deduct 10% tax rate from it? Or does REPUBLIC ACT NO. 7496 apply to this?

    For example:
    Earnings for July 2500 less 10% (250) = 2250 total monthly earnings
    Is this right? Shouldn’t there be exemptions even for individual contractors?
    Thank you.

    • Lemuel Manzano says

      Hi Jenny. Being a contractor, it is correct for them to deduct 10% expanded withholding tax. This is a creditable tax withheld at source. (It will be 15% if you are earning gross of more than P720,000 per year)
      Now, when you compute and file for your Annual Income Tax, you will now be subjected to the Income Tax rates based on what bracket you will fall. From your total gross income for the year, you can deduct all the taxes previously withheld from you, including a personal exemption of P50,000 and additional exemptions for your qualified dependents.

  186. Lindsay lubuguin says

    Hello, thank you for the informative article. I will be a freelance english teacher which is home-based. This will also be my first job. I am only planning to work lets say 2 months then I wont be a freelance anymore. Because this is just a part time job for me. Assume that i pay my taxes every month. What about the succeding months wherein i dont work anymore? Should i just leave it like that or should i close my “freelance business” and inform the BIR? This is my first time with tax and stuff.

    • Lemuel Manzano says

      Hi Lindsay, First you have to process your registration with the BIR. Afterwards, you have to file your tax returns regularly whether you have operations or not.
      In the event that you go into another business or become employed, you’ll have to update your registration information.

  187. Anne says

    Wow this blog is really informative!! It’s my first time being an independent taxpayer since I’ve been with an employer ever since. I have a question! This applies also to freelancers who are not necessarily online right? Also, I see monthly, quarterly, and annual taxes based on the blog – my question is do I have to pay all of those? Or do I choose one preferred method of paying taxes (meaning I’ll pick if I want monthly or quarterly or annual)? Also if I’ll only choose 1, are the total tax equal for all? Or is paying monthly ‘cheaper’ than annual payment, etc. Thanks for your help!!

    • says

      HI Anne!

      Regarding your questions:
      This applies also to freelancers who are not necessarily online right? – Yes

      Also, I see monthly, quarterly, and annual taxes based on the blog – my question is do I have to pay all of those? Or do I choose one preferred method of paying taxes (meaning I’ll pick if I want monthly or quarterly or annual)? Monthly is the monthly percentage tax. You pay taxes either annually or quarterly.

    • Francis says

      Monthly taxes are usually BUSINESS taxes like percentage or VAT while quarterly annual taxes are usually INCOME taxes. You are subject to both taxes, no multiple choice.

  188. Jean says

    thank you for making this so easy for non-accounting people. I have questions too. This may been asked by other people who commented but please bear with me. (I tried reading ALL the comments but I started zoning out, sorry!) My questions are: if I file my taxes online, will there be a need for an accountant’s signature for the annual filing? If I choose OSD, will I need to save all my transaction (income and expenses) receipts? Thank you for the enlightenment!

    • says

      Hi Jean!

      If I file my taxes online, will there be a need for an accountant’s signature for the annual filing? – Not really sure about this one. I will ask our accountant. But I hope our readers who are accountants who can also answer this question

      If I choose OSD, will I need to save all my transaction (income and expenses) receipts? No. If you choose OSD, you don’t need to save the receipts of your expenses.

      • Lemuel Manzano says

        Hi Jean! Whether submitting online or manual, You won’t be required to have an accountant sign on your ITR. The taxpayer himself can sign on the ITR.
        You just have to ensure yourself that the details you have provided in the return are correct and true to the best of your knowledge.

  189. Eleanor says

    Hi po! May tanong lang po ako. Kasi bago lng po ako sa job na ito, mag start plang po ako. Ang sabi po kasi pag online worker need pa din po mgbyad ng tax. may tin number na po ako dati kya dko na need kumuha ng bago pero ung pagreregister po as self employed yun po ba ang gagawin ko para mkapagbayad ng tax kahit na nasa training period palang ako?

    I hope matulungan nyo ko sa tanong ko thank you..

      • Eleanor says

        Ok…Pero kelngan ko po magreg sa bir as self-employed? how can bir categorized my work?do i need to get journal and receipt to bir? I’m a little bit confused.

        • Francis says

          It’s better you register as a self-employed professional even before you actually earn. Get the checklist of requirements from your nearest BIR office and comply.
          You may check your exact occupational classification thru the following link:
          http://www.bir.gov.ph/images/bir_files/research_and_statistics/NSCB_PSOC_2002.pdf
          Tell the BIR person in charge of taxpayer registration your exact occupation even its code because you are more familiar with your occupation.
          You’ll be required to attend the BIR briefing for new taxpayers, that’s when the books of accounts like journals and official receipts will be explained/clarified.
          When you become an officially registered taxpayer, even if you have no transaction for a particular taxable period, you are still required to file the applicable no payment tax return/s to avoid open cases.

  190. Roel says

    Hello,

    I work online as a freelance tutor and my students are abroad. I have to file first percentage tax this week but BIR told to issue receipt? Do you do this receipt and journal stuffs? Also when I am going to BIR this week to pay my first percentage tax do I have to bring the receipts as well as the journal or I am going to just tell how much I earned in 1 month (month of July)