filipino online workers guide to paying taxes

8/18/2019 Filipino Online Workers Guide to Paying Taxes

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Filipino Online Workers Guide To Paying

Taxes

October 30, 2014 By Julia Jasmine Sta Romana

In this world nothing can be said to be certain, except death and taxes. – en!a"inFranklin

A lot of online workers hae been !ettin! away with "O# $ayin! ta%es& ' un(erstan( that manyof us )ustify not !iin! our har(*earne( money to corru$t !oernment officials& +hy $ay ta%es

when you know most of what youre $ayin! will )ust line the $ockets of !ree(y an( corru$t

$oliticians-

http://wailingsofawham.com/http://wailingsofawham.com/http://wailingsofawham.com/


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But $ayin! ta%es is each .ili$ino citi/ens obli!ation& ontrary to $o$ular belief, ta%es (ont )ust

!o to (irty $oliticians $ockets& #hey also !o to buil(in! schools, bri(!es an( hos$itals& "ot

$ayin! ta%es actually hurts the $eo$le who nee( it most like stu(ents, $atients, an( farmersmore than it $unishes corru$t officials&

+ith the recent barra!e of hi!h $rofile stories in the me(ia about online workers earnin!millions, the B'R is lookin! for ways to catch an( $unish $eo$le who (ont $ay ta%es& 't wont be

lon! before the B'R fin(s an online worker an( makes an e%am$le of him&

Besi(es hel$in! those who nee( it most an( aoi(in! becomin! a $ublic e%am$le, $ayin! your

ta%es also makes it easier for you to obtain a loan, cre(it car(, $ass$ort or isa because these

a$$lications all reuire your ta% (ocuments&

#hink about it this way filin! an( $ayin! your ta%es "O+ will $rotect you from the wrath ofthe B'R in the future&

#s $asy #s %FP&#he # a(s make it all look so easy& Just re!ister, file an( $ay&

But the truth is the B'R is still workin! on how to cate!ori/e online workers& +ere notem$loyees in a tra(itional sense& 'n some ways we are business owners but most of us (ont

o$erate the same way most businesses (o& 'ts this limbo situation that com$licates the ta%

system for online workers an( (iscoura!es many from filin!&

#o make thin!s easier, we consulte( with a B'R certifie( accountant who has a lot of e%$erience

with online workers& "ot only (i( he e%$lain in !reat (etail how online workers can re!ister, filean( $ay, he also tau!ht us how to com$ute ta%es, so you only $ay e%actly what you owe no more

no less&

'ou "ust pay taxes. ut there(s no law that says you gotta lea)e a tip.– *organ +tanley

ad)ertise"ent

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 bookkeeperor accountant.

Getting your Taxpayer Identiication

-u"ber TI-/

#he first ste$ to re!isterin! as an online worker is !ettin! your ta% i(entification number or #'"&

'f you alrea(y hae a #'", youre !oo( to !o5 6ou (ont nee( to !et a new one&


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'f you (ont hae a #'" yet, you can easily !et one throu!h the B'R e*re!istration system& Once

you secure your #'", you nee( to $ay a Re!istration .ee of 7800 to Authori/e( A!ent Banks

9AABs: within your ta% area& 6ou can also $ay throu!h the followin! B'R*accre(ite( $aymentfacilities;

•e.7S

•


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'ts un(erstan(able how a !reat min( like Albert @instein foun( it har( to com$rehen( income

ta%& uantum $hysics is easy com$are( to the mountain of $a$erwork we hae to fill out )ust to

re!ister, file an( $ay our ta%es&

#hankfully, our ima!inary online worker, Jose, is !oin! throu!h the re!istration $rocess an( is

kin( enou!h to show us the ro$es&

One of the thin!s $eo$le fin( most challen!in! about the .ili$ino ta% system is the com$licate(

forms& Jose is makin! the $rocess easier for us by fillin! out the form with his ima!inaryinformation in re( ink, so well hae a !oo( i(ea of how to fill out our own forms&

0ertiicate o %egistration For" 1231/

.irst thin! Jose nee(s to fill out is .orm 1=01& +hen fille( out, Joses form will look like this;

Since Jose earns e%clusiely throu!h his online )ob, hes consi(ere( a self*$ro$rietorin(e$en(entcontractor& #hese are the ta%es that he has to (eclare;


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As an in(e$en(ent contractor, Jose nee(s to issue recei$ts for any transaction oer 728 an( kee$

a (isbursement book of his business e%$enses&

Jose is marrie( an( workin!& Ce nee(s to (eclare these as they im$act his (e(uctible& Ce an( hiswife will also be filin! their annual income ta%es )ointly& 'f Jose were sin!le, he coul( ski$ this

$art&

Jose an( Daria hae one chil( an( they a!ree( that Jose shoul( be the one to (eclare their son,

Juan, as a (e$en(ent& Jose (oes this because $arents are entitle( to a((itional e%em$tions $erchil( 9u$ to 4 chil(ren&:

#o $ay for his ertificate of Re!istration 9OR:, hell hae to fill out B'R form 0?08 9a&k&a&

7ayment .orm: in tri$licate to $ay for it& #he OR costs 7800& Jose will also hae to $ay an

annual fee eery January to renew his OR&

The Pay"ent For" For" 3435/

.ili$inos who are use( to $ayin! their own ta%es will be familiar with form 0?08 because its the

form you hae to fill out to $ay for almost eery kin( of ta%& Basically its like an inoice fromthe B'R that you hae to fill out yourself&

Below is how Jose fills out his 0?08 as he $ays for his OR&

ftp://ftp.bir.gov.ph/webadmin1/pdf/1210605.pdfftp://ftp.bir.gov.ph/webadmin1/pdf/1210605.pdf


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Since hes usin! the 0?08 to $ay for his OR, he only has to fill out the fiel(s below&

As you can see, hell be usin! this form a!ain in the followin! months to $ay for his $ercenta!e

an( income ta%es& But for now, this is all he nee(s to fill out on form 0?08 9$lus si!nature:&

Once he has his 1=01, 0?08 an( other (ocuments rea(y, Jose can !o to his local B'R office an(

submit them&

The %un #round

After submittin! the (ocuments an( forms liste( aboe, Jose will hae to atten( a seminar

con(ucte( by the B'R e%aminer in or(er to !et his OR& #he seminar usually lasts from 1 to 2hours& After the seminar, the B'R e%aminer will !ie Jose the (ate when he can claim his OR&

#o be safe, Jose brou!ht his book of accounts with him to the seminar so he coul( re!ister it&

Cell be usin! that book of accounts to (ocument his business e%$enses an( earnin!s& Ce nee(s

to re!ister a new book for eery fiscal year&


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Once Jose receies his OR, hell brin! a $hotoco$y of the OR an( form 0?08 he fille( out to

$ay for his OR to a B'R accre(ite( $rintin! $ress to hae his recei$ts $rinte(& 9#he local B'R

branches hae this list& 6ou )ust hae to ask for it:& #he $rintin! $ress will !ie Jose 12 booklets9each containin! 100 recei$ts: which will last him 8 years& On aera!e, a $rintin! $ress will

char!e between 71,000 to 71,800 for 12 booklets&

6et(s Talk #bout Taxes, aby7

"ow that Jose has his OR, he is a re!istere( ta%$ayer& As an online worker, these are the ta%es

he has to $ay with the accom$anyin! forms that he will nee( to fill out;

Donthly 7ercenta!e #a% 93E of !ross reenue:

• .orms; 2881D an( 0?08

• >ue >ate; @ery 20th of the month, $ay at $artner banks

uarterly 'ncome #a% 9base( on net income:

• .orms; 1F01 an( 0?08

• >ue >ate; A$ril 18, Au! 18, an( "o 18

6early an( .inal uarter 7ayment of 'ncome #a%

• .orms; 1F01 an( 0?08

• >ue >ate; A$ril 18 the followin! year

Annual Re!istration .ee 9OR Renewal:

• .orms; 0?08

• >ue >ate; On or before January 30 eery year

Gets say Jose, an online worker, earns 710,000 $er month& Ce )ust finishe( his re!istration in

January an( is !oin! to start $ayin! his ta%es& Base( on the table aboe he nee(s to $ay a $ercenta!e ta% eery month an( his income ta% eery uarter&

'our *onthly Taste o Percentage/ Tax

Online workers are e%em$t from A#, which ualifies Jose for 3E $ercenta!e ta%&

https://www.google.com.ph/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCAQFjAA&url=ftp%3A%2F%2Fftp.bir.gov.ph%2Fwebadmin1%2Fpdf%2F267692551M%2520final.pdf&ei=ncFIVNOFOYe3mgXzgoGYBA&usg=AFQjCNFdnlRWkgZctBI1afQ7UefEGoCkSQ&sig2=DTTHlBDxp0y4ySTRkfGo-whttps://www.google.com.ph/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB0QFjAA&url=ftp%3A%2F%2Fftp.bir.gov.ph%2Fwebadmin1%2Fpdf%2F27231701Qjuly2008.pdf&ei=vMFIVKK2O8bSmAW4oYLoAw&usg=AFQjCNEWN5ADEX_zQKFyrb3g0Tu1WsoN_Q&sig2=XWT3ttxi1tnY0gnF1-LNxQ&bvm=bv.77880786,d.dGYhttps://www.google.com.ph/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CBsQFjAA&url=ftp%3A%2F%2Fftp.bir.gov.ph%2Fwebadmin1%2Fpdf%2F82255BIR%2520Form%25201701.pdf&ei=4MFIVLefMsKOmwWGq4DoAw&usg=AFQjCNG4C-sB_dXuRICGmuEmK-C7_RRJJg&sig2=gxxM-2cDmThuwknClukVCQ&bvm=bv.77880786,d.dGYhttps://www.google.com.ph/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCAQFjAA&url=ftp%3A%2F%2Fftp.bir.gov.ph%2Fwebadmin1%2Fpdf%2F267692551M%2520final.pdf&ei=ncFIVNOFOYe3mgXzgoGYBA&usg=AFQjCNFdnlRWkgZctBI1afQ7UefEGoCkSQ&sig2=DTTHlBDxp0y4ySTRkfGo-whttps://www.google.com.ph/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB0QFjAA&url=ftp%3A%2F%2Fftp.bir.gov.ph%2Fwebadmin1%2Fpdf%2F27231701Qjuly2008.pdf&ei=vMFIVKK2O8bSmAW4oYLoAw&usg=AFQjCNEWN5ADEX_zQKFyrb3g0Tu1WsoN_Q&sig2=XWT3ttxi1tnY0gnF1-LNxQ&bvm=bv.77880786,d.dGYhttps://www.google.com.ph/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CBsQFjAA&url=ftp%3A%2F%2Fftp.bir.gov.ph%2Fwebadmin1%2Fpdf%2F82255BIR%2520Form%25201701.pdf&ei=4MFIVLefMsKOmwWGq4DoAw&usg=AFQjCNG4C-sB_dXuRICGmuEmK-C7_RRJJg&sig2=gxxM-2cDmThuwknClukVCQ&bvm=bv.77880786,d.dGY


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So each month, Jose has to $ay the !oernment 3E of his total earnin!s that month& #hats 3E of

710,000 which is euialent to 7300month& Ce nee(s to $ay this eery month 9on or before the

20th: an( he can $ay at the $artner banks& 9Giste( with your local B'R office:

Cell nee( his trusty 0?08 to $ay his $ercenta!e ta%& 'ts $retty much the same as the 0?08 he

fille( out aboe but with some (ifferences since hes now $ayin! for his $ercenta!e ta% an( not

for his OR&

Cell also nee( to fill out the B'R form 2881D eery month& Below is what Joses 2881 looks

like&

ftp://ftp.bir.gov.ph/webadmin1/pdf/267692551M%20final.pdfftp://ftp.bir.gov.ph/webadmin1/pdf/267692551M%20final.pdf


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#he calculate( $ercenta!e ta% will be reflecte( here;

Monthly Percentage Tax E- Update

B'R now has e*forms that woul( allow ta%$ayers to $rint $re*fille( form containin! their

information, sain! you time writin! an( com$utin! it yourself& #his blo! $ost contains (etaile(information on how to install the software, use it, an( hae the forms $rinte(&

8uarterly Inco"e Tax 0risis&

#o com$ute Joses uarterly ta%, we first nee( to (e(uct Joses work e%$enses&

Since Jose earns 710,000 $er month, this means he has a uarterly income of 730,000&

>e(uctibles can be (eclare( in 2 ways; the o$tional stan(ar( (e(uctible 9OS>: an( the itemi/e(

(e(uctible&

.or the o$tional stan(ar( (e(uctible, you can automatically (eclare 40E of your !ross as your

(e(uctible& #he a(anta!e of o$tin! for OS> is you (ont hae to itemi/e your e%$enses, theB'R (oesnt hae to au(it your e%$enses, an( is easier to com$ute&

So if Jose chooses OS>, eery uarter, he can automatically (e(uct 712,000 from his 730,000&

#his means for the ne%t 3 uarters, his ta% will be (e(ucte( from 71H,000, not 730,000&

Jose can also choose to (eclare itemi/e( (e(uctibles& #his can be cumbersome an( reuires youto kee$ recei$ts, so its best to consult with a bookkee$eraccountant if you (eci(e to itemi/e&

Coweer, if you hae a lot of (e(uctibles, you can en( u$ sain! money usin! this o$tion& Below

are e%am$les of Joses itemi/e( (e(uctibles;

1& Cis $ercenta!e ta%& Since he alrea(y $ai( it, we can (e(uct 71,200&

2& 'f this is Joses 1st time $ayin! ta%es as a self em$loye( in(ii(ual, he can (eclare thee%$enses he incurre( (urin! re!istration& #hats 71,800 for the recei$ts, 7800 for the

annual re!istration, an( lets say 71,000 for the "SO certificates, forms, an( re!istration

books&

http://djkaaccounting.com/how-to-use-the-e-bir-forms-for-your-monthly-returns/http://www.bir.gov.ph/index.php/eservices/ebirforms.htmlhttp://djkaaccounting.com/how-to-use-the-e-bir-forms-for-your-monthly-returns/http://www.bir.gov.ph/index.php/eservices/ebirforms.html


10/14

3& Cis SSS, 7hilhealth an( 7a!*ibi! for that month& Gets say for SSS, its 71,800 for 3

months& .or 7hilhealth an( 7a!*ibi!, its 7?00 for 3 months&

4& +hateer e%$enses he incurre( in or(er to (o his )ob& #his inclu(es his internet e%$enses&Gets say he monthly internet bill is 71,800& Ce uses it mainly for work but shares it with

his family& Ce estimates that 23 of his monthly internet usa!e is for work, so he (eclaresa 73,000k&

8& An( lets say that for electricity an( the (e$reciatin! alue of his com$uter he (eclares acost of 7800 $er month& So for 1 uarter, thats 71,800month&

+hen we total Joses itemi/e( (e(uctibles, we reach a total of 711,400&

Gets use the OS> as Joses (e(uctible because its hi!her an( is a nice roun( number 712,000&

Joses uarterly income Joses OS> I 9ose(s taxable inco"e

7 30,000 7 12,000 I P 1:,333

Since Joses ta%able income is 7 1H,000, this means he ualifies in the 7 10,000 to 7 30,000cate!ory& #o com$ute his ta%es (ue, well use the formula on the table below&

#a% >ue;

7 800 K 10E9 71H,000 710,000: I P 1,;33

So eery uarter, Jose has to $ay 71,300&

.or the 1st uarter, he has to $ay that amount on or before A$ril 18&

.or the 2n( uarter, he has to $ay on or before Au! 18&

.or the 3r( uarter, he has to $ay on or before "o 18&

An( to $ay this eery uarter, he has to fill u$ an( file B'R form 1F01

ftp://ftp.bir.gov.ph/webadmin1/pdf/27231701Qjuly2008.pdfftp://ftp.bir.gov.ph/webadmin1/pdf/27231701Qjuly2008.pdf


11/14

.or sim$licity, well focus on Joses si(e an( not inclu(e his wifes uarterly income ta%& SinceJoses wife is em$loye(, her boss will han(le the $rocessin! an( filin! of her ta%es& +e willinclu(e her info only when it becomes releant to Joses ta%es&

An( of course, he as to fill out a 0?08 to $ay for his uarterly ta%& At the bottom of that table,

hell $ut the amount an( si!n the form&


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Cell hae to (o this $rocess 3 times a year& .or the 4th uarter, hell be filin! for yearly income

ta% which he will $ay A$ril the followin! year&

Who(s #raid o the ig ad #nnual Inco"e/ Tax&

Gets say its now the followin! year an( Jose has to $ay his annual income ta%& Ceres when thecom$utation chan!es since the ta% com$utation is now base( on the yearly income& +e now take

into consi(eration Joses $ersonal e%em$tions&

All .ili$inos are entitle( to a basic $ersonal e%em$tion an( a((itional e%em$tions& Darital statusno lon!er matters& Re!ar(less of whether you are sin!le, marrie( or hea( of the family, you are

entitle( to a 780,000 (e(uction from your !ross income yearly& An( for eery chil( 9u$ to 4

chil(ren:, theres an a((itional 728,000 e%em$tion&

Gets say that Jose is a marrie( man with 1 chil(& #his ualifies him for a yearly $ersonale%em$tion of 780,000 for his marrie( status an( 728,000 e%em$tion for his chil(& #his !ies him

a total $ersonal e%em$tion of 7F8,000 $er year&

Since he earns 710,000, his yearly income totals at 7120,000&

#ake away the $ersonal e%em$tion of 7F8,000, he now has a ta%able income of 748,000&

#ake away his OS> 940E of 748,000: which is euialent to 71H,000, his ta%able income is now72F,000&

#his means Jose falls within the 710,000 to 7 30,000 bracket& "ow all we nee( to (o is com$utethe ta%es base( on the table aboe&

7800 K 910E L 972F,000 710,000:: I 72,200

An( since hes $ai( for the $ast 3 uarters, 73,=00& #his means we can (e(uct those $aymentsfrom his income ta%&

7 2,200 73,=00 I *7 1,F00

As you can see, by $ayin! ta%es eery uarter, the !oernment now owes Jose 7 1,F00& Ce can

actually hae this sur$lus (e(ucte( from his income ta% ne%t year& Ce can also hae his monthly


13/14

$ercenta!e ta%es (e(ucte( from his uarterly income ta%es to re(uce the amount he $ays eery

month so he wont be $ayin! in e%cess&

+hen this ha$$ens, Jose will only be $ayin! 7400 $er uarter& #hat means his annual income ta%

com$utation will look like this;

#a% >ue I 7 2,200 71,200 9his 3 uarterly income ta%es monthly $ercenta!e ta%: 7=00 9the

monthly $ercenta!e ta% for the last uarter:

#a% >ue I 7 100

om$are( to the 1F01, the 1F01 is lon!er an( much more com$licate( so we wont show a

sam$le of Joses form here& Suffice to say that re!ar(less of whether Jose chooses to take the

itemi/e( (e(uction or the stan(ar( o$tional (e(uction, he will nee( an accountant or bookkee$erto hel$ fill out the form since the 1F01 reuires the si!nature of an accre(ite( ta% a!ent&

Tax Payment and Filing E- Update

#urns out that B'R now has an online filin! an( $ayment system& Once you hae your OR, you

can re!ister here; B'R @lectronic .ilin! an( 7ayment System& Once your re!istration isa$$roe(, you hae to !o to your R>O to hae it actiate(& Once you hae an actie account,

you shoul( be able to in$ut your information in the a$$ro$riate forms an( it also automatically

com$utes for you& 'm in the $rocess of hain! this (one& +ill $roi(e more information on howit works as soon as 'm (one with the re!istration itself& #hank you Dommy A/alea for the ti$5


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"o nee( to re*fill another 1=01& Jose )ust nee(s to brin! his OR, 0?08, an( recei$t to renew his

ta% $ayer status with the B'R&

*odel Filipino Online Worker is a Tax Payer

An( as you can see, $ayin! ta%es (oesnt hae to be e%$ensie&

't is a te(ious, cumbersome, an( at time com$licate(, but once you hae eerythin! in $lace, the

$rocess becomes easier& An( with this !ui(e, we ho$e wee hel$e( (emystify the $rocess of

re!isterin!, filin!, an( $ayin! ta%es as an online worker& 'f you (ont want to han(le your ta%es by yourself, you can always hire an accountant, bookkee$er, on retainer to (o the bookkee$in!

for you&

Do(el citi/ens $ay their ta%es an( theres no reason why online workers cant be mo(el citi/ens

too& 7ayin! ta%es allows us to (o our share in hel$in! to make our country a better $lace& 7ayin!

ta%es also !ies us the ri!ht to !ie corru$t $oliticians the fin!er the ne%t time they s$en( OMRta%es&

filipino online workers guide to paying taxes

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