Computation of income tax
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This document provides an example computation of income tax for Mr. De Castro, a professor with a monthly salary of 85,000 pesos. It calculates his monthly and annual tax under two scenarios: as a single filer and as married with 4 dependents. As a single filer, Mr. De Castro's tax due is 270,792 pesos resulting in an overpayment of 55,608 pesos. As married with 4 dependents, his tax due is 238,792 pesos resulting in an overpayment of 87,608 pesos.
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Computation of income tax
- 1. COMPUTATION OF INCOME TAX
- 2. Computation of Income Tax In order to understand the concept described above, let us use the hypothetical data: Mr. De Castro is gainfully employed as a full-time professor at the Far Eastern Academy. His monthly salary is P85, 000.00 and said academy deducted 32% of his salary for tax. He is married, with five (5) children namely: Jackie, 25 years old but mentally retarded; Celine, 22years old; Andrew, 19 years old; Ely, 18 years old; and Ben, 15 years old. Solve the monthly and annual tax of Mr. De Castro. Identify if there is an overpayment/tax payable using the following allowable deductions: SSS= P700.00/Monthly Pag-IBIG= P200.00 PhilHealth= P200.00 Union Due= P100.00
- 3. Given: Total allowance reductions : P1, 200.00/month x 12 = P14, 400.00/year Gross income : P85, 000.00/month x 12 = P1, 020, 000.00/year Tax deduction from his employer (32% of his salary) : P1, 020, 000.00 x 0.32 = P 326, 400.00
- 4. Given: Tax income : P85, 000.00(month income) –P1,200.00(allowance deductions) = P83, 800.00 Annual tax of Mr. De Castro : P83, 800.00 x 0.32 = P26, 816.00(monthly tax) x 12 = P321, 792.00
- 5. Computation: A. Single Gross income : P1, 020, 000.00 - P14, 400.00(allowance deductions) = P1, 005, 600.00 Gross taxable income : P1, 005, 600.00 – P50, 000.00 (personal exemptions) = P955, 600.00
- 6. Computation: Taxable income (Notes: Using the tax table, tax table, tax due is P125, 000.00 + 32% of the excess of P500, 000.00) : P955, 600 – P500, 000 = P455, 600 x 0.32 = P145, 792 + P125, 000 = 270, 792.00 Tax due from his employer : P326, 400.00 Tax withheld per BIR 1700 : P270, 792.00
- 7. Computation: Overpayment of Mr. De Castro from his employer : P55, 608.00(refundable)
- 8. Computation: B. Married with 4 Qualified Dependents Gross income : P1, 020, 000.00 - P14, 400.00(allowance deductions) = P1, 005, 600.00 Gross taxable income :P1, 005, 600.00 – P150, 000.00 (personal exemptions + 4 Qualified dependant) = P855, 600.00
- 9. Computation: Taxable income (Notes: Using the tax table, tax table, tax due is P125, 000.00 + 32% of the excess of P500, 000.00) : P855, 600 – P500, 000 = P355, 600 x 0.32 = P113, 792 + P125, 000 = 238, 792.00 Tax due from his employer : P326, 400.00 Tax withheld per BIR 1700 P238, 792.00
- 10. Computation: Overpayment of Mr. De Castro from his employer : P87, 608.00(refundable)