How do I file my PH Annual Income Tax Return?

It’s that time of the year again when we all have to pay our Annual Income Tax Return, popularly known as ITR. And with this, I see a lot of posts online asking how to I file an Income Tax Return or ITR and where should one start.

So, let me give you at least some information, based on what I know and how I do it. Again, I am not an accountant, but having Taxumo as a business have made me understand how taxation in the Philippines work for MSMEs, self-employed individuals and PRC licensed/non-licensed professionals.

Who needs to prepare their ITR by themselves?

Most of us are employees of a local company that are registered with the BIR. The company that we work for withholds a certain amount that they pay to the BIR (on our behalf). This is called substituted filing. And as proof of that, employees get a form 2316 around Jan to Feb (start of the year) so that you can use this when you apply for VISA, get loans, etc.

So for employees, MAKE SURE you get a 2316 form and KEEP IT! That form is very important.

Now for employees who have side businesses or freelancing / professional services that they do on the side? How do I file an Income Tax Return?

Friend, you are called a Mixed Income Individual. This means that you earn from being an employee and from your business or profession. So what you need to do is to file a Form 1701 (Annual Income Tax Return Form). Let’s talk about how to file it later on in this article. To file a 1701 for mixed income individuals though, you will have to have your 2316 by your side. And if some of your clients also gave you 2307 forms, you have to have them, too.

How about for full time freelancers, professionals and sole proprietors, what do we file?

Now listen up! You can either use 1701 or the newest form to the ITR family, which is 1701A. Now when do you know which of the two you will have to file?

  • Form 1701 – Please use this form if 1) you are a mixed income individual, meaning you are an employee AND also earning income from a business or side profession (ex. consultancy work, freelance writer, etc.) or 2) if you’ve chosen Graduated Tax rate with an Itemized Deduction Method
  • Form 1701A – Please use this form if you are earning purely business income or income from your profession. This is a new form released by the BIR for those who chose the Optional Standard Deduction Method (OSD) or opted in for 8% GRT in the previous year

I’m ready to file my ITR. I know what form I should fill out. What do I do?

First thing that I did was I created an account in Taxumo. Just follow these screenshots:

A. https://www.taxumo.com/blog/taxumo-how-tos-creating-a-user-account-in-taxumo/

B. https://www.taxumo.com/blog/how-tos-setting-up-your-company-information

Once you’re done setting up your user account and company information, the next step is to feed Taxumo with information. Note that the system COMPUTES for your taxes, so you don’t have to manually compute or compute using a spreadsheet.

So, there are two scenarios when we get to entering Revenue and Expenses in Taxumo. Scenario one is that you’ve never filed anything before (even manually). This is your first time. And scenario two is that you’ve actually filed manually before and you want to try using Taxumo this time around.

Perfect! I will guide you for both instances.

Scenario one’s cash flow entry is basically adding your revenue and expense entries into Taxumo. Click on your CASH FLOW tab and add entries one by one. Things to note:

  • For revenue that you key in, it has to pair up with an OR that you have written for a client
  • For expenses, enter expenses that are related to your business. It has to pair up with an official receipt (it’s usually indicated in the receipt).
  • Taxumo has standard and suggested categories already in the system. If you’d like to add a few categories, it’s best to consult with an accountant to know if it’s a direct or indirect expense. You can book a consultation here: https://www.taxumo.com/taxumo-consult/

Scenario two’s cash flow is basically adding your revenue and expenses for the 4th Quarter of 2019 (or applicable year for your ITR) — October, November and December. This is because we assume that you have your 1701Q-Q3 (3rd Quarter Income Tax Return) with you. Just keep it by your side when you file.

I totally forgot Scenario three. Scenario 3 is basically when you have used Taxumo and have filed at least your 3rd Quarter 1701Q with us and have consistently been logging revenue and expenses for 4th quarter. You have nothing to worry since all fields will be filled out (assuming you are not a mixed income individual where you need to have your 2316 form by your side).

So I have encoded all of my revenue and expenses in Taxumo. Do I need to encode anything else?

If you have 2307s, please take a picture of each of the 2307 form and go to the WITHHELD TAXES tab. Encode and copy each one under the RECEIVED tab.

If you are a withholding agent and need to pay withholding taxes (0619E,1601EQ and 1604E), be sure that you have done and paid all of these already.

Hmmm, that’s about it.

I have done all that. Am I ready to file my Annual Income Tax Return now?

Yes, you are! You have done all the prep work. All you need to do is to watch these videos and follow it. If this is the first time you are using Taxumo, be sure that you have your past filings of 1701Q beside you. If you are a mixed income individual, have your 2316 with you while filing your ITR in Taxumo.

Visit this link, watch and follow the videos:

https://www.taxumo.com/blog/how-do-i-file-an-annual-income-tax-return/

Oh, this sounds easy! Aside from the actual tax dues that I will need to pay, how much is processing in Taxumo?

Taxumo has 3 subscription plans to choose from and the plans are based on the tax forms that you need to file. To know the forms that you need to file, check your Certificate of Registration and look at Tax Types. You’ll normally see the following for a self-employed individual:

  • Percentage (Non-VAT taxpayers) / Value Added Tax (VAT taxpayers)
  • Registration fee (this is the yearly BIR fee that you need to pay every January)
  • Income Tax (this is paid by everyone)
  • Withholding Taxes – EXP/OTH (This means you are a Withholding Tax Agent and you need to withhold taxes for each payment that you make)

Okay, on to the plans, you can check out Taxumo’s plans here: https://www.taxumo.com/taxumo-pricing/

The cheapest is Php 700 per month (if you get the annual fee). It’s Php 888 if you get the monthly fee. This is for those who opted to pay the 8% flat income tax rate (so they need to file forms 1701Q, 1701A and usually the registration fee or 0605). Taxumo’s pricing already includes filing form 1701A and all of these mentioned forms. You SAWT or 1701Q/1701A attachments are also submitted to the BIR! No need to be penalized for missed submissions of attachments.

The next plan is at Php 1500 per month (if you get the annual fee). It’s Php 1888 if you get the monthly fee. In this plan, the forms Percentage tax (2551Q), Income Tax Forms (1701Q, 1701, 1701A), Withholding Tax (0619E, 1601E, 1604E), Registration Fee (0605) and submission of attachments QAP and SAWT are also included.

The last plan is at Php 2300 per month(if you get the annual fee). It’s Php 2888 if you get the monthly fee. This is what VAT taxpayers usually need since in this plan, the forms Percentage tax (2551Q), VAT forms (2550M and 2550Q), Income Tax Forms (1701Q, 1701, 1701A), Withholding Tax (0619E, 1601E, 1604E), Registration Fee (0605) and submission of attachments QAP, SAWT and SLSP are also included.

*Note that for all plans, Taxumo gives you additional 2 delegate access and access to your Books of Accounts view.

A lot of people are asking if they can just avail of Annual ITR (1701 and 1701A). Yes, you can!

Here are the rates:

1701A 8%  at ₱ 888.00 
1701A Graduated (Optional Standard Deduction) at ₱ 1,888.00 
1701 at  ₱ 1,888.00

Usually, the deadline is on April 15, but it was extended for this year due to COVID 19. BIR deadline is May 15,2020. Taxumo’s deadline is May 10, 2020.

Always file early, peeps, and #TaxItEasy!

If I missed anything that you’d like to ask, please feel free to comment on the comment section below. Also, check out the videos of Taxumo in their YouTube channel: https://www.youtube.com/c/taxumo

Happy filing!

Simpler Packages from Taxumo (Taxumo Subscription Plans)

Taxumo is celebrating it’s 3rd year anniversary this September 20, 2019. It’s been an exciting three years for us and we’re looking forward to servicing more clients in the years to come. So to date, we have around 13,000 users and we have help collect Php 11 Million worth of taxes from MSMEs (mostly sole proprietors), professionals and freelancers.

We have undergone a lot of improvements also this past year. Some of these improvements were:

  • Adding payment channels like GrabPay and Coins.ph
  • Updating all your income tax forms to the newly release BIR forms
  • Adding a dashboard that shows you your income compared to previous months and your top expense categories
  • We also added servicing corporations (those who are not mandated to use eFPS) to our roster of clients.

Looking forward to a brighter future!

For this September, we will now offer simpler Taxumo subscription plans!

The three plans will be:

  • Professionals (ex. doctors, lawyers, financial advisors, freelancers, etc.) — ONLY AT PHP 10,000 A YEAR
  • Micro Business — ONLY AT PHP 20,000 A YEAR (ex. VA Agencies, production house, online sellers, etc.)
  • Small & Medium Business — ONLY AT PHP 30,000 A YEAR (ex. Those earning more than 3 Million Gross Revenue per year)

*Be sure to check the forms that are included in the package here: https://www.taxumo.com/taxumo-pricing/ Corporations and Partnerships will have customised packages. Please email customercare@taxumo.com if you are a corporation or partnership 🙂

The inclusions of these Taxumo Subscription Plans are for Unlimited filing for the indicated forms (please check out the details here: https://www.taxumo.com/taxumo-pricing/), submission of attachments (regardless of number of transactions), access to a books of accounts view (can be used to be accredited for Loose-Leaf) and additional 2 delegate accesses to your account.

Encoding of receipts will be an “add-on” service moving forward. Just add Php 1000 a month for encoding of receipts for that particular month.

We will still have business registration for any type of company. Check out our Business Registration page to know how to register with the LGU/BIR: https://www.taxumo.com/business-registration/

How do I subscribe to a plan?

Just click on the “sign up” button on the upper right hand of the Taxumo.com page. Answer the questions and once you are in, please click on the subscription button to subscribe to a plan.

We highly recommend that you join our ONLINE ONBOARDING SESSION, too. Choose a schedule here: https://calendly.com/consultnow/onboarding?month=2019-09

If you have any questions, feel free to reach out to use via our chat box in our site: https://taxumo.com

Happy tax filing!

*Full disclosure: I am one of the founders of Taxumo. I’m also a proud user!

GrabPay x Taxumo: The Mission

Mid March 2019, my team (Taxumo) was introduced to the GrabPay team of Grab. We were introduced by Ms. Diane Eustaquio, the Executive Director of Ideaspace. As some of you may know, we were part of Batch 4 of this incubator/accelerator program, and it has helped us a lot in our start-up journey.

I remember the first time we met with the GrabPay (Grab Philippines) team. They really and sincerely wanted to help with the mission of making it easier for every one to pay taxes. After the first meeting, everyone in each of the teams were committed to make this happen.

Since April was a busy season for us, we agreed to start integrations by May 2019. Integrations only took us a month and for marketing, our go-to-market strategies were laid out after.

We’ve actively started promoting our partnership this month (July 2019).

How will this partnership benefit me?

You can get huge savings when it comes to paying your taxes, particularly on the Taxumo processing fees.

For one, when you pay your taxes using GrabPay Credits for the months of July and August 2019, you get Php 100 OFF on Taxumo Processing Fees.

All you need to do are the following:

Step 1: Key in your income and expense receipts in Taxumo then view your Tax Dues Cards to check on the amount of taxes that you need to pay

Step 2: Choose GrabPay as the payment option and click on payment. It will immediately confirm if you have enough balance in your Grab App (GrabPay Credits) so be sure that you have enough GrabPay credits.

Notice that you will automatically have Php 100 OFF.

The second benefit is that you can get more Taxumo Xennies (usually 1 Xenny is equivalent to 1 Peso). Taxumo Xennies can be used to pay Taxumo Processing fees and to upgrade your Taxumo Plans.

You can now purchase Taxumo Xennies using GrabPay Credits. The best deal that you can get is paying Php 250 for 550 Xennies!

So if you really want to upgrade your Taxumo account and have access to our books of accounts view (if you don’t know how to fill out those manual ledgers) or if you want to get around 50%+ off on Taxumo Processing fees, now it the time to STOCK UP ON XENNIES!

Personally, my dream really for these kinds of integrations with partners, is to have a country where you can pay taxes anytime, anywhere. A country where tax payers pay their duties while commuting, while waiting for the next episode on Netflix, while standing in line in the recently opened ShakeShack… basically, anywhere!

We also welcome new ideas that you may have. If you have an idea that you think will work well for Taxumo, message us at customercare@taxumo.com!

Taxumo Cool Changes, Promos and Upgrades!

Hear ye, hear ye! Taxumo has a new and improved dashboard that offers so much more than just tax filing. It now has some form of analytics (cool charts and all!) that shows you your income and expenses and what your top expenses are as a business.

The Dashboard

For long time users, you may be surprised to see that the first thing you see is the dashboard and not the “CASHFLOW” tab. If you want to ADD an Income or an Expense Entry, feel free to click on the Cashflow tab on the left side or one of the Cards in the Dashboard.

Settings Tab

We changed how we called the tab for setting up your account from “COMPANY” to “SETTINGS”. When you first created your Taxumo account, this is what you were filling out. Feel free to visit this page again as we have simplified the fields the best way we can. We have some guides that you can click on; those are the little question marks seen at the side of each field.

Tax Dues Tab

Tax dues are now in the tax due tab and are grouped per tax type. We also have a reminder on actionable steps that you need to take. For late filings, we have also highlighted them just in case you have missed them.

If you want to view your past filings, click on the Past Filings tab. If you accidentally marked a tax card as paid, you can go to the Hidden Filings tab and unhide it.

Payment Channels

We have fixed our payment checkout page. We have heard your requests for us to add more payment channels! We are proud to say that in the coming months, you will see more and more payment options — options that will make it easier for you to file and pay your taxes anytime, anywhere!

#TeamTaxumo is honored to partner with GrabPay! When you file and pay via GrabPay Credits starting July 1, 2019 (until August 31, 2019), you will get a Php 100 off on Taxumo’s processing fees.

Xennies! Get or Earn Taxumo Credits!

We have introduced Xennies! Xennies are Taxumo’s Credits that can be used to pay for your Taxumo Processing fees. There are two ways to get hold of Xennies.

One is to share your own referral code to your friends and family. To set your referral code, click on your name at the top portion of Taxumo’s screen. Click “My Account” and it will direct you to your Xennies Transaction History page. You can earn 100 Xennies for every friend or family that successfully files a form via Taxumo.

Another way to get Xennies is to purchase Xenny Packs. These are available for sale inside the Taxumo Platform. 1 Xenny = 1 Peso. We have a promo running now with GrabPay. Get 10% to 100+% credits when you purchase using GrabPay.

So there you have it folks! These are the changes in the system. If you have any other suggestions, feel free to email customercare@taxumo.com 🙂

Here is a video that you can watch!

Business Renewal with BIR -Here’s an Easier Way!

Every January 2, I usually prepare all of my current Business Documents. I’m registered as a Sole Proprietorship. This means that I have to renew my documents with both the Local Government Unit / Municipal Hall and with the Bureau of Internal Revenue or BIR. Usually, I need to go to both places, which is such a hassle!

But guess what? This year, because of Taxumo, life became easier! You can now renew your 2018 Certificate of Registration or COR (file and pay form 0605)  via Taxumo!  

What Happens If I Don’t Renew My Certificate of Registration? 

To avoid penalties, the deadline for renewing your Certificate of Registration would be January 31. Failure to renew this would incur fines ranging from PHP 5,000 to PHP 20,000.

What Is the Standard Process of Business Renewal vs. the Taxumo Way? 

The standard process for renewing your Certificate of Registration would be: 

  • Go to your RDO (Revenue District Office) and submit a fill-out BIR Form 0605
  • The officer of the day will then compute the fees that you need to pay
  •  You need to settle the payment at an Authorized Agent Bank (AAB), duly accredited by the BIR in your RDO.  

Note: For more information, check out this article: Here’s What You Need to Do to Renew Your Business in the Philippines

The standard process could take hours, because of the number of people who will have to renew. If you value your time, just do it online!

With Taxumo, you just pay your Certificate of Registration online, without the stress. 

Here are the Steps to Renew Your COR via Taxumo: 

If you already have an existing Taxumo account, all you need to do is activate the 0605 Form on your company profile. 

To do this, simply follow the steps listed below.

  1. Go to your company profile
  2. Scroll down until you see the forms that you need to file.
  3. Check on the 0605 form and click the save changes button. 
  4. Go to your account dashboard and click on the file button.
  5. Fill-up the form details (applicable date if you’re paying for 2019 is Dec. 31, 2019)
  6. Choose your preferred payment method and click pay.
  7. That’s it! You’re done. 

It’s super easy!

Note that this process is only for renewing your BIR Certificate of Registration. Again, if you are a sole proprietorship, have a partnership or corporations, you still have to renew you other business documents (baranggay clearance and business permits) in the LGU / Municipal hall.

If you have any questions, you can always message Taxumo using their chatbox at their site: https://www.taxumo.com 

Share the good news!