Know About Income Tax And Current Rulings

We now often see on television individuals and companies charged with tax evasion. With the consequences being so undesirable, it would be prudent to learn more about income taxation. Even those who already have substantial understanding on income tax must update their knowledge because the regulations change rapidly.

Previously, only business owners and accountants concern themselves with income taxation, but lately it has become necessary for other professionals and individuals to know the basics—even if they have an accountant to manage their financial reporting. The law does not excuse the taxpayer if his/her accountant makes mistakes.

Below are important topics to understand:

What are the different types of income tax? There are many types of income tax and I will only mention some. There are the different types of withholding taxes deducted from your income before you even receive the payment. Then there are also the quarterly income taxes, annual income taxes, Minimum Corporate Income Tax (MCIT) and Improperly Accumulated Earnings Tax (IAET). Note that computation for these vary on whether you are an individual or a corporation.

Where do income tax laws come from? They basically come from the National Internal Revenue Code and amendments. New income tax laws may also be passed by congress. However, the effect of the laws also depends on the interpretation of the law as seen in BIR rulings.

What are the types of taxpayers? There are different ways of classifying taxpayers: they can be either individuals or corporations. In the case of a corporation, there is double taxation with the company first paying corporate income taxes, and another tax when it gives cash dividends to stockholders.

What are the allowable deductions? In order to reduce your tax liabilities, you must know all the allowable deductions. For these deductions to be valid, you must also be aware of the conditions and documentation procedures. There is also an option to simplify the process by means of optional standard deduction. This option allows you to rely on a fixed percentage deduction instead of relying on documents like receipts to prove your expenses.

What are the current rulings relating to income tax? Income tax law is a constantly evolving field. New laws are promulgated and there are constant streams of new BIR rulings. Procedures are modified and some deductions may no longer apply, or there may even be new deductions. Keeping abreast of developments is imperative not only for tax practitioners but also taxpayers who are the ones most affected.

To know more about this topic, BusinessCoach, Inc., a leading business seminar provider, conducts a seminar entitled, “Income Tax Seminar with Latest Updates.” Contact (02) 727-5628, (02) 727-8860, (0915) 205-0133 or visit www.businesscoachphil.com for details.

Click here to view details of the seminar: Income Tax Seminar With Latest Updates »

*Originally published by the Manila Bulletin. C-4, Sunday, May 19, 2013. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.