Tax deductions and how to use them

Many of us, employees and businessmen alike, pay huge amounts of taxes without having to understand the true meaning behind what we are paying for.

In this article, I would like to enlighten you with some ways on how to minimize your taxes using legal means.  And this is with the use of tax deductions as given by our government.

First is the Personal Exemption.  This has been revised and what we are using now is P50,000.00.  There is no difference if you are the head of the family, single or married.  This amount is automatically deducted to your gross income. (Gross income is the total of all of your income for the year, without deductions.)

Second deduction that you should know about is the Additional Exemption.  This is in the amount of P25,000.00 for every qualified dependent but is only limited to 4 dependents, i.e. maximum amount is P25,000.00 x 4 = P100,000.00.

Who can claim this additional exemption? According to the Bureau of Internal Revenue (BIR), the following can claim additional exemption:

• The husband who is deemed the head of the family unless he explicitly waives his right in favor of his wife
• The spouse who has custody of the child or children in case of legally separated spouses. Provided, that the total amount of additional exemptions that may be claimed by both shall not exceed the maximum additional exemptions allowed by the Tax Code.
• The individuals considered as Head of the Family supporting a qualified dependent

Who are your qualified dependents? These means a legitimate, illegitimate or legally adopted child chiefly dependent upon and living with the taxpayer if such dependent is not more than twenty-one (21) years of age, unmarried and not gainfully employed or if such dependent, regardless of age, is incapable of self-support because of mental or physical defect.

These are only some of the deductions or exemptions which you can use while computing your taxes.  You can use these to legitimately minimize you income taxes.

I hope you were able to get an idea on how income taxation works.  In my next blogs, I will be discussing about your income and other deductions that you can use in computing for your taxes. 

Thank you for reading! =)

Why the government taxes you

Ok, ok.. The government levies taxes on everyone, everything and anything.  So what's the point in complaining, huh. =) The best that we can do is file our taxes and pay our dues on time.

But the question is, why does the government levy taxes on us?

The answer to that question is simple.  Taxation is the lifeblood of the country.  It simply is the means for the government to earn and spend for the expenses of the country, i.e. infrastructures, job creation, etc.  But why pay taxes when we definitely know that not all of it is being used for the greater good of the country?  First, because you are liable for your own taxes and second, that is just one simple way to give back to your homeland.

Isn't it nice to know that you have done your part in making the Philippines a greater country for the next generations to come? =)

In my next blogs, I will be writing about the things that you can do to lessen your taxes using tax deductions and legal tax avoidance.  Hope this will help you in filing your income taxes on or before April 15 of this year.

Thanks for reading! =)

New Philippine currency series a hit!

Well, what do you know? The "New Generation Currency" series of the Philippine Peso has been awarded as one of the best currencies in the world.

This is one of the many things that a  Filipino can be proud of.  Aside from the design of the NGC's, the new series has also been recognized for its safety features.

The New Generation Currency Series

It would be good to note that during the release of these new currencies, some errors have been seen and there was this petition for it to be redone.  But lo and behold, the series was judged as one of the best in the world by the International Association of Currency Affairs (Iaca).

According to the report of the Philippine Daily Inquirer, the Iaca is an international organization of central banks, currency-issuing authorities, currency producers and suppliers. 

With these developments in our country, I do believe that this particular news should be spread throughout the nation so that we can sidestep our minds to something that is more positive.

Have a great day everyone!