Months covered for tax returns

Fri, Feb 17, 2012

Hi Mam Al,

Good day po, freelancer po ako. I work at home, doing drafting works. Tanong ko

lang po ano 'yung coverage ng 1st quarter income tax which we pay on or before

April 15? Is it our income for the month of January, February, and March?

How about po 'yung 2nd quarter which we pay on or before August 15? Is it our

income for the months of April, May, June, and July? Tama po ba ako? Why is it 'yung

first quarter, three months ang cover while the second quarter four months ang

cover. Please correct me if I am wrong.

How about 'yung 3rd quarter which we pay on or before November 15? Is it our

income for the month of August, September, and October?

Saan po kasama 'yung income for the month of November and December?

How about po 'yung annual income tax, ano po 'yung cover noon?

When you are paying quarterly, are you still going to pay for the annual income

tax? 'Di po ba nagbayad ka na ng quartely, bakit may annual pa? 'Di ba double

taxation na 'yun, plus 'yun pang monthly na pina-file on or before the 20th of

the month? 'Di ba parang tina-taxan 'yung income nang paulit-ulit?

Sorry for my ignorance. Please enlighten me. I just want to pay my tax properly.

Thank you very much po.

Mel

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Mon, Feb 20, 2012

Hello Mel,

I remember you, glad to hear from you again. Thank you for writing!

. . . ano 'yung cover ng 1st quarter Income tax which we pay on or before April 15? Is it our income for the month of January, February, and March?

Yes, that's correct.

How about po yung 2nd quarter which we pay on or before August 15. Is it our income for the month of April, May, June, July? Tama po ba ako? Why is it yung first quarter three months ang cover while the second quarter four months ang cover. Please correct me if I am wrong.

The second quarter covers April, May, and June. Because we have 12 months in a year, we simply divide that by 4, and so that means 3 months per quarter.

How about 'yung 3rd quarter which we pay on or before November 15? Is it our income for the month of August, September, and October?

The third quarter then covers July, August, and September.

Saan po kasama 'yung income for the month of November and December?

The fourth quarter covers October, November, and December.

How about po 'yung annual income tax, ano po 'yung cover noon?

The annual income tax covers the income tax return of the previous year. So if we're filing our ITR this year, it's going to be a coverage of our 2011 income tax, that is, from January to December 2011.

When you are paying quarterly, are you still going to pay for the annual income tax? 'Di po ba nagbayad ka na ng quartely, bakit may annual pa? 'Di ba double taxation na 'yun, plus yung pang monthly na pina-file on or before the 20th of the month? 'Di ba parang tina-taxan 'yung income nang paulit-ulit?

The answer really depends on your records. So it is important to record your daily transactions and to know which transactions you make. There are times our computation will tell us we have to pay a certain amount (sometimes, as low as PhP37 or a few hundreds of pesos), or sometimes we pay nothing (due perhaps to a negative total). Hindi naman nadodoble ang bayad natin. Sa pagkakaunawa ko, kaya may buwanan at quarterly na bayaran ng buwis e para gumaan ang pagbabayad natin ng buwis. I recommend that you review the guidelines on the back pages of every BIR form. For instance, page 4 of Form 1701 (ITR form) and page 2 of Form 1701Q (quarterly income tax return form) have tables on tax due for every taxable income. You will also find there notes on deductions which help lighten our taxes due. You might also find helpful my notes on deductions which I shared with a fellow freelancer.

Sorry for my ignorance. Please enlighten me. I just want to pay my tax properly.

Oh, no, Mel. This is not ignorance on your part. We do have to know these things. And so, I'm delighted to know that you're conscientious about paying taxes. Continue the good work!

Thank you very much po.

You're welcome, Mel. I'm glad to be of help.

A blessed new week to you and your family!

Sincerely,