Chapter 14

Question 1

Which law repealed the concept of personal exemption to simplify the tax system?

Answer 1

TRAIN Law

Question 2

True or False: The 250,000 exemption on tax for every individual as provided by the TRAIN Law is not automatic, as most tax exemptions,

Answer 2

False. This exemption is one that is automatic for every individual.

Question 3

Who are the taxpayers subject to progressive income tax?

Answer 3

p. 592

Question 4

What kind of tax are pure compensation earners subject to?

Answer 4

Withholding tax

Question 5

What is the treatment of the withholding tax on compensation?

Answer 5

Full payment - employee has no other income and tax is correctly withheld

Tax Credit - the employee has other taxable income or tax is not correctly withheld

Question 6

If an employee has no other taxable income, what can she avail?

Answer 6

Substituted filing system

Question 7

What are the requisites to be avail substituted filing system? (6)

Answer 7

p. 592

Question 8

What happens if an employee does not meet the conditions of the SFS?

Answer 8

She shall file the annual or final adjustment return and claim. Form 2316 as tax credit.

Question 9

The correct tax due of the employee will least likely to be withheld in these scenarios.

Answer 9

p. 593

Question 10

This is an annual return that is filed in order to adjust the tax due to the correct amount of tax.

Answer 10

Adjustment return

Question 11

If the employee has other taxable income, what is she required to file?

Answer 11

Consolidation income tax return

Question 12

The consolidated income tax return may either be?

Answer 12

1. BIR Form 1700 - when not engaged in business or profession
2. BIR Form 1701 - for mixed income earners (those who are engaged also in business or profession)

Question 13

The withholding tax on compensation (BIR Form 2316) given by the employer shall be claimed as?

Answer 13

Tax credit

Question 14

Pure business and/or professional income earners should file income tax returns annually for every?

Answer 14

Quarter

Question 15

True or False: Since a pure business/professional income earner already submits income tax return quarterly, she doesn’t need to file an annual tax return as other individual taxpayers.

Answer 15

False. Still need to file annual income returns.

Question 16

What form needs to be submitted quarterly by a pure business/professional income earner?

Answer 16

BIR Form 1701Q

Question 17

The taxable income from business or profession may be computed using?

Answer 17

Itemized deductions
Optional Standard Deduction (OSD)

Question 18

At whose option may the excess quarterly estimated tax payments over the quarterly tax due be carried forward?

Answer 18

The taxpayer

Question 19

Once the option to carry over excess quarterly tax payments, is it revocable for that period?

Answer 19

No it is irrevocable for that period.

Question 20

In what forms can tax refunds be in?

Answer 20

Cash
Tax credits

Question 21

The 8% income tax option is a bundled tax meaning it is in lieu of?

Answer 21

regular income tax
3% general percentage tax

Question 22

To whom is the 8% income tax option available to?

Answer 22

Non-VAT taxpayers

Question 23

What is the scope of the 8% income tax option?

Answer 23

Pure business or professional income earners
Mixed income earners

Question 24

Individuals engaged in business or profession are also required to pay a business tax which is either?

Answer 24

3% percentage tax
12% VAT

Question 25

Which vatable business pay the 12% VAT?

Answer 25

Those with annual sales exceeding 3M or when they are registered VAT taxpayers

Question 26

Which vatable business pay the 3% percentage tax?

Answer 26

Those with annual sales not exceeding 3M or when they did not register as VAT taxpayers

Question 27

True or False: Normally, business or professional practitioners start small as non-VAT taxpayers.

Answer 27

True

Question 28

What are the covered businesses of the 8% income tax?

Answer 28

Those who are below the 3M threshold and did not register as VAT taxpayers. (simply those eligible for the 3% percentage tax.)

Question 29

The 8% optional income tax is based upon the?

Answer 29

Gross sales or gross receipts of the individual taxpayer.

Question 30

What rule is observed for mixed income earners who opted for the 8% optional tax?

Answer 30

Classification rule

Question 31

Explain the classification rule for mixed income earners who opt for the 8% tax.

Answer 31

p. 601

Question 32

True or False: Individuals exceeding the 3M VAT threshold are required to register as a VAT taxpayer.

Answer 32

True

Question 33

When is an estate taxable?

Answer 33

If under judicial settlement or admnistration

Question 34

An estate under extra-judicial settlement is not a taxpayer. So, the income of the estate is taxable to the?

Answer 34

heirs

Question 35

True or False: A revocable trust is taxable.

Answer 35

False. It is treated as a pass through entity.

Question 36

True or False: An irrevocable trust is taxable.

Answer 36

True.

Question 37

True or False: Multiple irrevocable trusts designated by the same grantor for the benefit of same beneficiary shall be consolidated.

Answer 37

True

Question 38

The consolidation of irrevocable trusts is necessary to eliminate what?

Answer 38

Tax savings

Question 39

True or False: Married taxpayers are always required to file their income in one return.

Answer 39

False. XPTN is when it is impracticable

Question 40

The income of unmarried minors from property received from parents are taxable to?

Answer 40

the parents

Question 41

What are the exceptions to the income of unmarried minors from property received from parents?

Answer 41

1. donor's tax has been paid 2. transfer is exempt from donor's tax

Question 42

True or False: Employee trust funds are exempt only on income tax and not on final tax, capital gains tax.

Answer 42

False. It is exempt on all mentioned.

Question 43

True or False; A disabled taxpayer's name signed in a. return is presumed correct.

Answer 43

True

Question 44

This shows the composition of the itemized deductions in the annual income tax returns plus required disclosures by law or regulations.

Answer 44

Attachment form

Question 45

In case of no payment returns the same shall be filed with the?

Answer 45

Revenue District Officer

Question 46

This is a tax return without tax payable.

Answer 46

No payment return

Question 47

Where shall non resident taxpayers file and pay tax?

Answer 47

Office of the Commissioner or RDO No. 39

Question 48

Who are required and not required to file income tax returns?

Answer 48

p. 616