Our country is governed by a lot of taxes imposed by the government; this is to ensure that the businesses established are paying their part of serving and patronizing national products and services in our land. There is one tax that all employees and entities in our country pays and this is what we call the income tax. This was imposed way back when we weren’t still around and it varies from the salary, and by the jurisdiction. However, taxpayers can get back what they have been paying and this is now what we call the Income Tax Return or the Tax Refund.
What is Tax Refund?
If you are an employee and you notice that you are not getting the whole amount that the company and you agreed to, the amount that was cut is the amount of taxes you are paying each month. Tax Refund is when your employer, gives back what you have been paying as stated in the law. Also, you can file a claim for a tax refund when the tax liability is less than the amount paid. But here in our country, employees get a tax refund on or at the coming end of the calendar year.
How can I claim my Tax Refund?
As mentioned earlier, your tax refund is usually computed on or before each calendar year unless a modification in your employment happens. Say you went to a maternity leave, or you switched companies, etc. This is where claiming of your Tax Refund comes in.
When this happens, the employee needs to file with the employer the new and updated withholding exemption certificate reflecting the change in a span of 10 days; notify your employer just as your status changes and you should do this immediately.
Read: How to compute capital gain tax on sale of real property in the Philippines
YOU ARE EXEMPTED FROM FILING INCOME TAX RETURN IF:
- A Filipino citizen who works and earns income abroad.
- An overseas Filipino worker whose income is derived only in sources not in our country.
- A Filipino working overseas as a seaman; the vessel must be engaged in international trade.
- A Filipino citizen previously considered a non-resident citizen.
How can I compute for my Tax Refund?
People sometimes compute for their tax refund to check if there are errors in the computation, here is how you can compute for your Tax Refund:
Gross: P180, 000.00
Less: P15, 000.00 = 13th Month Tax Exempt
P6, 000.00 = Government Dues or exemptions (only an example and this may vary from company to company or salary range)
Taxable income: P159, 000.00
Tax Due for the Year: P39, 750.00
Tax withheld from Jan to Dec: P43, 250.00 / 12 = P3, 604.17 (this means that the average withholding tax that is being deducted from your salary each pay day P1, 802.805)
Tax refund: P3, 500.00
Example Source: Call Center Beat
Now that you know how to compute for tax refund, be sure to do it before your employer assesses yours to ensure that you are getting the right amount. Stay tuned for more.
Read Also: How to get BIR Tax Identification Number online