INCOME TAX: CHAPTER 2 Flashcards
What are the 2 Classifications of Income Taxpayers? And the sub of the two?
Citizen:
- Resident
- Non-Resident
Alien:
- Resident Alien
- Non-Resident Alien Engaged in Trade and Business
- Non-Resident Alien Not Engaged in Trade and Business
• Those who are citizens of the Philippines at the time of the adoption of the Feb. 2, 1987 Constitution,
Those whose fathers or mothers are citizens of the Philippines,
Those born before Jan. 17, 1973, the date of the adoption of the 1973 Constitution, of Filipina mothers, who elect Philippine citizenship upon reaching the age of majority, and
Those who are naturalized in accordance with law
CITIZEN
is a Filipino citizen who permanently resides in the Philippines
Resident Citizen
A citizen of the Philippines who establishes to the satisfaction of the Commissioner the fact of his physical presence abroad with a definite intention to reside therein.
A citizen of the Philippines who leaves the Philippines during the taxable year to reside abroad, either as an immigrant or for employment on a permanent basis,
Non-Resident Citizen
A citizen of the Philippines who works and derives income employment thereat requires him to be physically preseme from abroad and whose Par during the taxable year. “Most of the time” is interpreted to mean presence abroad for at least 183 days during the taxable year (BIR Ruling 128-99, Aug. 18, 1999
Non-Resident Citizen
• A citizen who has been previously considered as non-resident citizen and who arrives in the Philippines at any time during the taxable year to reside permanently in the Philippines shall likewise be treated as a non-resident citizen for the taxable year in which he arrives in the Philippines with respect to his income derived from sources abroad until the date of his arrival in the Philippines.
The taxpayer shall submit proof to the Commissioner to show his intention of leaving the Philippines to reside permanently abroad or to return to and reside in the Philippines, as the case may be.
Non-Resident Citizen
An individual whose residence is within the Philippines and who is not a citizen thereof. He is one who is actually present in the Philippines and who is not a mere transient or sojourner. But residence does not mean mere physical presence. __ is considered a resident or a non-resident depending on his intention with regard to the length and nature of his stay.
Resident Alien
An individual whose residence is not within the Philippines and who is not a citizen thereof
Non-Resident Alien
In general, means all remuneration for services performed by an employee for his employer under an employer-employee relationship, unless specifically excluded by the Code. Results of your performance
The name by which the remuneration for services is designated is immaterial. Thus, salaries, wages, emoluments and honoraria, allowances, commissions (e.g transportation, representation, entertainment and the like), fees including director’s fees, if the director is, at the same time, an employee of the employer/corporation, taxable bonuses and fringe benefits, except those which are subject to the fringe benefits tax under Sec. 33 of the Code and the allowable “de minimis” benefits; taxable pensions and retirement pay, and other income of a similar nature constitute _______.
Compensation Income
Individuals whose source of income is purely derived from an employer-employee relationship.
Compensation Income Earners
An individual performing services under an employer-employee relationship. The term covers all employees, including officers and employees, whether elected or appointed, of the Government of the Philippines, or any political subdivision thereof or any agency or instrumentality.
Employee.
refers to an employee holding neither managerial nor supervisory position as defined under existing provisions of the Labor Code of the Philippines, as amended.
Rank and File Employee
Any person for whom an individual performs or performed any service, of whatever nature, under an employer-employee relationship. It is not necessary that the services be continuing at the time the wages are paid in order that the status of employer may exist.
Employer
____ exists when a person for whom services were performed (employer) has the right to control and direct an individual who performs the services (employee), not only as to the result of the work to be accomplished but also as to the details, methods and means by which it is accomplished.
Employer and Employee Relationship
_____ means any good, service or other benefit furnished or granted in cash or in kind other than the basic compensation, by an employer to an individual employee (except rank and file employee as defined herein) such as, but not limited to the following:
a. Housing,
b. Expense account,
C. Vehicle of any kind;
d. Household personnel, such as maid, driver and others;
e. Interest on loan at less than market rate to the extent of the difference between the market rate and actual rate granted,
f. Membership fees, dues and other expenses borne by the employer for the employee in social and athletic clubs or other similar organizations,
g. Expenses for foreign travel,
h. Holiday and vacation expenses,
i. Education assistance to the employee or his dependents, and
j. Life or health insurance and other non-life insurance premiums or similar amounts in excess of what the law allows.
Fringe Benefits
Classifications of Individual Taxpayers under TRAIN
Compensation income earner
Self employed
Mixed
- Contract of services
- Job order
- Professionals
Examples of what?
Examples of Self-employed
An individual earning compensation income from employment, and income from business, practice of profession and/or other sources aside from employment.
Mixed Income Earner
A sole proprietor or an independent contractor who reports income controls works for, how the work is done and when it is done. It includes those hired under a contract of service or job order, and professionals whose income is derived purely from the practice of profession and not under an employer-employee relationship.
Self-employed
This is eferred to in the Revenue Memorandum Circular 97-2021 includes all taxpayers, individuals or corporations, receiving income, in cash or in kind, from any social media sites and platforms (YouTube, Facebook, Instagram, Twitter, TikTok, Reddit, Snapchat, etc.) in exchange for services performed as bloggers, video bloggers or “vloggers” or as an influencer, in general, and from any other activities performed on such social media sites and platforms.
“social media influencers”
Social media influencers derive their income from the following sources:
- YouTube Partner Program
- sponsored social and blog posts
- display advertising
- becoming a brand representative/ambassador
- affiliate marketing
- co-creating product lines
- promoting own products
- photo and video sales
- digital courses, subscriptions, e-books
- podcasts and webinars
In the case of YouTubers for instance, the common business expenses that may be deducted from their gross income include, but not limited to, the following:
(Allowable Deductions)
- filming expenses (cameras, smartphones, microphone and other filming equipment);
- computer equipment;
- subscription and software licensing fees;
- internet and communication expenses;
- home office expenses (ex. proportionate rent and utilities expenses); 6. office supplies;
- depreciation expense; and
- business expenses (e.g. travel or transportation expenses related to YouTube business, payment to an independent contractor or company for video editing, costume designer, advertising and marketing costs (cost of contests and giveaway prizes, etc.);
- bank charges and shipping fees.
