oDesk XV

[ayanlanz]

^^parang gusto ko yung Tax seminar. wait, Philippines taxation yan right?

ooppss....hello po! 

[shinta]

^ sis, eto event details, mukhang philippine taxation naman:

Learn Tax Basics of Online Freelance Professionals!
Hosted by: Elance

Featuring the Tax Whiz! Mon Abrea, CPA, MBA
President, Center for Strategic Reforms of the Philippines

April 20, 2013
Seminar Room G, 2nd Floor, Philippine Trade Training Center, Sen. Gil Puyat corner Roxas Boulevard, Pasay City

hosted by elance din pala siya pero pinoy speaker.

[freelancer_babe]

The taxation is interesting. But I worry na, with that 1.5 hours duration, very basic at hindi detailed ang babanggitin - yes, those details on how to fill out the form, up to how to fill out that blue book.

Kasi yung details na yun ang kailangan ko. :-D

Besides, this event is around 6 to 8 hours away from my place.

[ayanlanz]

^same po tayo... 

mas maganda sana kung detailed from start to finish including na yung tax dates at payments.

ang hirap kasi magtanong sa mga local branch ng BIR dito... palaging busy ang mga personnel. 

[freelancer_babe]

^ I hope this helps,

I rely on eFPS to handle all the computations. Buti na lang pumayag ang BIR na magkaroon ako ng account doon. via Online banking na rin ang pagbayad ko.

Yun nga lang, I also learned that not everyone gets to have an efps account. Kaya the others have to go the old way of asking how things are computed. 

But for that 1701 form I've used the interactive one sa BIR website. Kaya ganun rin, input lang ako ng input ng values. Then print out the form and manually submit to the BIR office and manually pay the bank.

I've always chosen "optional deductions" - iwas audit, additional documents at accountant (saka simple lang naman ang income and expenses ko), although I still have to keep receipts and keep track of income and expenses via the blue book.

But true, mahirap magtanong, even if they have that BIR officer of the day (which doesn't charge any fees) at their desk.


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on topic:

Duda ako kung kaya ng gobyerno natin na talagang buksan ang odesk accounts natin para busisihin kung magkano talaga ang kinikita.

Bank accounts pwede pa, in particular yung peso bank accounts. Yung LFT tingin ko nakaindicate doon sa bank records na galing sa odesk ang remittances. (click here see BPI's advisory here, under Important Advisory on Telegraphic Transfer/Inward Remittance Transactions)

LFT is probably not the best means to hide income kasi may remittance details na pwedeng i-disclose ng bank sa BIR.

[shinta]

kami wala talagang alam kahit basics pag dating sa income tax filing. hopefully we'll learn something from the seminar. sana may Q&A din para dun sa mga items na di madiscuss.

[shielala]

Salamat sa inyo, medyo naenlighten na ko ngayon.

I think I'll try teaching muna since yun naman talaga gusto ko in the first place. Sa mga nababasa ko dito, matagal makakuha ng work sa odesk kaya nagulat ako nung may naghire saken agad.

Time management is the key.

[virt_train]

@ freelancer_babe, may template ka ba na ginagamit for the detailed expenses? Just wondering kung paano kaya ang sa akin...na file ko na kasi as company name...dapat pala individual na lang..

Although..hindi pa naman ako ng file ng permit sa munisipyo...

 

[freelancer_babe]

^ oo individual sa akin. As in name ko ang business name, hehe. para di ko na kailangan ng DTI, mayor's permit, etc.

I don't use any template. I just use yung blue book, but I am not very much sure on how to classify things in the bluebook either, but I write on it anyway for compliance.

In my ITR I always use "optional deduction" para di na mahirap mag-itemize ng expenses. Though you still need to list down work-related expenses sa blue book (it might be a ledger or journal, in your case, not sure though).

Kaya lang sa iyo company name ang ginamit. I don't know how simple or complicated ang ginagawa mo. Mine is really simple (I have very few expenses to list) na hindi ko na talaga kailangan ng accountant. But if you find tax too complicated, it might be better to hire an accountant or a bookkeeper - and you'd better hire a good one.

Even those with accountants pwede pa rin magkaproblema sa tax evasion.

[charmedwitch776]

hi mga sis, about sa bank remittances natin at possible na pag check ng government para sa mga freelancer like us...I have friends working in different bank (BPI, Metrobank and another one in PS Bank) and same lang ang sagot nila sakin about this issue and that is as far as they know walang power ang government na makialam or magbusisi ng bank account ng individuals(public or private person) dahil sa Bank Secrecy Law...so hindi possible daw na mahabol tayo...share lang po.

[freelancer_babe]

^ We wished though, and I hope the bank personnel you've asked are very right.

This section in Amended RA 1405 after the word "except" can be used as an excuse by BIR's lawyers to probe into our deposits. Obviously for Corona's case, yung impeachment ang reason why the senate were able to gain access - so they where able to open a public official's Peso account (his Dollar accounts were untouchable, though).

SECTION 2. All deposits of whatever nature with banks or banking institutions in the Philippines including investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities, are hereby considered as of an absolutely confidential nature and may not be examined, inquired or looked into by any person, government official, bureau or office, except upon written permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or invested is the subject matter of the litigation.

source

[ReservoirDogs]

^

Pero yung exception (as per link above posted) is if you give a written permission to the bank, or if you are a government official; what I don't know is ano yung "subject of litigation" na clause.  IMO, hindi naman pwede buksan ng BIR yung bank account mo kung wala ka pang kaso.  Example ko lang, dun sa case ni Solenn, ang sabi ni Henares, kaya nakita si Solenn na nag-underdeclare ng tax is because Henares herself saw that Solenn is everywhere so pinabuksan nya yung tax records ni Solenn. Still her bank records deposits were not opened.

Well anyway, it's still better to pay taxes bago pa masilip ng BIR.  Ang tanong ko lang, kung halimbawang mag-online work ako abroad, kanino ako magbabayad ng Tax? 

[freelancer_babe]

^ oo sis, yun din. Ako rin, gusto kong maintindihan yung "subject of litigation".

So far, what I know is, bago mabuksan ang bank account, kailangan may kaso na ifa-file ang BIR.

Anyway, BIR has other ways to check other than bank accounts. Existing assets, pati rin assets of relatives. Beware if you have assets such as a house and lot, or a car na katas ng online jobs. These can be questioned.

High speed internet... I heard from the news that BIR coordinating with the telcos.

OFWs are exempted from tax. Medyo straightforward nga lang BIR dito: But if you will be a Filipino citizen residing overseas (you are not living here in the Philippines) working with clients outside the Philippines, I think not. If you have a client residing here in the Philippines, then you are still subject to tax even if you are out of the country.

One good thing though... self-employed can still choose to declare the amount of earnings that they declare to the BIR. Just make sure that the declaration matches your lifestyle and assets that you own.

[shinta]

Anyway, BIR has other ways to check other than bank accounts. Existing assets, pati rin assets of relatives. Beware if you have assets such as a house and lot, or a car na katas ng online jobs. These can be questioned.

ito din iniisip ko, kasi naghuhulog na kami ngayon for a lot, and hopefully matayaun na din ng bahay. baka masilip kami ng BIR since we have no tax declaration since 2008 pa, when we started online freelancing. another reason is para din mareactivate ang PAG-IBIG.

question lang sis, sa deductions, pwede ba i-include internet connection, electricity, other contributions like SSS, philhealth, HMO? o kaya halimbawa, nasira yung PC/laptop mo, yung expenses for buying/repairing? o hindi ito deductible from the taxable income?

may nakausap din ako na pwede daw mag-declare ng no-income months.

[freelancer_babe]

^ Mahirap ng yan sis, especially kung aging ka na (like me) tapos sasabihin ko na wala akong income. May situations na minsan mahirap humarap sa government agencies and tell them na unemployed ka judging from your appearance (sana na lang ang tingin nila sa akin, parang inutil na lang ako na may katawan ako tapos unemployed. LOL. Pero hindi eh, tingin nila sa akin kaduda-duda na wala akong income, haaayyy!).

But kidding aside, penalties could be steep for non-filing/underdeclaration - criminal case kasi ang tax evasion. Personally I'd rather do tax avoidance (which is 100% legal) than tax evasion.

question lang sis, sa deductions, pwede ba i-include internet connection, electricity, other contributions like SSS, philhealth, HMO? o kaya halimbawa, nasira yung PC/laptop mo, yung expenses for buying/repairing? o hindi ito deductible from the taxable income?

internet connection, electricity, computer repairs, equipment, printer ink, paper - YES ... basta anything related sa work
contributions to SSS, Philhealth, HMO, PAGIBIG, life insurance, retirement, and other plans - NO

kasama rin sa expenses ko ang website and domain expenses and even online backup, which I am paying monthly in dollars, converted into pesos when I put that in the "blue book". I keep the receipts.

In the above, I said YES - I mean it is deductible sa taxable income. NO - I mean they are NOT deductible.

HOWEVER, if you are using "Optional Deduction", the expenses above (marked as YES above) are sort of "disregarded" already from the computation - kasi fixed na 40% yun. But, you should still keep the receipts and declare these in the "blue book" if in case a BIR audit. I use "Optional Deduction", by the way.

Also, I am assuming pareho tayo ng set of taxes na fina-file (1701, 1701Q and 2551M). If not, or you find it quite complicated, an accountant/bookkeeper's might be of help.

may nakausap din ako na pwede daw mag-declare ng no-income months.

Yes, I have no-income months too.

No income, no tax to pay. 

But even if you got no income for the month, the tax return has to be filed. Puro zero nga lang ang mga nakalagay.

[ikaela]

Sis freelancer_babe, pa-rough estimate lang. Say you earn 10 to 15K a month from your online jobs, using your method, how much tax do you pay on that income?

[freelancer_babe]

^ If P15k, and assuming BIR has told you that you have to pay these set of taxes (this could differ depending sa setup ng freelance business ninyo, but most freelancers would have these set of taxes): 1701 (annual income tax return), 1701Q (quarterly income tax return), and 2551M (monthly percentage tax return).

I will also assume that you are using Optional Deduction to simplify things. Also, the status of the filer is single without dependents (may personal exemption na P50k)

Percentage Tax Return or 2551M, paid monthly

The Percentage Tax Return is just simply computed at 3% of gross income.

Tax Due = P10k x 3% = P300 (this is the amount you pay monthly)


Quarterly Income Tax Return or 1701Q, paid quarterly (only for 1st, 2nd and 3rd quarters only)

Gross Income for 3 months = P10,000 x 3 months = P 30,000

Allowable Deduction (Using Optional Deduction of 40% of gross income) = P 30,000 x 40% = P12,000

Therefore your Taxable Income is = Gross Income - Allowable Deduction = P 30,000 - P 12,000 = P18,000

Look under the Tax Rate Table: http://www.bir.gov.ph/taxinfo/tax_income.htm#25147

P18,000 falls under 10k to 30k bracket. Therefore,

Tax Rate = 500 + 10% of the excess of over P10,000

Tax Due = 500 + ( 10% x (P18,000 - P10,000)) = 500 + (10% x P8,000) = 500 + 800 = P1300 (amount to pay for the 1st, 2nd and 3rd quarters)


Annual Income Tax Return or 1701, paid April 15 each year

The computation is same as Quarterly, except that you have to compute income in one year, then subtract the taxes you have paid for the first three quarters (in quarterly ITR). This is a bit more complicated, as I will have to include

Gross income for the year = P10k x 12 = P120,000

Allowable deduction (using optional deduction of 40% of gross income) = P 120,000 x 40% = P48,000
Personal exemption (single, no dependents) = P 50,000

Taxable Income = Gross income - Allowable deduction - personal exemption = P 22,000

Look under Tax Rate Table: http://www.bir.gov.ph/taxinfo/tax_income.htm#25147

P22,000 falls under 10k to 30k, therefore

Tax Rate = P500 + 10% of the Excess over P10,000

Tax Due  = P500 + ( 10% x (P22,000 - P10,000)) = P1,700

But, you have paid taxes for the first three quarters in using form 1701Q, kaya ibabawas ito:

Tax Payable for the year = P 1700 - 1300 (paid 1st quarter) - 1300 (paid second quarter) - 1300 (paid third quarter) = - P 2,200 (yes, this is the one you will file with BIR before April 15 each year... negative value nga yan, ibig sabihin may utang pa si BIR sa iyo, LOL)

I believe the info above is accurate, not an estimate, given those assumptions above, BTW. I have to be That accurate because I'm filing my taxes without an accountant. The BIR officer of the day simply double checks my computation. I use BIR eFPS and interactive form 1701 to help me automate the computations so I don't do them manually as I did them here.

You could use the above computation to try to get the taxes at P15k monthly. The tax payable for the year won't go negative as this one, but the tax payable isn't that huge either.

[xyeZZZ]

^ and galing mo naman sis. Very clear ang pagkakaexplain. 

I'm not aware na kahit freelancer dapat magbayad pa rin ng tax. LOL.  Anyway, pano yun kapag negative, so dapat may tax refund ka pa from BIR or TY nalang.

[ikaela]

^^Thank you very much, that is so much more than what I asked for. I'm sure plenty others here would benefit from that very clear explanation.

[freelancer_babe]

You're welcome sis xyeZZZ and ikaela!

Mababa yung income na P10k ngayon, that's why it returned negative. Of course, it's a different story kung mataas ang declared income - there's serious amount of taxes to pay.

Anyway, pano yun kapag negative, so dapat may tax refund ka pa from BIR or TY nalang.

Kung negative, hindi naman TY, as some believed (Would you believe na may malaking government institution who believed TY ang negative returns!!! Pinagtanungan ko sila ng tax computation, and turned out na yung IT handling their payroll, hindi alam ito. LOL. I've informed them that I was able to refund.)

Pwedeng tax refund, but it'll take quite a while bago talaga ibalik ang pera - something I've always heard of.

Probably the best way to refund that negative is to make use of it when filing the next annual return. This is what I did.

Yung annual ITR ko last year, negative. So for this year na may tax payable, dinala ko ang photocopy ng ITR ko last year and attached it sa ITR ng year na ito. It was credited, nabawasan ang tax payable ko ngayong year na ito.