Classification of personal

exemptions
Basic exemptions – all individual taxpayers, whether single or
married, resident or non-resident cetizens, are entitled to an across
the board deduction of Php.50,000

Additional exemptions - Php. 25,000 is allowed for each qualified

dependent, whether the taxpayer is single or married.
Legitimate – child born during a valid marriage
Illegitimate – child born outside a valid marriage
Legally adopted – child adopted through the legal
procedures and formally declared by a court decision
 10 – 6

Business expenses ordinary and necessary

 ordinary and necessary expenses in
general

To be deductible as a business expense,
the expense must be both “ordinary” and
“necessary.“ Ordinary and necessary
expenses must also be “reasonable,” or the IRS
may disallow the expense. Ordinary Expenses:
Things that are commonly used, and accepted
by general industry standards.
compensation for personal services of
employees

Fringe Benefits. Fringe benefits are allowances

and services provided by employers to
their employees as compensation in addition to regular
salaries and wages. ... (a) Fringe benefits are allowances
and services provided by employers to
theiremployees as compensation in addition to regular
salaries and wages.
bonuses for employees

Bonuses may be contractual, such as

sales bonuses for salespeople, or they may be for
performance awards. Another type of bonus is a special
holiday bonus to a group of employees who have met a
specific sales or production goal or for overall yearly
profitability. Bonuses are typically paid out in a special
check.
travel expenses

An expense incurred by an employee while he/she

istraveling for business purposes or entertaining a
business client. Examples of traveling expenses include
money spent on lodging, transportation, and meals.
repair and maintenance expenses

The costs incurred to bring an asset back to

an earlier condition or to keep the asset
operating at its present condition (as opposed to
improving the asset). For example, if a company
truck is damaged, the cost to repair the damage
is immediately debited to repairs and
maintenance expense.
interest expense in general

Interest Payable is a liability account shown on a

company's balance sheet which represents the amount
of interest expense that has been accrued to date but
has not been paid as of the date on the balance sheet. In
short, it represents the amount ofinterest currently owed
to lenders.
 bad debts in general

The seller can charge the amount of an invoice to the

bad debt expense account when it is certain that the
invoice will not be paid. The journal entry is a debit to
the bad debt expense account and a credit to
the accounts receivable account.
depreciation in general

The general depreciation system is the

most commonly used modified accelerated cost
recovery system(MACRS) for
calculating depreciation. A general
depreciation system uses the declining-balance
method to depreciate personal property.
 tax payments

Make estimated tax payments in advance of the

timely filing of your return. Depending on your income,
your payment may be due quarterly, or as calculated on
Form 1040-ES, Estimated Tax for Individuals. ... IRS
assessment of a civil penalty on business or
individual tax forms.
creditable withholding tax

The BIR Form 2037 is also called the Certificate

of Creditable Tax Withheld At Source. This certificate
shows the income subjected to expanded withholding
tax paid by the withholding agent. BIR Form 2307 in
the books of accounts of the taxpayer is accounted for as
an asset.