Individual taxpayers are taxed based on the person’s Net Income for the Year. To compute for the taxable income of an individual taxpayer is to ascertain the person’s total gross income. Gross Income may be derived from compensation income and/or income from business or profession. Deductible items from compensation income are contributions to SSS, PHIC, HDMF and Health Insurance Premium (not to exceed P2,400 annually) and Income from Business/Profession’s deductible items are Business Costs and Expenses. Aside from that, an individual taxpayer will deduct the personal and allowable deductions afforded to the taxpayer.
An Individual Taxpayer may deduct, on top of the personal allowable deductions, ALLOWABLE ADDITIONAL EXEMPTIONS ON QUALIFIED DEPENDENTS as provided for in Section 35 of the National Internal Revenue Code. One frequent question on this matter is the erroneous take-up of additional qualified dependents as claim for additional exemptions. The new tax exemptions law (Revenue Regulations 10-2008) has no more distinction as to the status of an individual taxpayer since all are afforded P50,000 personal allowable deductions, either an individual be single or married. Now for qualified dependents to be considered for additional allowable deductions, ONLY THE CHILD/CHILDREN, WHETHER LEGITIMATE, ILLEGITIMATE OR LEGALLY ADOPTED as long as the child is below 21 years old, are allowed to be claimed as an ADDITIONAL EXEMPTION/QUALIFIED DEPENDENT OF A TAXPAYER. Even before the passage of RA 9504, individuals who claim as head of the family are not allowed to claim additional allowable exemption for qualified dependent parents or siblings. Although prior RR 10-2008, an individual could claim higher personal exemption being a head of the family considering a parent or sibling as mainly dependent on the person, the parent or siblings will however not to be counted as QUALIFIED DEPENDENT for additional allowable deduction purposes.
Republic Act 9504 simplified the classification of Individual Taxpayers by affording the same personal deductions. Which in essence is just appropriate since an unmarried or married individual would have the same needs on a personal level. A lot of mis-interpretation have arisen with regards to qualified dependents in the prior years which was aptly corrected on the new Revenue Regulations 10-2008.
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interesting read! qualified yata ako sa exemptions na ito.