FOR INDIVIDUALS EARNING PURELY COMPENSATION INCOME
(Including Non-Business/Non-Professional Income)
Each taxpayer is required to file a specific annual income tax return from the different types of Income Tax Return issued by the Bureau of Internal Revenue. In order to determine which tax return is applicable for each taxpayer, the sources of income as well as the employment status must be checked.
For individuals earning purely compensation income from two or more employers within the same taxable year, they are required to file BIR Form 1700 as their annual income tax return. Individuals having two or more employers are not qualified for substituted filing, thus they are required to file their annual tax return on their own.
This tax return shall be filed by every resident citizen deriving compensation income from all sources, or resident alien and non-resident citizen with respect to compensation income from within the Philippines, except the following:
- An individual with respect to pure compensation income, as defined in Section 32(A)(1) of National Internal Revenue Code as amended by Tax Reform for Acceleration and Inclusion Act, derived from sources within the Philippines, the income tax on which has been correctly withheld (tax due equals tax withheld) under the provisions of Section 79 of the Code: Provided, that an individual deriving compensation concurrently from two or more employers at any time during the taxable year shall file an income tax return.
- An individual whose income has been subjected to final withholding tax (alien employee as well as Filipino employee occupying the same position as that of the alien employee of regional or area headquarters and regional operating headquarters of multinational companies, petroleum service contractors and sub-contractors, and offshore banking units; non-resident alien not engaged in trade or business).
- A minimum wage earner or an individual who is exempt from income tax.
Certificate of Income Tax Withheld (2316) issued by employers should be attached upon filing of BIR Form 1700 to validate the claim for tax credit.
Individuals filing BIR Form 1700 must secure a copy of all their 2316 from all of their employers for the taxable year.
This tax return shall be filed on or before April 15 of each year covering income for the preceding taxable year.
Failure to file the correct income tax return on time will result in imposition of penalties.