As a citizen of the country, every Filipino both professionals and self-employed are required to file an annual income tax return. It’s because the earned income regardless of the source has a corresponding income tax rate. Thus, the optional standard deduction is determined and the 8% flat income tax rate as well.
The BIR Form 1701A is used by taxpayers in filing the annual income tax returns. The new TRAIN law is applied in this form that follows the new tax rates for 2019.
Who are qualified to file the BIR Form 1701A?
Individuals whose source of income is generated mainly from business or trade, or practice of the profession. A resident citizen, non-resident citizen, a resident alien, or non-resident alien. However, the said individuals can use the form only in the following circumstances:
- If the income tax payer avails the optional standard deduction and if the income falls into the graduated income tax rates. It is applicable regardless of the amount or receipts or sales as well as other non-operating income.
- If the receipts or sales do not exceed P3M and the taxpayer takes advantage of the 8% flat rate of income tax.
Guide in filling out the form (for professionals and self-employed)
- On the first page, select the appropriate ATC or alphanumeric tax code and the taxpayer type either professional or single proprietor.
- The second page is the computation of the income tax according to the chosen tax rate either 8% or OSD.
- Provide the details of previous tax payment or tax credit.
- Validate all the entries in the form before affixing your signature and paying your taxes.
Single proprietors or businessmen are under the category of self-employed individuals. Likewise, individuals generating income from any business non-VAT or VAT registered is also considered as self-employed.
Lawyers, doctors, architects, CPA’s and any person whose source of income is primarily from the practice of the profession. Professionals usually opt for 8% flat rate instead of the graduated rates provided that the gross receipts or sales do not exceed Php3M.