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6) What Are The Allowable Deductions From Gross Income?: Personal Exemptions

Taxpayers may deduct certain items from their gross income to calculate taxable income. Allowable deductions include an optional standard deduction of up to 40% of net sales or itemized deductions for expenses, interest, taxes, losses, depreciation, and more. Individual taxpayers are also entitled to personal exemptions of P50,000 for single filers or married filers filing separately, P50,000 for heads of household, and P50,000 for each spouse of a married couple. Additional exemptions of P25,000 per qualified dependent can be claimed, up to four dependents.

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42 views2 pages

6) What Are The Allowable Deductions From Gross Income?: Personal Exemptions

Taxpayers may deduct certain items from their gross income to calculate taxable income. Allowable deductions include an optional standard deduction of up to 40% of net sales or itemized deductions for expenses, interest, taxes, losses, depreciation, and more. Individual taxpayers are also entitled to personal exemptions of P50,000 for single filers or married filers filing separately, P50,000 for heads of household, and P50,000 for each spouse of a married couple. Additional exemptions of P25,000 per qualified dependent can be claimed, up to four dependents.

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Deopito Barrett
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6) What are the allowable deductions from gross income?

Except for taxpayers earning compensation income arising from personal services rendered
under an employer-employee relationships where the only deduction provided that the gross
family income does not exceed P250,000 per family is the premium payment on health and/or
hospitalization insurance, a taxpayer may opt to avail any of the following allowable deductions
from gross income:

a)Optional Standard Deduction - an amount not exceeding 40% of the net sales for individuals
and gross income for corporations; or

b) Itemized Deductions which include the following:


Expenses
Interest
Taxes
Losses
Bad Debts
Depreciation
Depletion of Oil and Gas Wells and Mines
Charitable Contributions and Other Contributions
Research and Development
Pension Trusts

In addition, individuals who are either earning compensation income, engaged in business or
deriving income from the practice of profession are entitled to personal and additional
exemptions as follows:

Personal Exemptions:

For single individual or married individual judicially decreed as legally separated with no
qualified dependentsP 50,000.00

For head of familyP 50,000.00

For each married individual *P 50,000.00

Note: In case of married individuals where only one of the spouses is deriving gross income,
only such spouse will be allowed to claim the personal exemption.

Additional Exemptions:


For each qualified dependent, an P25,000 additional exemption can be claimed
but only up to 4 qualified dependents
The additional exemption can be claimed by the following:


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

The maximum amount of P 2,400 premium payments on health and/or hospitalization insurance
can be claimed if:


Family gross income yearly should not be more than P 250,000
For married individuals, the spouse claiming the additional exemptions for the
qualified dependents shall be entitled to this deduction

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