Scribd Logo
Upload

Welcome to Scribd!

  • Withholding Tax On Monthly Compensation Income

    Uploaded by

    RyD
    34 views11 pages
    The document discusses taxation and withholding tax on compensation. It explains that individuals earning compensation income should pay annual taxes on their total earnings. Employers withhold these taxes from employees' salaries on a monthly basis and remit them to the Bureau of Internal Revenue. The withheld taxes should equal the individual's annual tax liability when considered altogether. If too much was withheld, a tax refund is due, and if too little was withheld, more tax is still payable.

    Original Description:

    Original Title

    Withholding Tax on Monthly Compensation Income

    Copyright

    © © All Rights Reserved

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The document discusses taxation and withholding tax on compensation. It explains that individuals earning compensation income should pay annual taxes on their total earnings. Employers withhold these taxes from employees' salaries on a monthly basis and remit them to the Bureau of Internal Revenue. The withheld taxes should equal the individual's annual tax liability when considered altogether. If too much was withheld, a tax refund is due, and if too little was withheld, more tax is still payable.

    Copyright:

    © All Rights Reserved
    Flag for inappropriate content
    34 views11 pages

    Withholding Tax On Monthly Compensation Income

    Uploaded by

    RyD
    The document discusses taxation and withholding tax on compensation. It explains that individuals earning compensation income should pay annual taxes on their total earnings. Employers withhold these taxes from employees' salaries on a monthly basis and remit them to the Bureau of Internal Revenue. The withheld taxes should equal the individual's annual tax liability when considered altogether. If too much was withheld, a tax refund is due, and if too little was withheld, more tax is still payable.

    Copyright:

    © All Rights Reserved
    Flag for inappropriate content
    of 11

    TAXATION

    WITHHOLDING TAX ON COMPENSATION


    WITHHOLDING TAX ON COMPENSATION

     Individuals earning compensation income should pay taxes to the government.


     The total compensation earned by an individual is calculated annually hence a person is
    liable to pay for an annual tax on the earnings for the whole year.
     However individuals earn and/or paid of their salaries on a daily, weekly, semi-monthly or
    monthly basis. These salaries when received by the employees are already net of taxes.
     These taxes are being withheld by their employers and these employers are the ones who
    remit the taxes to the BIR. Individuals need not go to the BIR monthly to pay their taxes.
     The monthly taxes paid by the individual (through the employers) should equal with the
    annual taxes when the total annual compensation is considered.
     If tax withheld is greater than annual tax due, there is tax refund.
     If tax withheld is lesser than annual tax sue, there is still tax payable.
    PAYROLL

    A payroll is a calculation of all employee’s compensation, statutory contributions, taxes, deductions,


    and net payment for a certain time period. The formal document to present payroll is called a payroll
    register.
    PAYSLIP

    A payslip is a document that explains the components of an individual’s pay for a


    certain time period. It is a “personal” version of a payroll register.
    RELEVANT
    STATUTORY
    CONTRIBUTIONS
    RELEVANT
    STATUTORY
    CONTRIBUTIONS
    RELEVANT
    STATUTORY
    CONTRIBUTIONS
    RELEVANT STATUTORY CONTRIBUTION
    BASIC TECHNIQUES IN PAYROLL CALCULATION
    Step 1. Compute for the gross pay by getting the Step 2. Compute for the taxable income (basis
    total earnings. for withholding tax)
    Basic pay xx,xxx Gross pay xx,xxx
    Less: Lates and absences (xxx) Less: SSS EE Contribution (xxx)
    Add: Overtime x,xxx Less: PHIC EE Contribution (xxx)
    Add: Other taxable income x,xxx Less: HDMF EE Contribution (xxx)
    Add: Other nontaxable income x,xxx Less: Other nontaxable income (x,xxx)
    GROSS PAY xx,xxx TAXABLE INCOME xx,xxx

    Step 3. Compute for the total deductions. Step 4. Compute for the net pay using all
    SSS EE Contribution xxx earnings deducted by all deductions.
    PHC EE Contribution xxx Gross pay xx,xxx
    HDMF EE Contribution xxx Less: Total deductions (x,xxx)
    Withholding Tax xxx NET PAY xx,xxx
    Other deductions xxx
    TOTAL DEDUCTIONS xxx
    Problem 1 Gross pay 24,448
    Jean Abe, an employee has a monthly basic Less: SSS EE Contribution (800)
    salary of P20,000. She had a one day unpaid Less: PHIC EE Contribution (300)
    leave amounting to P766 and a 15 minute late Less: HDMF EE Contribution (100)
    amounting to P24. Total overtime pay amounted Less: Other nontaxable income (1,800)
    to P1,438. During the month, she is given rice TAXABLE INCOME 21,448
    subsidy of P1,800 and other taxable income of
    P2,000. Compute for the following: SSS

    a. Gross pay PHIC = 20,000 X 3% = 600; EE = 300 ; ER =300


    b. Taxable income
    HDMF = Gross pay 24,448 x 2% = 488.96, max is 100
    c. Withholding tax
    d. Net pay

    Basic pay 20,000


    Less: Lates and absences 766
    24 (790)
    Add: Overtime 1,438
    Add: Other taxable income 2,000
    Add: Other nontaxable income 1,800
    GROSS PAY 24,448
    Gross pay 24,448 Minimum tax 0
    Less: SSS EE Contribution (800) 20% tax on excess of CL
    Less: PHIC EE Contribution (300) (21,448 – 20,833) x 20% 123
    Less: HDMF EE Contribution (100) Withholding tax for the month 123
    Less: Other nontaxable income (1,800)
    TAXABLE INCOME 21,448

    SSS EE Contribution 800 Gross pay 24,448


    PHC EE Contribution 300 Less: Total deductions (1,323)
    HDMF EE Contribution 100 Net Pay 23,125
    Withholding Tax 123
    Other deductions 0
    TOTAL DEDUCTIONS 1,323

    You might also like