Just like the Twilight series, please refer to earlier blog on business receipts and expenses Episode I.
Well we start Episode II again with our friend, triathlon coach JCruz, who’s eager to share his questions on business expenses. He has completed Step One and have identified all his “what-if” expenses, but has hit a roadblock. Turns out most of the utility bills are not under his name, his mobile postpaid plan, plus the lease agreement too. Within all these bills are his business expenses, but it can be a hassle to change all these agreements.
This is where Optional Standard Deduction (OSD) comes in. Ano yun? It’s the BIR saying for as long as an individual taxpayer is willing to limit business deductions to 40% of revenue/income, then the taxpayer need not keep the receipts/invoices for these deductions. What it really means is the BIR, in general, would ask no further questions (yey!) ONLY IF a taxpayer is not claiming just about any imaginable receipt out there, with a simple goal of paying little to no taxes. This is what I call a peace offering from the BIR (friends tayo ah) to anyone willing to claim only reasonable amounts of deductions. You see guys, the BIR can be reasonable, and this OSD option, this BIR peace offering, is one very effective way in simplifying the payment of income taxes.
So what are the other benefits of OSD (wait, there’s more?) Well, we might as well make this a trilogy. And our friend JCruz will be back for the finale.