FREELANCER'S GUIDE TO PAYING TAX
by: Ione Baron-Mejia
by: Ione Baron-Mejia
Image from rabidbi.com
"Freelance ain't free therefore you're income's taxable."
"Tulungan mo naman ako sa tax ko." "Ano bang gagawin ko? " "Pano ba mag online" "Pwede bang ikaw na lang gumawa ng tax ko? " These are the things i usually here from my friends who are also freelancers. I figured, i better write about this, so the next time i hear another soul lost on what to do with their tax, i'm just going to send them link, to this blog, makes life a little easier. This is also to help other freelancers in dilemma as to what and how to pay their taxes.
First things first.
Anong klaseng taxpayer ka muna?
There are two major kind of taxpayers:
I. Individual
II. Corporation
Ang mga freelancer ay Individual taxpayer.
May dalawang klase ang Individual Taxpayer
Individual taxpayer can be classified as:
I-A. Citizen
I-B, Alien
Ang mga freelancer ay classified na Citizen na Individual Taxpayer.
IA - CITIZENS are classified as:
IA-1.Resident citizen - Pilipino na nakatira at nagtratrabaho sa Pilipinas
IA-2. Non resident citizen - Pilipino na hindi nakatira at nagtratrabago sa ibang bansa.
IA2-a. Immigrants
IA2-b Employees of foriegn entities on apermanent basis
IA2-c. Overseas Contract workers or (CW)
Freelancers are classified as Resident Citizen
Aliens are either resident of nonresident. Nonresident aliens are further divided into engaged or not engaged in trade or business in the Philippines. If an alien has an aggregate period of stay here in the Philippines for more than 180 days he shall be considered as a “nonresident alien doing business in the Philippines.”
What are the sources of income of resident citizens taxable under the Philippine law?
Ans. All income derived from sources within and without the Philippines.
In short lahat ng kita mo sa Pilipinas o sa ibang bansa man yan taxable yan.
Ngayon alam na natin kung ano ang taxable income mo, kung ano ang kailangan mong ireport na kita.
Tanong: Freelancer artist ka, may raket ka sa Pilipinas, meron ka ring raket sa ibang bansa. Kita lang ba sa Pilipinas ang taxable? Mali. Lahat ng kita mo kahit saan man yan sa mundo kinita, taxable yan under Philippine law.
What are the sources of income of nonresident citizens taxable under Philippine law?
A nonresident citizen is taxable only one income derived from sources within the Philippines. Thus an immigrant, employee of a foreign entity on permanent basis and OCW will be taxed only on income derived from the Philippines. His income from the country where he is working will not be taxed in our country.
In short, kung nonresident citizen: Kita lang sa Pilipinas ang taxable same with aliens.
What sources of income of aliens taxable under Philippine law?
An alien individual, whether a resident or not of the Philippines, is taxable only on income derived from sources within the Philippines.
Self employed taxpayers are those individual who receive income from business ( sole proprietorship) or/and from practice of profession ( registered or not registered with the PRC (Professional Regulation Commission) such as CPA's, lawyers, doctors, engineers, architects, dentist,artists, bloggers, media practitioners). Freelancers are self employed taxpayers.
SELF EMPLOYED KA OR FREELANCER, WHAT'S NEXT?
First thing to do is to register in BIR.
First: Go to BIR's office. I assume you already have your TIN. If not, you have to register here first.
https://ereg.bir.gov.ph/ereg/welcome.do
Your Revenue District Office ( RDO) depends on your business address that you will be using. If you are a freelancer and working at home, you can use your residential address as your business address. ( Isa yan sa laging tinatanong wala naman akong business address, kung wala kang business address yong home/ residential address mo ang gamitin mo, pwede yon. Check your RDO below.
http://www.bir.gov.ph/index.php/contact-us/directory/revenue-district-offices.html
2nd: the BIR will ask you for your license if you tell them your are applying as self employed or a professional. You can show them your PRC ID, if your industry doesn't require one, just inform them about it, they will understand.
3rd: Fill up a registration form, you will have to use BIR form 1901 and BIR form 605, which is payment form. You need to pay (P500.00 ) five hundred pesos for your registration fee.
Where do you pay? You need to go to the authorized bank of your RDO, these are the banks usually within your area, check the link below.
http://www.bir.gov.ph/index.php/list-of-authorized-agent-banks.html
4th: You need to submit the following documents together with the BIR for 1901.
1. Prepare your registered TIN Number
2. Xerox copy of your birth certificate
3. If your are married, xerox copy of your marriage certificate and birth certificate/s of your dependents/children
4. Xerox copy of your ID with name, address and signature.
5. Xerox copy of your proof of address.
( The BIR may ask if your are renting your office. They will require you to submit lease contract if you are renting your office if you have an office, then you have to pay docs stamps for that.)
5th: Register your books.
Journal, Ledger, Cash receipt Journal and Cash Disbursement Journal
( Buy these from bookstore then bring it to BIR para tatakan nila)
6th: Look for an accredited printer who can assist you with printing your invoices. Or you can ask BIR personnel for recommendation, usually may kakilala sila para mas mabilis.
You can allocate at least one whole day for these. Go to the BIR office with the BIR form 1901, BIR form 605 for registration fee together with the required docs and the books. Then go to the bank for the registration fee, go back to BIR and submit the payment form. They will then inform you when to go back for the Certificate of Registration.
Congratulations! You are now regisitered in BIR. You can now start paying your taxes. :-)
If you need assistance or tax help, contact us @ TAXINSIDER.
