So I finally filed my annual income tax for 2017 using the old BIR Form 1701 and old rates. Due date is just a few days from now which is April 15. If you haven’t yet, file it asap to avoid penalties.
Personally, I got really confused on what to file since the TRAIN Law is already effective. I still filed my 2551M for the month of January and sent my payment via Gcash. However, I learned from my fellow freelancers that it’s no longer needed. Not sure if a tax credit is possible. Maybe I’ll just consider that as a costly mistake 🙁
What I learned about the new tax system aka TRAIN Law (I’m not a tax expert so don’t trust me):
- Monthly filing of 2551M is no longer necessary. This is now replaced by 2551Q which is filed quarterly. Deadline is within 25 days after the end of each taxable quarter. It’s April 25 for the first quarter.
- First quarter income tax must be filed on or before May 15, 2018, using BIR Form 1701Q. The deadline for the second quarter (August 15) and third quarter (November 15) remain the same.
- Those individuals earning less than 250,000 per year are exempted from paying taxes but are still required to file an ITR even if the tax due is zero. Filing of income tax is mandatory regardless of the amount.
- Self-employed individuals earning less than 3 million per year can opt for the flat 8% income tax rate on gross receipts. In order to avail this, you have to update your COR (Certificate of Registration) and fill up BIR Form 1905 in your RDO office.
- If you avail the 8% income tax rate, percentage tax will be canceled and you won’t have to file 2551Q. Assuming you updated your COR.
- You have to avail the 8% income tax rate during the first quarter. If not, your income will be subjected to graduated tax rates during the taxable year.
- The formula for the eight percent tax rate is: (gross income – 250K) * 0.08. So if you’re earning less than 250k, you’re not going to pay a cent. But again, you are required to file the BIR forms.
Let’s just pay our taxes …
As I’ve said, I’m not a tax expert. I am struggling to understand all the updates 🙁 On Monday, I’m going to visit BIR to update my COR. I’d like to avail the 8% income tax rate if it’s possible. I hate visiting BIR. LOL! My friend recently visited BIR and she has open cases. Oh no!
Many of my freelancer friends still don’t want to register. Honestly, I understand why. It’s a lot of headaches. If the government wants us to pay taxes, why can’t they make this easier and simpler for small business people? Take note though that tax evasion is a crime.
Visit your RDO
Don’t trust my blog. If you have questions about the filing of taxes, it’s always best to visit your RDO and get clear answers. That’s what I’m going to do. I’ll write another blog post about my experience.