#2.2 : Gross & Net Income

Question 1

Any amount referred to as the exchange of work rendered or services done, prior to any deductions.

Answer 1

GROSS INCOME

Question 2

Gross Pay consists of:

Answer 2

• Monthly Basic Pay
• Overtime Pay
• Holiday Pay
• Night Differential

Question 3

Income reduced by standard and some other deductions but prior to tax.

Answer 3

TAXABLE INCOME

Question 4

Taxable Income consists of:

Answer 4

• Tardiness
• Absences
• SSS contribution
• Pag-IBIG contribution
• Philhealth contribution

Question 5

Income reduced by taxes, standard deductions, and some other deductions.

Answer 5

NET INCOME

Question 6

Net Pay or Take-home pay formula

Answer 6

Taxable Income – Withholding tax

Question 7

Gross Income formula

Answer 7

(Monthly Basic Pay + Overtime Pay + Holiday Pay + Night Differential)

Question 8

Taxable Income formula

Answer 8

(Monthly Basic Pay + Overtime Pay + Holiday Pay + Night Differential) – (Tardiness + Absences + SSS Contribution + Philhealth Contribution + Pag-IBIG Contribution)

Question 9

Gross income is always the basis of the __________.

Answer 9

benefits

Question 10

Gross benefits/de minimis are only added at the end of the solution because they are not _________.

Answer 10

taxable

Question 11

1st step in computing for SSS contribution

Answer 11

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.

Question 12

2nd step in computing for SSS contribution

Answer 12

Identify the range of compensation and look for the corresponding employee ss or total contribution “EE”.

Question 13

GSIS Contribution formula

Answer 13

Monthly Basic Salary × 9%

Question 14

1st step in computing Philhealth contribution

Answer 14

Identify the monthly basic salary then multiply it by 3%.

Question 15

2nd step in computing Philhealth contribution

Answer 15

To get the employee share you must divide it by 2 (to separate the employer share).

Question 16

1st step in computing Pag-IBIG or HDMF (Home Development Mutual Fund) Contribution

Answer 16

Identify the monthly basic salary if it is P1,500 or less or over P1,500.

Question 17

2nd step in computing Pag-IBIG or HDMF (Home Development Mutual Fund) Contribution

Answer 17

Multiply it to the employee share percentage.

Question 18

What is the basis for Withholding tax?

Answer 18

taxable income

Question 19

1st step in computing the Withholding Tax

Answer 19

Identify the pay period if it is daily, weekly, semi-monthly or monthly.

Question 20

2nd step in computing the Withholding Tax

Answer 20

Look for the column where the taxable amount belong to, follow the amount in the column that is nearest to the taxable amount.

Question 21

3rd step in computing the Withholding Tax

Answer 21

Get the difference of the taxable amount and the column amount for the over CL amount or the “in excess of” compensation level.

Question 21

3rd step in computing the Withholding Tax

Answer 21

Get the difference of the taxable amount and the column amount for the over CL amount or the “in excess of” compensation level.

Question 22

4th step in computing the Withholding Tax

Answer 22

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.