Quiz on Income Taxation

Individual Income Taxation

“Trust in the LORD with all your heart and do not lean on your own understanding.
In all your ways acknowledge him, and he will make straight your paths”
Proverbs 3:5-6
Name:_____________________________ Date:________________

Part 1 Theories. Match the following terms with their appropriate definitions. Use the provided answer sheet
below.

A. Compensation Income Earners L. Compensation Income

B. Gross Sales M. Corporation
C. Gross Receipts N. Mixed Income Earner
D. Tax Due O. Estate
E. Self-employed P. Non-Resident Alien Engaged in Trade or
F. Income Tax Business (NRA-ETB)
G. Non-taxable benefits Q. Domestic Corporations
H. Minimum Wage Earner R. Passive Income
I. VAT Threshold S. Capital Gains
J. Citizen T. Taxable-Income
K. Non-resident citizen

1. It means all remuneration for services such as salaries and wages performed by an employee for his
employer under an employer-employee relationship.
2. These are individuals whose source of income is purely derived from an employer-employee relationship.
3. It refers to the total amount of money received for the services performed or to be performed for another
person.
4. It refers to the total sales transactions net of VAT.
5. A worker in the private sector who is paid with a statutory minimum wage (SMW) rates.
6. An individual earning compensation incomes from employment, and income from business, practice of
profession and/or other sources aside from employment.
7. A sole proprietor or an independent contractor who reports income earned from self-employment.
8. It refers to the ceiling fixed by law to determine VAT registrable taxpayers and is currently set at three
million pesos (P3,000,000).
9. It includes Thirteenth (13th) month pay and other benefits such as de minimis benefits, employee’s share
in the SSS, GSIS, PHIC, HMDF, and union dues.
10. The term being used for the computed tax liability of a certain taxpayer; the tax needed to be paid.
11. A tax on a person’s income, emoluments, profits arising from property, practice of profession, conduct of
trade or business or on the pertinent items of gross income specified in the Tax Code of 1997 (Tax
Code), as amended, less the deductions if any, authorized for such types of income, by the Tax Code, as
amended, or other special laws.
12. Individuals under Article IV, Section I of the Philippine Constitution.
13. It includes the following but not limited to; Partnerships, Joint-stock companies, Joint accounts,
Associations, and Insurance companies.
14. It refers to the mass properties left by a deceased person.
15. A citizen who is required by his employment to stay abroad for 183 days or more during the taxable year.
16. An individual who comes to the Philippines and stay therein for an aggregate period of more than 180
days.
17. A Corporation created or organized under the Philippine laws.
18. Income where there is no active participation on the part of the taxpayer (e.g. (1)interest on deposit,
(2)interest income, (3)royalty income, (4)dividend income, and (5)prizes and winnings).
19. These are gains or profits in selling specific capital assets.
20. This refers to pertinent items of gross income less deduction.

1. 5. 9. 13. 17.
2. 6. 10. 14. 18.
3. 7. 11. 15. 19.
 4. 8. 12. 16. 20.

Part II Computations. Solve the following tax problems. Please provide your computations on the space
provided.

1. Ms. Anna Frozen operates an ice cream while she offers bookkeeping services to her clients. In 2018,
her gross sales amounted to P400,000, in addition to her receipts from bookkeeping services of
P150,000. She already signified her intention to be taxed at 8% income tax rate in her 1 st quarter return.
What is her tax due liability in her 1st quarter return?

2. Mr. John Wick operates book stores and renders services as a professional broker. In 2018, his gross
sales amounted to P800,000. In addition to that, he received P300,000 from his services as a broker.
Assume that he failed to signify his intention to be taxed at 8% income tax rate on gross sales in his
initial Quarterly Income Tax Return, and he incurred the cost of sales and operating expenses
amounting to P600,000 and P200,000. What is the income tax due to John Wick in his quarterly income
tax return?

3. Pedro, single, is a minimum wage earner of Makibaka Corporation. In addition to his basic minimum
wage of P180,000, he also received the following benefits: Holiday Pay of P32,000; Overtime Pay of
P25,000, and Night shift differential of P18,000. How much is Pedro’s tax due for the period?

Tax schedule as provided under Sec. 24(A)(2)(a) of the Tax Code; as amended:

Effective January 1, 2018 until December 1, 2022.

Annual Income Bracket (in PHP) Tax Rate

Not over 250,000 0%
Over 250,000 but not over 400,000 20% of the excess over 250,000
Over 400,000 but not over 800,000 30,000 + 25% of the excess over 400,000
Over 800,000 but not over 2,000,000 130,000 + 30% of the excess over 800,000
Over 2,000,000 but not over 8,000,000 490,000 + 32% of the excess over 2,000,000
Over 8,000,000 2410,000 + 35% of the excess over 8,000,000