Filing Tax Returns with BIR: A Step-by-Step Guide and How a Payroll System Can Help

September 28, 2023

Filing tax returns with the Bureau of Internal Revenue (BIR) is part of your financial responsibility. Usually, going through it is a challenging task, unless you have the experience and expertise with this engagement.

Read below and learn the process of filing tax returns, and find out how a payroll system can be a great tool to simplify this task.

Step 1: Determine Your Filing Deadline

Start by knowing your tax filing deadlines. Typically, the deadline for filing your annual income tax returns (ITR) is on or before April 15th of the following year. However, this specific  date can change. That is why it is always important to verify this information with the latest BIR announcements.

Step 2: Gather Your Financial Documents

Collect all the necessary financial documents, such as income statements, receipts, and records of deductions and exemptions. Organize these documents meticulously to facilitate accurate reporting.

Step 3: Select the Appropriate Tax Form

The BIR provides different tax forms for various types of taxpayers. For instance, self-employed individuals often use BIR Form No. 1701 for their annual income tax returns. Different forms are available for corporations and other entities. Choose the form that corresponds to your taxpayer category and income source.

Step 4: Complete the Tax Form

Fill out the selected tax form carefully, following the provided instructions. Ensure that your income and deduction details are precise and accurate, as inaccuracies can lead to penalties.

Step 5: Compute Your Tax Liability

Use the applicable tax rates and brackets, which can be based on your annualized income (as mentioned in previous articles), to calculate your tax liability. The BIR offers guidelines and calculators to assist you in this process. Be thorough in your calculations to avoid errors.

Step 6: Make Tax Payments

After calculating your tax liability, proceed to make your tax payments. You can pay taxes through authorized banks or accredited payment centers. Always keep the proof of payment for reference.

Step 7: File Your Return

Consider using the online options provided by the BIR for convenience. The Electronic Filing and Payment System (eFPS) and eBIRForms allow you to submit your tax return electronically. If you prefer filing in person, visit the nearest BIR office or an authorized agent bank to submit your documents.

Step 8: Retain Copies of Your Filed Returns and Documents

Keep copies of your filed tax documents. These include tax returns, proof of payment, and supporting documents for at least the past three years. These documents may be required in case of tax audits or investigations.

How a Payroll System Can Simplify the Process

A payroll system can significantly simplify the tax filing process in several ways:

1. Automated Calculations: Payroll systems can automatically calculate employee taxes based on the latest tax brackets and rates, reducing the risk of errors.

2. Accurate Record Keeping: These systems maintain detailed records of employee income and deductions, making it easier to compile the necessary financial documents.

3. Compliance: Payroll systems are designed to adhere to tax regulations, ensuring that your calculations and deductions are accurate and up-to-date.

4. Efficiency: By automating many aspects of payroll and tax calculations, these systems save time and resources, allowing your HR team to focus on other essential tasks.

Filing tax returns with the BIR in the Philippines can be a challenging process, but it's a necessary obligation for individuals and businesses. Follow this step-by-step guide and leverage the benefits of a payroll system. Also, learn to simplify  your payroll and tax processes with technology. This is a wise investment that can save you time, reduce errors, and ensure a smoother tax filing experience.

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