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How to File Income Tax Return as a Physician/Doctor?

The painstaking BIR filing process is a lot to handle, especially so as a doctor with overwhelming obligations inside and outside of your work. To make things easier, more bearable, and less time-consuming, we will walk you through all that you need to know about ITR filing as a doctor/physician. Keep reading to find out more. 

It’s that time of the year that most people dread – paying taxes. Yes, the process may be time consuming, but still it is our responsibility as a Filipino citizen. Physicians, or doctors in particular, have to free up their schedule just to pay taxes. This is because the law states that practicing a profession and gaining income from it makes it taxable. And as stated in the law, taxes that we pay fund social services that are vital to the citizens and the country’s economic growth. So think of it as positive thing since as a physician, you are contributing for the good of the entire country in so many ways!

So imagine your friends and family who are busy getting documents and rushing for the deadline. To add to the stress, finding out additional payments for tax filing makes one question the need to pay taxes in the first place. So what is an income tax return and why do we need to file it annually? This blog will sum it all up for you, giving you more time to do rounds and attend clinical conventions.

An income tax return

To brush up your knowledge about taxes in the country, an ITR (income tax return) is basically a tax on a working individual’s salary from practicing a specific profession,or profits gained from a property or business.  So any legal activity that entails producing income should be taxed. The individual or company then files annually during the year.

Just like any Filipino taxpayer, a physician also has to do his or her duties as a citizen of the country.

Why does a physician need to file an ITR?

A physician practices his or her profession and gains compensation income. As clearly stated from the Bureau of Internal Revenue, all salaries, wages, honoraria and bonuses fall into the category of filing an income tax return.

So to be able to do this, set a schedule for filing an income tax return since it may take up an entire day. Some physicians though work under a company and it is usually the HR department that handles the paperwork. For those who do private practice, you are going to file the income tax return yourself or let Taxumo handle it for you.

Before anything else, there is a difference between how employed and self-employed physicians turn in the income tax return. Once you know which category you belong, you will be able to prepare the necessary documents needed to be able to file the annual income tax return.

Employed Physicians

For employed physicians and those receiving BIR form 2316, follow the substitute filing system as they need not accomplish and file an ITR. There are several conditions though for qualified physicians to handle their income tax return doing the substitute filing method:

  • Receives purely compensation income during taxable year
  • Receives income from one employer in the Philippines during taxable year
  • Amount of tax due at the end of the year is equivalent to the total of tax withheld by employer
  • Spouse of the physician complies three conditions above
  • Annual information return is filed by employer
  • BIR Form No. 2316 is filed by the employer

Employed physicians who do not meet conditions above (based on RMC No. 01-03):

  • Acquiring compensation income from more than two employers during the taxable year
  • Procuring compensation income in which the tax due is not equal to tax withheld
  • Receiving monthly gross compensation income that is less than five thousand pesos
  • Getting non-profession-related income in addition to compensation which is not subject to final tax
  •  Receiving purely compensation income from one employer but the spouse is not qualified to substituted filing
  • Non-resident aliens working in the Philippines

These physicians are thus required to file their Annual income tax return BIR Form No. 1700.

The documents needed in filing the annual ITR (income tax return) are as follows:

  1. BIR Form 2316 or Certificate of Income Tax Withheld on Compensation
  2. Waiver of the Husband’s right to claim additional exemption, if applicable
  3. Duly approved Tax Debit Memo, if applicable
  4. Proof of Foreign Tax Credits, if applicable
  5. Income Tax Return (filed previously and proof of payment)

Self-employed physicians

Physicians who practice their profession privately in a clinic or those who moonlight, they need to get ahold of BIR Form No. 1701. This form is specifically for those who practice their profession and also earning mixed income. Regardless of the amount of the gross income, the physician must be working within and outside the Philippines. This also applies to a resident or non-resident alien or citizen practicing as a physician in the country.

Documents needed to file the annual income tax return are as follows:

  1. BIR Form 2316 or Certificate of Income Tax Withheld on Compensation, if applicable only
  2. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form 2304) if applicable
  3. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
  4. Waiver of the Husband’s right to claim additional exemption, if applicable
  5. Duly approved Tax Debit Memo, if applicable
  6. Proof of Foreign Tax Credits, if applicable
  7. Income Tax Return previously filed and proof of payment, if filing an amended return for the same year
  8. Account Information Form (BIR Form 1701 AIF) or the Certificate of the independent
  9. CPA with Audited Financial Statements
  10. Proof of prior year’s excess tax credits, if applicable

Filing process

Once all the documents are at hand, it is time to file that income tax return. The first thing to do is fill up the particular BIR Form – whether it is Form 1700, 1701 or 1702 – in three copies. Make sure that your penmanship is clear to avoid delays. Easily attach the documentary requirements to the particular BIR Form.

If there is a need to pay, head to an Authorized Agent Bank of the RDO (Revenue District Office) where you are duly registered. Hand out the accomplished BIR form, attached documents and payment.

In case there is no Authorized Agent Bank within the area, you may proceed to the Authorized Municipal Treasurer or Collection Officer in the Revenue District Office. Just submit the accomplished form with attached documents and payment. The teller then releases a validated form as a proof of payment and filing.

For those who do not need to pay or are qualified for a second installment of payment, the procedure is practically the same. Proceed to the Revenue District Office or BIR-established tax filing center and submit the accomplished form and attached documents. A tax filing representative then provides a validated form as proof.

One important thing that physicians may tend to forget is the deadline of filing the ITR. And it is on the 15th of April of the following year. It is best to jot it down on the calendar. This is to avoid surcharges for filing later than required.

Better yet, if those conferences and emergencies come in the way, there are always professionals who can assist and take care of the tedious process. Time is gold so for a breezy tax filing procedure, click here and learn more about Taxumo!

Having a hard time filing your taxes?
Try TaxumoMD Today!

If you have more questions to ask, feel free to leave a comment below.

8 thoughts on “How to File Income Tax Return as a Physician/Doctor?”

  1. Hi. I’m a self-employed professional, non-VAT.
    1. Under the TRAIN Law, do I need to file monthly percentage & quarterly percentage tax if I am using the graduated tax rate or computation? Am I still entitled to the 40% optional standard deduction (OSD) on filing my annual ITR?
    2. In comparison, if I use the fixed 8% tax rate, do I still need to file monthly & quarterly tax? Aside from the 240,000 deduction, can I still use the 40% OSD?
    3. What if I receive compensation and form 2307 for services renderred months or even a year late, say after April 15 of the following year, can I still declare this as income for the succeeding year?

    1. Hello, Sir.
      1) If you’re using graduated tax rates, you have to file percentage tax. This is done on a quarterly basis. (Apr 25, July 25, Oct 25 and Jan 25) Yes, you’re entitled to the 40% OSD when filing AITR.
      2) If you opt for the 8%, you don’t need to file quarterly percentage tax BUT this requires BIR Form 1905 (application for registration information update) at the beginning of the taxable year, to end-date the form type of quarterly percentage tax and/or selection of the 8% income tax rate in filing the initial quarterly income tax on the year the choice was made. You can’t use OSD if you opt for 8%
      3) Yes, you may declare it as income for succeeding year. Although, there might be timing differences, in case of BIR assessment, you can have it as you have acted in good faith since you have declared the income when the 2307 was received.
      Hope this helps!

  2. Hi, I have a client who’s a a doctor, and is now a VAT taxpayer, but has no employer-employee relationship with any hospital in town, what deductions can she claim, since she has no clinic at all.

  3. Hi, I have a client who’s a a doctor, and is now a VAT taxpayer, but has no employer-employee relationship with any hospital in town, what deductions can she claim, since she has no clinic at all.

  4. I love that you talked about how taxation should be applied to any legal activity that involves earning money. My dad wants to hire an accountant that can help him with income tax return preparation for his company’s account. I’ll make sure that he reads this article so he can have more insights about it.

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