Year-End Adjustment New

7/29/2019 Year-End Adjustment New

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Seminar on Year End Adjustment ofWithholding Tax on Compensation


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PURPOSE:

TAX DUE = TAX WITHHELD

WHEN: On or before the end of the calendar year, prior to

the payment of compensation for the last payroll.

If terminated, on the day on which the lastpayment of compensation is made.


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STEP 1 - Determine the taxable regular and

supplementary compensation paid to the

employee for the entire calendar year;

STEP 2 - If the employee has previous employment/s

within the year, add the amount of taxable

compensation paid to the employee by the

previous employer.


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STEP 3 - Deduct from the aggregate amount ofcompensation computed in Step 2 the amountof the total personal and additional exemptions

of the employee;Personal Exemptions:

Single - P50,000

Married P50,000

Additional Exemption:P25,000 for each qualified dependent


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STEP 4 - Deduct the amount of premium payments onHealth and/or Hospitalization Insurance of

employees who have presented evidence

that they have paid the same during the

taxable year.

Note: The deductible amount shall not exceed

P2,400/annum or P200/month whichever is

lower and total family gross income does not

exceed P250,000 for the calendar year.


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STEP 5 - Compute the amount of tax on thedifference arrived at in Step 4, in accordance

with the schedule provided in Sec. 24 (A) of

the Code, as follows:


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OVER BUT NOT OVER AMOUNT RATE OF EXCESS OVER

Not over 10,0000 5%

10,000 30,000 500 + 10% 10,000

30,000 70,000 2,500 + 15% 30,000

70,000 140,000 8,500 + 20% 70,000

140,000 250,000 22,500 + 25% 140,000

250,000 500,000 50,000 + 30% 250,000

500,000 over 125,000 + 34% 500,00033% in 1999

32% in 2000 and thereafter


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STEP 6 - Determine the deficiency or excess, if any,

of the tax computed in Step 5 over the

cumulative tax already deducted and

withheld since the beginning of the current

calendar year.


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Gross Compensation (prev. + present) PxxxLess:Non-Taxable/Exempt Compensation

xxxa)13th month pay & other benefits xxx

b)Other non-taxable benefits xxxc)SSS, GSIS, PHIC, Pag-ibig and

Union Dues (Employees share only) xxx xxxLess: a) Personal and additional exemption xxx

b) Health/Hosp. Premium payment xxx xxxTaxable Compensation Income xxxTax due xxx


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OVER BUT NOT OVER AMOUNT RATE OF EXCESS OVER

Not over 10,0000 5%

10,000 30,000 500 + 10% 10,000

30,000 70,000 2,500 + 15% 30,000

70,000 140,000 8,500 + 20% 70,000

140,000 250,000 22,500 + 25% 140,000

250,000 500,000 50,000 + 30% 250,000

500,000 over 125,000 + 34% 500,00033% in 1999

32% in 2000 and thereafter


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Compensation Income-netA B C230,000 230,000 230,00050,000 50,000 50,000

180,000 180,000 180,000

32,500 32,500 32,500

32,500 30,000 34,5000__

2,500

(2,000)

Compensation Income-net

Less: Exemption (single)

Taxable Income

Tax Due

Less: Tax Withheld Jan-Nov

EVEN

PAYABLE

REFUNDABLE


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Mr. Vic, head of the family with a qualifieddependent brother receives P18,000 (net of SSS,

Philhealth, HDMF) as monthly regular

compensation starting January 1, 2012. On June

1, 2012, he filed his resignation effective June 30,

2012 and was not reemployed for the rest of the

year. The tax withheld from January to May was

P15,208.75.


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Total compensation (Jan.

May ) P90,000.00

Add: Compensation to be recd (June) 18,000.00

Gross compensation Jan-June 108,000.00

Less: Personal Exemption 50,000.00Net Taxable Compensation P58,000.00

Tax Due P 6,700.00Tax Withheld from Jan. to May 15,208.75

To be refunded on or before 6/30/12 (P8,508.75)


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Mr. Alexander, married with 2 qualified

dependent children received P18,500 monthly

compensation (net of SSS, Philhealth, HDMFemployees contributions). Taxes withheld from

Jan. to Nov. were P8,158.00.


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Total Compensation (Jan - Nov) P203,500.00

Add: Dec. compensation 18,500.00

Gross Compensation P222,000.00Less: Personal/additional exemption 150,000.00

Total Compensation P 72,000.00

Tax due P 8,900.00

Less: Tax Withheld 8,158.00

Collectible W/tax for Dec. salary P 742.00


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Manual Submission - 3 copies of

1604CF/1604E Including the alphalist of

employees and income payees. Diskette/CD & email Submission thru

[email protected]


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Where to file?

B I R

Revenue District Office 24

Valenzuela City


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WAGES EXPANDED

What to use: 1604CF 1604 E+ alphalist + alphalist

When to submit: On or before on or before

Jan. 31 ff year March 1 ff year

Where to submit: RDO RDO

Retention 3 yrs

same


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1. Non-withholding of tax

2. Under withholding

3. Non remittance4. Under remittance

5. Late remittance

6. Failure to refund excess taxes withheld
http://localhost/var/www/apps/conversion/My%20Documents/Susan/The%20Overall%20Withholding%20Tax%20System.ppt


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1. Additions to the taxa. Sec. 248 - 25%/50% penalty

b. Sec. 249 - 20% interest

c. Sec. 251 - in addition to the other penalties, be liable

upon conviction to a penalty equal to the total amount

of the tax not withheld, or not accounted for and

remitted

d. Sec. 252 - in addition to the penalties, be liable to apenalty equal to the total amount of refund which was

not refunded to the employee resulting from any

excess of the amount withheld over the tax actually due

on their return


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2. Criminal Liabilities

a. Sec. 255 for failure of any person

required to pay any tax, make a return, keep anyrecord, or supply correct the accurate

information, or supply correct and accurate

information, or withhold or remit taxes withheld

withheld, or refund excess taxes withheld oncompensation

upon conviction thereof, be punished by a fine of

not less than Ten thousand pesos (P10,000) and

suffer imprisonment of not less than (1) year but


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b. Sec. 256 in the case of corporations, the

penal liabilities of any corporation, association orgeneral co-partnership liable for any of the acts

or omissions penalized under the Tax Code, in

addition to the penalties imposed upon the

responsible corporate officers, partners oremployees,


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b. Sec. 256 upon conviction for each act or

omission, be punished by a fine of not less thanFifty thousand pesos (P50,000) but not more

than One hundred thousand pesos (P100,000).


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c. Sec. 272 in case of public officers, upon

conviction for each act or omission, be punishedby a fine of not less than Five thousand pesos

(P5,000) but not more than Fifty thousand pesos

(P50,000) or suffer imprisonment of not less

than six (6) months and one (1) day but notmore than two (2) years, or both.


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d. Sec. 275 no specific penalty is provided

by lawupon conviction for each act or omission, be

punished by a fine of not less than One

thousand pesos (P1,000) or suffer imprisonment

of not more than six (6) months, or both.


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Rozenn G. Novilla CPA, MPARevenue Officer III (Assessment Section)

Revenue District Office NO. 24Valenzuela City

Year-End Adjustment New

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