CHAPTER 8 INCOME TAX OF INDIVIDUALS

Income Taxation of Individual Taxpayer has the ff Characteristics:

1.
Schedular system of taxation
-classifies income and imposes different tax rates depending on the level of income
2.

Progressive tax rates

-tax rate increases as the tax base increases, but such increase is not directly
proportional

3.

Pay-as-you-file-or-earn system
-amount of tax liabilities are paid upon filing the return, or the taxes are withheld on
income subject to withholding tax

4.

Adoption of modified gross income

-self-employed can deduct business expense and personal exemptions
-pure compensation income earners can deduct only their personal exemptions

Income Tax Return

-formal declaration under oath of the tp indicating gross taxable income, allowable
deductions, basic personal and additional exemptions, and the amount of tax due covering a
certain taxable year
Individual Taxpayer required to file Income tax return
1.
RC,
2.
NRC, income within
3.
RA, income within
4.
NRAETB, income within
5.
RC, NRC, RAETB, NRAETB regardless of the amount of gross income, income derived
from business or exercise of profession
6.
Individual deriving compensation concurrently from 2 or more employers at any
time during the taxable year
7.
Individual whose pure income derived within, exceeds statutory minimum wage