#2.2 : Gross & Net Income Flashcards
Any amount referred to as the exchange of work rendered or services done, prior to any deductions.
GROSS INCOME
Gross Pay consists of:
- Monthly Basic Pay
- Overtime Pay
- Holiday Pay
- Night Differential
Income reduced by standard and some other deductions but prior to tax.
TAXABLE INCOME
Taxable Income consists of:
- Tardiness
- Absences
- SSS contribution
- Pag-IBIG contribution
- Philhealth contribution
Income reduced by taxes, standard deductions, and some other deductions.
NET INCOME
Net Pay or Take-home pay formula
Taxable Income – Withholding tax
Gross Income formula
(Monthly Basic Pay + Overtime Pay + Holiday Pay + Night Differential)
Taxable Income formula
(Monthly Basic Pay + Overtime Pay + Holiday Pay + Night Differential) – (Tardiness + Absences + SSS Contribution + Philhealth Contribution + Pag-IBIG Contribution)
Gross income is always the basis of the __________.
benefits
Gross benefits/de minimis are only added at the end of the solution because they are not _________.
taxable
1st step in computing for SSS contribution
Check the employment status (is he/she is employed, self-employed, voluntary, non-working spouse, kasambahay, or OFW member) and look for the SSS table applied for him/her.
2nd step in computing for SSS contribution
Identify the range of compensation and look for the corresponding employee ss or total contribution “EE”.
GSIS Contribution formula
Monthly Basic Salary × 9%
1st step in computing Philhealth contribution
Identify the monthly basic salary then multiply it by 3%.
2nd step in computing Philhealth contribution
To get the employee share you must divide it by 2 (to separate the employer share).
1st step in computing Pag-IBIG or HDMF (Home Development Mutual Fund) Contribution
Identify the monthly basic salary if it is P1,500 or less or over P1,500.
2nd step in computing Pag-IBIG or HDMF (Home Development Mutual Fund) Contribution
Multiply it to the employee share percentage.
What is the basis for Withholding tax?
taxable income
1st step in computing the Withholding Tax
Identify the pay period if it is daily, weekly, semi-monthly or monthly.
2nd step in computing the Withholding Tax
Look for the column where the taxable amount belong to, follow the amount in the column that is nearest to the taxable amount.
3rd step in computing the Withholding Tax
Get the difference of the taxable amount and the column amount for the over CL amount or the “in excess of” compensation level.
3rd step in computing the Withholding Tax
Get the difference of the taxable amount and the column amount for the over CL amount or the “in excess of” compensation level.
4th step in computing the Withholding Tax
Multiply the corresponding percentage to the over CL amount or the “in excess of” compensation level amount and then add it to the amount in the prescribed minimum withholding tax that corresponds to the column of the compensation level.
