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Trish Rodriguez

How to File BIR Form 1701Q

How to File BIR Form 1701Q

By | How To, Tax Hacks, Tax Rules, TRAIN | No Comments

One of your major responsibilities as a freelancer or sole proprietor is filing your BIR form 1701Q. This is submitted quarterly for the first quarter, second quarter and third quarter.

Who are required to use the BIR form 1701Q?

This must be accomplished and filed in triplicate by the following individuals:

1. A resident citizen engaged in trade, business, or practice of profession within and without the Philippines.

2. A resident alien, non-resident citizen or non-resident alien individual engaged in trade, business or practice of profession within the Philippines.

3. A trustee of a trust, guardian of a minor, executor/administrator of an estate, or any person acting in any fiduciary capacity for any person, where such trust, estate, minor, or person is engaged in trade or business.

Do I have to file Quarterly Income Tax?

Under the new TRAIN law, those who earn less than P250,000 annually are exempt from paying income tax return.  So if you fall under this bracket, you don’t have to pay your quarterly ITR. Having said that, we do recommend that you still file your Quarterly ITR’s. As we said previously in an earlier article, imagine needing to have an ITR and then having to explain how tax exemptions work to whoever you’re talking to. Yeah, good luck.

Check out the new Income Tax Table under TRAIN. Take note that the rates will go lower in 2023.

bir form 1701Q

My annual income is more than P250,000. How do I compute my dues?

The TRAIN law gives you two options for filing and computing your taxes. You can either follow the 3% percentage + income tax or use the new 8% Gross Receipt Tax.

Now, the 8% Gross receipt Tax might sound easier for you, but keep in mind that it’s not for everyone. To know if you’re making the right choice, check out this tax calculator that we made for you.

How do I compute my income tax dues if I opt for the 8% Income Tax Rate?

The first thing you need to know is whether your earnings come solely from your business or profession, or if your earnings come from both compensation and business/profession.  After which, you can apply the formula below applicable to you:

 Income Solely from Business / Profession:

Total Income Tax Due = 0.08 * (Gross Sales – 250,000)

Mixed Income Earner:

Total Income Tax Due = (0.08 * Gross Sales) + Tax Due on Compensation

As you can see, the Php 250,000 deduction is NOT applied for Mixed Income Earners. Reason for this is because the Php 250,000 has already been deducted from the tax due based on compensation so it no longer applies to the tax from your business.

What are the attachments required for filing my quarterly return?

Here are the documents you need to prepare:

1. Certificate of Income Tax Withheld at Source (BIR Form 2307), if applicable.

2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304) if applicable.

3. Duly approved Tax Debit Memo, if applicable.

4. Previously filed return, if an amended return is filed for the same quarter.

When and where do I file my BIR Form 1701Q?

You must file your income tax return with any Authorized Agent Bank (AAB) located within the territorial jurisdiction of your Revenue District Office. Present your accomplished BIR form 1701Q with the requirements and your payment. The teller of the AAB or the RDO officer will give you a copy of your stamped and validated form.

For “No Payment” returns, you only have to attach the required documents to your BIR form 1701Q. You will also receive a copy of your stamped and validated form.

In case your place doesn’t have any AABs, you can file this directly with the Revenue Collection Officer or duly Authorized City or Municipal Treasurer of the RDO.

The deadlines for filing of BIR form 1701Q are:

1st quarter: On or before May 15
2nd quarter: On or before August 15
3rd quarter: On or before November 15

Remember, the BIR doesn’t give extensions to these deadlines. Taxpayers are encouraged and expected to file as early as they can to avoid the usual inconveniences during the last day of filing.

How do I accomplish and compute my quarterly income tax returns?

1. Fill out the Part 1 of BIR form 1701Q. This includes your TIN, registered name, registered address, the line of business or occupation, and other applicable information.

2. The Part 2 of the form states the computation of your quarterly income tax. Put your Sales/Revenues/Receipts/Fees. Add the Amount You Received as a Partner from General Professional Partnership, if there’s any.

3. Determine your Gross Income by subtracting your Cost of Sales/Services to your total sales or revenue. If you’re a freelancer, your cost of services will include internet fees, freelance platform fees, etc. For sole proprietors, you can put your building rental, internet cost, salaries of your employees, and other relevant expenses.

4. After getting your Total Gross Income, determine and compute your Total Allowable Deductions. You can choose between Itemized Deduction and Optional Standard Deduction. Take note that neither of these options is available for you if you pick the 8% Gross Receipt Tax.

  • OSD- This allows you claim a deduction of 40% from your gross sales or receipts for the quarter.
  • Itemized Deduction- You have to identify and deduct all the ordinary and necessary expenses from your gross income. These expenses must attribute to the development, management, and operation of your business, like travel and salaries.

5. Subtract your Allowable Deduction from your Total Gross Income to get your Taxable Income.

6. Compute your Tax Due by using the tax table under the TRAIN Law.

7. Determine your Tax Payable by deducting the Total Tax Credits/Payments for the Quarter from your Tax Due. This includes Credible Tax Withheld from the previous Quarters, Credible Tax Withheld per BIR Form 2307, and Prior Year’s Excess Credits.

Is there any easier way to prepare, file and pay my income tax return?

Let’s admit. The computations and filling up of forms can be quite tedious. Fortunately, there is Taxumo, a web-based tax filing app that lets you skip the manual computing of tax dues and accomplishing of BIR form 1701Q.  Instead, you would only need to enter your income and expenses, and you get your tax dues auto-calculated real time.  The BIR form 1701Q is also auto-generated so no need for filling up and printing of forms. Best part is that with a click of a button, you could submit your taxes online. You can check it out here.

Are there any penalties if I missed the deadline for filing?

Absolutely. Apart from your tax due, you have to pay a 25% surcharge, a 20% interest per annum, and a compromise penalty. If you choose to neglect to file the return, there is a penalty of 50% of the tax due.

Refusal to pay penalties will be referred to the appropriate office for criminal action, so make sure that you pay your taxes on time

 

File & Pay Taxes Online In Minutes!

Hungry for more? Visit our Taxumo blog HERE.  
Final-Banner-Payroll-Tax-Rates_032118-1

What Are The Different Payroll Tax Rates to be Aware of This 2018

By | Thoughtpieces | No Comments

 

 

Whether you’re a freelancer or a new entrepreneur flying solo, sooner or later as your business grows, you may want to consider hiring employees. And when you do hire your first employee, you would have to start thinking about payroll, and payroll tax rates.

For both aspiring and existing business owners, 2018 comes with big changes specifically with implementation for payroll taxes. When it comes to handling payroll, it’s important to understand the current payroll tax rates. Not all employees under an organization have the same salaries and there are those who have different tax brackets as well. Meaning, each individual can have varying tax rates depending on their job position and company.

Read More

Small Business Tips: Using SEO To Spark Your Business in 2018

Small Business Tips: Using SEO To Spark Your Business in 2018

By | Digital Marketing, New Business, Small Business Tips | No Comments

I’m going to discuss one of the small business tips some entrepreneurs are not taking advantage of nowadays.

Over 3.5 billion searches happen per day, according to InternetLiveStats.com.  Is your website near the top of the search results when someone searches for the services or products you offer?  According to BigCommerce.com, in 2017, 51% of Americans (and that’s just Americans) prefer to shop online and that rate grows every year.

Find out more about SEOs here…

Genesis Reonico of Online Jobs University

Taxumo Heroes: Genesis Shares His Winning Advantage to Filipino Freelancers

By | Taxumo Heroes, Testimonials | No Comments

Genesis Reonico of Online Jobs University

For Filipino freelancers, taking the leap from their corporate jobs into the wild world of online freelancing can be a daunting start to a rewarding career.

Luckily, it’s not as scary as it used to be. Many freelancers will not face the same problems that those who started years back had encountered, thanks to the web-based freelance mentoring platform Online Jobs University.

Below, we get to know more about Genesis, the founder of Online Job University, and his precious advice for Filipino freelancers, and just about everybody who wants to pursue their passion and make a difference:

Read More

Taxumo Hero Raffy Vicente

Taxumo Heroes: Why Paying His Income Tax Won’t Stop Raffy from Pursuing His Passion 

By | Taxumo Heroes, Testimonials | No Comments

Taxumo Hero Raffy Vicente

It wasn’t always living a life he truly wanted for himself.

Before Raffy Vicente set out to build his own consultancy firm, he was working full-time as an employee for almost a decade.

He yearned for something more fulfilling, career-wise: a level-up of some sort. That was the time he decided that it was time for a change.

But while it was the desire for freedom that had made him leave, it was ultimately his burning passion and relentless drive that eventually built and grew his company, RV Marketing Services.

Below, Raffy recounts his rewarding journey from leaving the corporate world to joining the growing pool of successful entrepreneurs who continue to defy their comfort zones, in the name of following and living out their passions: Read More

TAX-5

What You Need to Hear About the BMBE Law

By | New Business, Tax Rules, Tax Savings, Thoughtpieces | 6 Comments

The BMBE Law (Barangay Micro Business Enterprise)  (copy of the law here) has certainly come a long way.

If you had applied for it in 2013, you might have encountered staff and officers at the municipal hall’s business permits and licensing office blankly wondering what the heck are you applying for.

But now, it’s one of the first things small-scale entrepreneurs ask about.

There’s plenty of information online about the BMBE Law nowadays, so I won’t write anymore about the stuff you’ll find rewritten in various forms all over the Internet.

Instead, let’s talk about the nitty-gritties of the BMBE Law—the stuff you seldom hear about.
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Withholding Taxes Philippines

Withholding Tax 101 (or, ‘Why Is My Pay Less Than What My Client Said It Would Be?’)

By | Tax Rules, Tax Savings, Thoughtpieces | No Comments
Withholding Taxes Philippines

How withholding tax feels like, sometimes: someone taking a bite out of your favorite doughnut before you can eat it. (Then again, lessening calories can be good for you.)

If you’re a freelancer with local clients, you must be familiar with withholding tax. 

Simply put, it’s the amount of money that your client deducts from the amount you’re supposed to receive. So if you’re expecting, say, Php 3,000, you might end up getting Php 2,700 instead.

Where did that missing Php 300 go?

It went to your withholding tax

Withholding tax: What Is It? Read More

Basic Taxes Every Proprietor and Professional Needs to Pay to the Bureau of Internal Revenue

Basic Types of Taxes Every Proprietor and Professional Needs to Pay to the BIR

By | Tax Rules, Thoughtpieces | No Comments

Basic Taxes Every Proprietor and Professional Needs to Pay to the Bureau of Internal Revenue

Many of us who start a business come from a regular employment setting.  So when we decide to register our business with the Bureau of Internal Revenue (BIR), it comes as a shock when we learn that there are several types of taxes.

Yes, aside from income tax, there are other types of taxes that a business owner needs to pay–and that they need to file various tax forms many times a year.

Of course, we can’t spare you the payments, but we can at least spare you the shock.

Here, for your reading pleasure, are all the basic types of taxes and fees every professional or business owner needs to pay once they have registered with the BIR:

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