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Get Annual Income Tax Return 1701 Form

The Annual Income Tax Return 1701 form is a crucial document for self-employed individuals, estates, and trusts (including those with both business and compensation income) in the Philippines. It serves as the primary means for these entities to report their annual income and calculate respective tax dues. Detailed in the form are various sections catered to capture background information, computation of tax, schedules for deductions, and much more, all of which must be submitted in three copies: one for the BIR file, one for BIR encoding, and one for the taxpayer's file.

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The Annual Income Tax Return 1701 form is a crucial document for self-employed individuals, estates, and trusts in the Philippines, including those with both business and compensation income. Mandated by the Bureau of Internal Revenue (BIR), this form is designed to facilitate the declaration and computation of annual income tax due. It requires comprehensive information, such as taxpayer identification, registered address, taxable income breakdown, the method of deduction preferred, and tax credits or payments. The form offers options for itemized or optional standard deductions, as well as provisions for claiming additional exemptions. Detailed sections guide filers through the computation of tax—including regular, special rates, and total income tax due—while ensuring tax relief under special laws or international tax treaties are applied where eligible. Taxpayers must prepare three copies, submitting them to respective BIR offices and keeping one for their records, reflecting the importance of accuracy and compliance in tax filing. It serves as a testament to the government's efforts in streamlining tax collection processes, thus facilitating a more efficient fiscal system that holds individuals and entities accountable for their share in nation-building.

Annual Income Tax Return 1701 Example

(To be filled up by the BIR)

Document Locator Number (DLN): _____________________________

Batch Control Sheet (BCS) No./Item No.: __________________________________

Republika ng Pilipinas

Information Return/Annual Income Tax Return

BIR Form No.

Kagawaran ng Pananalapi

1701

Kawanihan ng Rentas Internas

[For Self-Employed Individuals, Estates and Trusts (Including those with both Business and Compensation Income)]

All information must be written in CAPITAL LETTERS

June 2011 (ENCS)

Fill in alll blank spaces. Shade all applicable circles.

TO BE FILED IN THREE (3) COPIES: (1) BIR FILE COPY (2) BIR ENCODING COPY (3) TAXPAYER FILE COPY

For the year (YYYY)

2 Amended Return?

Yes

Joint Filing?

Yes

Part 1

Background Information

Taxpayer/Filer

Taxpayer Identification Number (TIN)

RDO Code

Taxpayer's

Name

Last Name

First Name

Middle Name

Registered

Address

(Unit/Room Number/Floor)

(Building Name)

(Lot Number

Block Number

Phase Number

House/Building Number)

(Street Name)

(Subdivision/Village)

(Barangay)

(Municipality/City)

(Province)

(Zip Code)

Date of Birth (MM/DD/YYYY)

9 Gender

Male

Female

10 Civil Status

Single

Married

Separated

Widow/er

Contact Number

12 E-mail Address

Line of

14 Alphanumeric Tax Code (ATC)

II 011

Compensation Income

II 012

Business Income/Income from Profession

II 013

Mixed Income

Business

Method of Deduction

Itemized Deduction [Secs. 34 (A to J), NIRC]

Optional Standard Deduction (OSD) - 40% of Gross Sales/Receipts/

16 Claiming for Additional Exemptions?

Yes

If yes, number of Qualified Dependent Children

Revenues/ Fees [Section 34(L), NIRC, as amended by R.A. No. 9504]

Spouse

Spouse's

Name

Last Name

First Name

Middle Name

Taxpayer Identification Number (TIN)

RDO Code

Date of Birth

22 Contact

E-mail

(MM/DD/YYYY)

Number

Address

Line of

25 Alphanumeric Tax Code (ATC)

II 011

Compensation Income

II 012

Business Income/Income from Profession

II 013

Mixed Income

Business

Method of Deduction

Itemized Deduction [Secs. 34 (A to J), NIRC]

Optional Standard Deduction (OSD) - 40% of Gross Sales/Receipts/

27 Claiming for Additional Exemptions?

Yes

If yes, number of Qualified Dependent Children

Revenues/Fees [Section 34(L), NIRC, as amended by R.A. No. 9504]

Qualified Dependent Children

Mark, if

Last Name

First Name

Middle Name

Date of Birth (MM/DD/YYYY)

Physically/Mentally

Incapacitated


30 Are you availing of tax relief under Special Law or International Tax Treaty?	Yes	No

BIR Form No. 1701 - page 2

Part II

Computation of Tax

Taxpayer/Filer

Spouse

Income Tax Due under Regular Rate (from Item 69C/ 69D of Part V)

31A

•

31B

•

Add: Income Tax Due under Special Rate (from Item 69A/ 69B of Part V)

32A

•

32B

•

Total Income Tax Due (Sum of Items 31A & 32A/ 31B & 32B)

33A

33B

•

Aggregate Income Tax Due (Sum of Item 33A & 33B)

•

35Less: Tax Credits/Payments (attach proof)

	35A/B Prior Year's Excess Credits							35A	•	35B	•
									•		•
	35C/D Tax Payment for the First Three Quarters							35C	•	35D	•
									•		•
	35E/F Creditable Tax Withheld for the First Three Quarters							35E	•	35F	•
									•		•
	35G/H Creditable Tax Withheld per BIR Form No. 2307 for the 4th Quarter							35G	•	35H	•
									•		•
	35I/J Tax withheld per BIR Form No. 2316							35I	•	35J	•
									•		•
	35K/L Tax Paid in Return Previously Filed, if this is an Amended Return							35K	•	35L	•
									•		•
	36M/N Foreign Tax Credits							35M	•	35N	•
									•		•
	35O/P Other Payments/Credits, specify____________________________							35O	•	35P	•
									•		•
	35Q/R Total Tax Credits/Payments (Sum of Items 35A, C, E, G, I, K, M & O/ 35B, D, F, H, J, L, N & P)							35Q	•	35R	•
									•		•
36	Net Tax Payable/(Overpayment) (Item 33A less 35Q/ 33B less 35R)							36A	•	36B	•
									•		•
37	Aggregate Tax Payable/(Overpayment) (Sum of Item 36A & 36B)								37		•
											•
38	Add: Penalties
	Taxpayer/Filer	38A	•	38B	•	38C	•	38D	•
			•		•		•		•
	Spouse	38E	•	38F	•	38G	•			38H	•
			•		•		•				•
39 Aggregate Penalties (Sum of Item 38D & 38H)									39		•
											•
40	Total Amount Payable/(Creditable/Refundable)(Sum of Item 36A & 38D/ 36B & 38H)							40A	•	40B	•
									•		•
41	Aggregate Amount Payable/(Creditable/Refundable)(Sum of Item 40A & 40B)								41		•
											•

Less Portion of Tax Payable Allowed for 2nd Installment Payment to be paid on or before July 15(not less than 50% of Item 33A/ 33B)

42A

•

42B

•

Amount of Tax Required to be Paid Upon Filing this Return(Item 40A less 42A/ 40B less 42B)

43A

•

43B

•

Net Aggregate Amount of Tax Required to be Paid/(Creditable/Refundable) Upon Filing of this Return(Sum of Item 43A & 43B)

•

If overpayment, mark one box only:

To be Refunded

To be issued a Tax Credit Certificate (TCC)

To be carried over, as tax credit for the next year/quarter

Part III

Availment of Tax Income Incentives/Exemptions

Taxpayer/Filer

Spouse

Total Tax Relief/Savings (from Item 98J/ 98K of Part VII)

45A

•

45B

•

Aggregate Amount of Tax Relief/Savings (Sum of Item 45A & 45B)

•

Part IV

Details of Payment

Stamp of Receiving Office/AAB and Date of Receipt

Particulars

Drawee Bank/Agency

Number

Date (MM/DD/YYYY)

Amount

(RO's Signature/Bank Teller's Initial)

Cash/Bank

47A

47B

47C

47D

•

Debit Memo

48A

48B

48C

Check

48D

•

Tax Debit Memo

49A

49B

49C

•

Others

50A

50B

50C

50D

•

BIR Form No. 1701 - page 3

Part V

Breakdown of Income (attach additional sheet/s, if necessary)

E X E M P T

S P E C I A L R A T E

R E G U L A R R A T E

Taxpayer/Filer

Spouse

Taxpayer/Filer

Spouse

Taxpayer/Filer

Spouse

Gross Compensation Income (from Schedule 1)

51A

•

51B

•

Less: Non-Taxable/Exempt Compensation

52A

52B

•

Gross Taxable Compensation Income (Item 51A less 52A/ 51B less 52B)

53A

53B

•

54Less: Deductions

54A/B

Premium on Health and/or Hospitalization Insurance (not to exceed P 2,400/year)

54A

•

54B

•

54C/D

Personal Exemption/Exemption for Estate and Trust

54C

54D

•

54E/F

Additional Exemption

54E

54F

•

54G/H Total Deductions (Sum of Items 54A, C & E/ 54B, D & F)

54G

54H

•

Total Compensation Income/(Excess of Deductions) (Item 53A less 54G/ 53B less 54H)

55A

55B

•

Sales/Revenues/Receipts/Fees (net of sales returns, allowances and discounts)

56A

56B

56C

56D

56E

56F

•

Add: Other Taxable/Exempt Income from Operations, not subject to Final Tax

57A/B/C/D/E/F

57A

•

57B

•

57C

•

57D

•

57E

•

57F

•

57G/H/I/J/K/L

57G

57H

57I

57J

57K

57L

•

57M/N/O/P/Q/R Total (Sum of Item 57A & 57G/ 57B & 57H/ 57C & 57I/ 57D & 57J/ 57E & 57K/ 57F & 57L)

57M

•

57N

•

57O

•

57P

•

57Q

•

57R

•

Total Sales/Revenues/Receipts/Fees (SUM OF ITEM 56A & 57M/ 56B & 57N/ 56C & 57O/ 56D & 57P/ 56E & 57Q/ 56F & 57R)

58A

58B

58C

58D

58E

58F

•

Less: Cost of Sales/Services

59A

59B

59C

59D

59E

59F

•

Net Sales/Revenues/Receipts/Fees (Item 58 less 59)

60A

60B

60C

60D

60E

60F

•

Add: Non-0perating Taxable Income

61A

61B

61C

61D

61E

61F

•

Gross Income (Sum of Item 60 & 61)

62A

62B

62C

62D

62E

62F

•

63Less: Deductions

63A/B

Optional Standard Deduction (OSD)

63A

•

63B

•

63C/D/E/F/G/H Regular Allowable Itemized Deductions

63C

•

63D

•

63E

•

63F

•

63G

•

63H

•

Special Allowable Itemized Deductions

Description

Legal Basis

63I/J/K/L/M/N

63I

•

63J

•

63K

•

63L

•

63M

•

63N

•

63O/P/Q/R/S/T

63O

•

63P

•

63Q

•

63R

•

63S

•

63T

•

63U/V/W/X/Y/Z Allowance for NOLCO (from Item 83)

63U

•

63V

•

63W

•

63X

•

63Y

•

63Z

•

63AA/AB/AC/AD/AE/AF Total Allowable Itemized Deductions (Sum of Items 63C, I, O & U/ 63D, J, P & V

63AA

•

63AB

•

63AC

•

63AD

•

63AE

•

63AF

•

63E, K, Q & W/ 63F, L, R & X/ 63G, M, S & Y/ 63H, N, T & Z)

Net Income

(Item 62A less 63AA/ 62B less 63AB/ 62C less 63AC/ 62D less 63AD/

64A

•

64B

•

64C

•

64D

•

64E

•

64F

•

62E less 63AE/ 62F less 63AF) (to Item 90 of Part VI-Schedule 3)

Less: Excess of Deductions over Taxable Compensation Income (FROM ITEM 55A/55B)

65A

•

65B

•

OR the Total Deductions (FROM ITEM 54G/54H) , if there is no Compensation Income

Taxable/Exempt Business Income/Income from Profession (Item 64 less 65)

66A

•

66B

•

66C

•

66D

•

66E

•

66F

•

Total Taxable Income (Sum of Item 55 & 66)

67A

•

67B

•

67C

•

67D

•

67E

•

67F

•

Applicable Tax Rate (i.e. special/regular rate)

68A

•

68B

•

68C

•

68D

•

Income Tax Due (refer to Tax Table below) (to Item 32A & 32B/ 31A & 31B)

69A

•

69B

•

69C

•

69D

•

Less: Share of Other Agencies

70A

•

70B

•

Income Tax Due to National Government Under Special Rate (ITEM 69A LESS 70A/ 69B LESS 70B)

71A

•

71B

•

TAX TABLE

If Taxable Income is:

Tax Due is:

If Taxable Income is:

Tax Due is:

Not over P 10,000

Over P 10,000 but not over P

30,000

P 500 + 10% of the excess over P 10,000

Over P 140,000 but not over P 250,000

P 22,500 + 25% of the excess over P 140,000

Over P 30,000 but not over P

70,000

P 2,500 + 15% of the excess over P 30,000

Over P 250,000 but not over P 500,000

P 50,000 + 30% of the excess over P 250,000

Over P 70,000 but not over P 140,000

P 8,500 + 20% of the excess over P 70,000

Over P 500,000

P 125,000 + 32% of the excess over P 500,000

NOTE: Read Guidelines and Instructions on page 6

- THIS FORM IS NOT FOR SALE -

BIR Form No. 1701 - page 4

Part VI

SCHEDULES

Schedule 1

Gross Compensation Income and Tax Withheld (attach additional sheet/s, if necessary)

TAXPAYER/FILER

SPOUSE

Name of Employer

Taxpayer Identification Number (TIN)

Compensation Income

Tax Withheld

Compensation Income

Tax Withheld

72A

72B

•

72C

•

72D

•

72E

•

73A

73B

•

73C

•

73D

•

73E

•

74A

74B

74C

74D

74E

•

75A

75B

75C

75D

Total Compensation Income/Tax Withheld (Sum of Item 72 to 74) (to Item 51)

•

Schedule 2

Computation of Net Operating Loss Carry Over (NOLCO)

Gross Income

•

Less: Total Deductions exclusive of NOLCO & Deductions under Special Laws

•

Net Operating Loss Carry Over (to Schedule 2A)

•

Schedule 2A

Computation of Available Net Operating Loss Carry Over (NOLCO) (attach additional sheet/s, if necessary)

Net Operating Loss

Net Operating Loss Carry Over (NOLCO)

Net Operating Loss Unapplied

Year Incurred

Amount

Applied Previous Year

Applied Current Year

Expired

79A

•

79B

•

79C

•

79D

•

79E

•

80A

80B

80C

80D

80E

•

81A

81B

81C

81D

81E

•

82A

82B

82C

82D

82E

•

Total (Sum of Items 79C, 80C, 81C & 82C) (to Item 63U/V/W/X/Y/Z)

•

Schedule 3

Reconciliation of Net Income per Books Against Taxable Income (attach additional sheet/s, if necessary)

S p e c i a l R a t e

R e g u l a r R a t e

Taxpayer/Filer

Spouse

Taxpayer/Filer

Spouse

Net Income/(Loss) per Books

84A

•

84B

•

84C

•

84D

•

85Add: Other Taxable Income/Non-deductible Expenses

85A

•

85B

•

85C

•

85D

•

86A

86B

86C

86D

Total (Sum of Items 84A & 85A/ 84B & 85B/ 84C & 85C/ 84D & 85D)

•

Less: Total Non-taxable Income and Income Subjected to Final Tax

87A

•

87B

•

87C

•

87D

•

Special Deductions (e.g. direct labor, training, etc.)

88A

•

88B

•

88C

•

88D

•

89A

89B

89C

89D

Total (Sum of Items 87A & 88A/ 87B & 88B/ 87C & 88C/ 87D & 88D)

•

Net Income (ITEM 86A LESS 89A/ 86B LESS 89B/ 86C LESS 89C/ 86D LESS 89D) (FROM ITEM 64C & 64D/ 64E & 64F)

90A

90B

90C

90D

•

Part VII

Details of Income Tax Incentives/Exemptions (attach additional sheet/s, if necessary)

Certificate of Registration/BIR

Legal Basis (Special Law-R.A.

Effectivity Date of Incentive Exemption

Nature

and Extent of

Amount of Income Tax Payable under Regular Rate

Amount of Actual Income Tax Paid

Amount of Tax Relief/Savings

No./Particular Sec. in the Tax

(state exact dates)

Ruling/MOA/Others

Incentive/Exemption

Code of 1997, as amended

From (MM/DD/YYYY)

To (MM/DD/YYYY)

Taxpayer/Filer

Spouse

Taxpayer/Filer

Spouse

Taxpayer/Filer

Spouse

( A )

( B )

( C )

( D )

( E )

( F )

( G )

( H )

( I )

( J ) = (F less H)

( K ) = (G less I)

•

98 Total (Sum of Items 91J to 97J/ 91K to 97K) (to Item 45)	98	•

•

BIR Form No. 1701 - page 5

Part VIII

Supplemental Information (attach additional sheet/s, if necessary)

TAXPAYER/FILER

SPOUSE

Actual Amount/Fair Market

Final Tax Withheld/Paid

Actual Amount/Fair Market

Final Tax Withheld/Paid

Gross Income/Receipts Subjected to Final Withholding Tax on Income

Value/Net Capital Gains

Interests

99A

•

99B

•

99C

•

99D

•

100

Royalties

100A

•

100B

•

100C

•

100D

•

101

Dividends

101A

•

101B

•

101C

•

101D

•

102

Prizes and Winnings

102A

•

102B

•

102C

•

102D

•

103

Fringe Benefits

103A

•

103B

•

103C

•

103D

•

104

104A

104B

104C

104D

Compensation Subject to 15% Preferential Rate

•

105Sale/Exchange of Real Properties

Description of Property

OCT/TCT/CCT/Tax

Certificate Authorizing

(e.g., land, building, improvement)

Declaration Number

Registration (CAR) Number

105A

105B

105C

105D

•

105E

•

105F

•

105G

•

105H

105I

105J

105K

•

105L

•

105M

•

105N

•

106Sale/Exchange of Shares of Stocks

Kind of

Stock Certificate

Certificate Authorizing

Number of

Date of Issue

Stocks*

Series Number

Registration (CAR) Number

(MM/DD/YYYY)

106A

106B

106C

106D

106E

106F

•

106G

•

106H

•

106I

•

106J

106K

106L

106M

106N

106O

•

106P

•

106Q

•

106R

•

[*e.g., preferred (PS), common (CS)]

107 Other Income Subject to Final Tax Under Sec. 57(A) of the Tax Code, as amended (specify)

107A

107B

•

107C

•

107D

•

107E

•

107F

107G

•

107H

•

107I

•

107J

•

108 Total FINAL TAX WITHHELD/PAID (SUM OF ITEMS 99B TO 104B, 105E, 105L, 106G, 106P, 107C & 107H/ 99D TO 104D, 105G, 105N, 106I, 106R, 107E & 107J)

108A

•

108B

•

Gross Income/Receipts Exempt from Income Tax

Actual Amount/Fair Market Value

109

Proceeds of Life Insurance Policy

109A

•

109B

•

110

Return of Premium

110A

•

110B

•

111

Retirement Benefits, Pensions, Gratuities, etc.

111A

•

111B

•

112Personal/Real Properties Received thru Gifts, Bequests, and Devises

Description of Property

Mode of Transfer

Certificate Authorizing

(e.g., cash, land, building, improvement)

(e.g., inheritance, donation)

Registration (CAR) Number

112A

112B

112C

112D

•

112E

•

112F

112G

112H

112I

•

112J

•

113 Other Exempt Income/Receipts Under Sec. 32 (B) of the Tax Code, as amended (specify)

113A

113B

•

113C

•

113D

113E

•

113F

•

114 Total Income/Receipts Exempt from Income Tax(SUM OF ITEMS 109A TO 111A, 112D, 112I, 113B & 113E/ 109B TO 111B, 112E, 112J, 113C & 113F)

114A

•

114B

•

Part IX - For Eatate and Trust (Engaged in Trade and Business)

Payments to Heirs/Beneficiaries (attach additional sheet/s, if necessary)

Name

Taxpayer Identification Number (TIN)

Amount

Tax Withheld

115

115A

115B

•

115C

•

116

116A

116B

•

116C

•

117

117A

117B

•

117C

•

118

Total Payment to Heirs/Beneficiaries (Sum of Items 115B, 116B & 117B)

118

•

eclare

, und

penalties of perjury, that this annual return has been made in good faith, verified by me, and to the best of my knowledge and belief, is true

and correct, pursuant to the provisions of the National Internal Revenue Code, as amended, and the regulations issued under authority there

119

Signature over Printed Name of Taxpayer/Authorized

Position and TIN of Authorized Representative/ATA

Tax Agent Accreditation No./Atty's Roll No. (if applicable)

Representative (attach authorization) /Accredited

Issue Date

Tax Agent (ATA)

Expiry Date

120

Community Tax Certificate Number

121

Place of Issue

122

Date of Issue (MM/DD/YYYY)

123 Amount

•

All returns filed by an accredited tax agent on behalf of a taxpayer shall bear the following information:

A. For CPAs and others (individual practitioners and members of GPPs); a.1 Taxpayer Identification Number (TIN); and

a.2 Certificate of Accreditation Number, Date of Issuance, and Date of Expiry. B. For members of the Philippine Bar (individual practitioners, members of GPPs);

b.1 Taxpayer Identification Number (TIN); and

b.2 Attorney’s Roll number or Accreditation Number, if any.

ENCS

Who Shall File This Form

This return shall be filed by the following individuals regardless of amount of gross income:

1.) A resident citizen engaged in trade, business, or practice of profession within and without the Philippines.

2.) A resident alien, non-resident citizen or non-resident alien individual engaged in trade, business or practice of profession within the Philippines.

3.) A trustee of a trust, guardian of a minor, executor/administrator of an estate, or any person acting in any fiduciary capacity for any person, where such trust, estate, minor, or person is engaged in trade or business.

4.) An individual engaged in trade or business or in the exercise of their profession and receiving compensation income as well.

All individuals, estates and trusts above required under the law and existing issuances to file this return should also fill up Part VIII hereof. Said individuals, estates and trusts shall declare such income subject to final tax and those exclusions from gross income under Section 32(B) of the Tax Code, as amended.

Married individuals shall file a return for the taxable year to include the income of both spouses, computing separately their individual income tax based on their respective total taxable income. Where it is impracticable for the spouses to file one return, each spouse may file a separate return of income. If any income cannot be definitely attributed to or identified as income exclusively earned or realized by either of the spouses, the same shall be divided equally between the spouses for the purpose of determining their respective taxable income.

The income of unmarried minors derived from property received from a living parent shall be included in the return of the parent except (1) when the donor’s tax has been paid on such property, or (2) when the transfer of such property is exempt from donor’s tax.

If the taxpayer is unable to make his own return, the return may be made by his duly authorized agent or representative or by the guardian or other person charged with the care of his person or property, the principal and his representative or guardian assuming the responsibility of making the return and incurring penalties provided for erroneous, false or fraudulent returns.

When and Where to File and Pay

1.For Electronic Filing and Payment System (eFPS) Taxpayer

The return shall be e-filed and the tax shall be e-paid on or before the 15th day of April of each year covering income for the preceding taxable year using the eFPS facilities thru the BIR website http://www.bir.gov.ph.

2.For Non-Electronic Filing and Payment System (non-eFPS) Taxpayer

The return shall be filed and the tax shall be paid on or before the 15th day of April of each year covering income for the preceding taxable year with any Authorized Agent Bank (AAB) located within the territorial jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered. In places where there are no AABs, the return shall be filed and the tax shall be paid with the concerned Revenue Collection Officer (RCO) under the jurisdiction of the RDO where the taxpayer is registered.

In case of “NO PAYMENT RETURNS”, the same shall be filed with the RDO where the taxpayer is registered/has his legal residence or place of business in the Philippines or with the concerned RCO under the same RDO.

3.For Installment Payment

When the tax due exceeds Two Thousand Pesos (P2,000), the taxpayer may elect to pay in two equal installments, the first installment to be paid at the time the return is filed and the second, on or before July 15 of the same year.

4.For Non-Resident Taxpayer

In case taxpayer has no legal residence or place of business in the Philippines, the return shall be filed with the Office of the Commissioner or Revenue District Office No. 39, South Quezon City.

Gross Taxable Compensation Income

The gross taxable compensation income of the taxpayer does not include SSS, GSIS, Medicare and PAG-IBIG Contributions, and Union Dues.

Taxable Income

Taxable income means the pertinent items of gross compensation and/or business income specified in the Tax Code of 1997, as amended, less the deductions and/or additional exemptions, if any, authorized for such types of income by the Code or other special laws.

Premiums on Health and/or Hospitalization Insurance

The amount of premiums not to exceed Two Thousand Four Hundred Pesos ( P 2,400) per family or Two Hundred Pesos (P 200) a month paid during the taxable year for health and/or hospitalization insurance taken by the taxpayer for himself, including his family, shall be allowed as a deduction from his gross income: Provided, That said family has a gross income of not more

GUIDELINES AND INSTRUCTIONS

than Two Hundred Fifty Thousand Pesos (P 250,000) for the taxable year: Provided, finally, That in the case of married taxpayers, only the spouse claiming the additional exemption for dependents shall be entitled to this deduction.

Personal and Additional Exemptions

Individual taxpayer, whether single or married, shall be allowed a basic personal exemption amounting to Fifty Thousand Pesos (P50,000).

In the case of married individuals where only one of the spouses is deriving gross income, only such spouse shall be allowed the personal exemption.

An individual, whether single or married, shall be allowed an additional exemption of Twenty Five Thousand Pesos (P 25,000) for each qualified dependent child, not exceeding four (4). The additional exemption for dependents shall be claimed by the husband, who is deemed the proper claimant unless he explicitly waives his right in favor of his wife.

“Dependent Child” 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.

In the case of legally separated spouses, additional exemptions may be claimed only by the spouse who has custody of the child or children: 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.

Exemption Allowed to Estates and Trusts

There shall be allowed an exemption of Twenty thousand pesos (P 20,000) from the income of the estate and trust.

Change of Status

If the taxpayer marries or should have additional dependent(s) as defined above during the taxable year, the taxpayer may claim the corresponding personal or additional exemption, as the case may be, in full for such year.

If the taxpayer dies during the taxable year, his estate may still claim the personal and additional exemptions for himself and his dependent(s) as if he died at the close of such year.

If the spouse or any of the dependents dies or if any of such dependents marries, becomes twenty-one (21) years old or becomes gainfully employed during the taxable year, the taxpayer may still claim the same exemptions as if the spouse or any of the dependents died, or as if such dependents married, became twenty-one (21) years old or became employed at the close of such year.

Allowable Deductions

A taxpayer engaged in business or in the practice of profession shall choose either the optional or itemized deduction (described below). He shall indicate his choice by marking with “X” the appropriate box, otherwise, he shall be deemed to have chosen itemized deduction. The choice made in the return is irrevocable for the taxable year covered.

Optional Standard Deduction (OSD) – A maximum of 40% of their gross sales or gross receipts shall be allowed as deduction in lieu of the itemized deduction. This type of deduction shall not be allowed for non-resident aliens engaged in trade or business. An individual who opts to avail of this deduction need not submit the Account Information Form (AIF)/Financial Statements.

Regular Allowable Itemized Deductions - There shall be allowed as deduction from gross income all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on or which are directly attributable to, the development, management, operation and/or conduct of the trade, business or exercise of a profession including a reasonable allowance for salaries, travel, rental and entertainment expenses.

Itemized deductions include also interest, taxes, losses, bad debts, depreciation, depletion, charitable and other contributions, research and development, pension trust, premium payments on health and/or hospitalization insurance.

Special Allowable Itemized Deductions – There shall be allowable deduction from gross income in computing taxable income, in addition to the regular allowable itemized deduction, as provided under existing regular and special laws, rules and issuances such as, but not limited to ‘Rooming-in and Breast-feeding Practices under RA 7600, Adopt-a-School Program under RA 8525, Senior Citizen Discount under RA 9257, Free Legal Assistance under RA 9999.

Tax Relief Availment

Taxpayer availing of any tax relief under the Tax Code and/or any prevailing special laws [e.g., Income Tax Holiday (ITH), preferential income tax rate, income tax exemption, additional special deductions, etc.] must completely fill up Part VII hereof.

BIR Form No. 1701 – page 6

Fair market value

“Fair market value” as determined in accordance with Section 6(E) of the Tax Code, as amended, shall be used in reporting the non-cash income and receipts in Part VIII.

Individual whose compensation income has been subjected to final withholding tax

The term "individual whose compensation income has been subjected to final withholding tax” shall include aliens or Filipino citizens occupying the same positions as the alien employees, as the case may be, who are employed by regional operating headquarters, regional or area headquarters, offshore banking units, petroleum service contractors and sub-contractors, pursuant to pertinent provisions of Sections 25 (C), (D), E) and 57(A), including those subject to Fringe Benefit Tax (FBT) under Section 33 of the Tax Code, as amended, Republic Act No. 8756, Presidential Decree No. 1354, and other pertinent laws.

Penalties

There shall be imposed and collected as part of the tax:

1.A surcharge of twenty five percent (25%) for each of the following violations:

a)Failure to file any return and pay the amount of tax or installment due on or before the due dates;

b)Filing a return with a person or office other than those with whom it is required to be filed;

c)Failure to pay the full or part of the amount of tax shown on the return, or the full amount of tax due for which no return is required to be filed, on or before the due date;

d)Failure to pay the deficiency tax within the time prescribed for its payment in the notice of Assessment (Delinquency Surcharge).

2.A surcharge of fifty percent (50%) of the tax or of the deficiency tax shall be imposed in case of willful neglect to file the return within the period prescribed by the Tax Code and/or by rules and regulations or in case a false or fraudulent return is filed.

3.Interest at the rate of twenty percent (20%) per annum, or such higher rate as may be prescribed by rules and regulations, on any unpaid amount of tax, from the date prescribed for the payment until it is fully paid.

4.Compromise penalty, pursuant to existing/applicable revenue issuances.

Excess Withholding Tax

Over withholding of income tax on compensation shall be refunded by the employer, except if the over withholding is due to the employee’s failure or refusal to file the withholding exemption certificate, or supplies false or inaccurate information, the excess shall not be refunded but shall be forfeited in favor of the government.

Attachments Required

1.Account Information Form and the Certificate of the independent CPA duly accredited by the BIR except for taxpayers who opted for the Optional Standard Deduction. (The CPA Certificate is required if the gross quarterly sales, earnings, receipts or output exceed P 150,000).

2.Certificate of Income Tax Withheld on Compensation (BIR Form No. 2316).

3.Certificate of Income Payments Not Subjected to Withholding Tax (BIR Form No. 2304).

4.Certificate of Creditable Tax Withheld at Source (BIR Form No. 2307).

5.Duly Approved Tax Debit Memo, if applicable.

6.Waiver of husband's right to claim additional exemption, if applicable.

7.Proof of prior years' excess credits, if applicable.

8.Proof of Foreign Tax Credits, if applicable.

9.For amended return, proof of tax payment and the return previously filed.

10.Authorization letter, if filed by authorized representative.

11.Proof of other tax payments/credit, if applicable.

12.Proof of Tax Payments for the First Three Quarters

13.Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding Tax at Source (SAWT), if applicable.

14.Statement of Management’s Responsibility (SMR) for Annual Income Tax Return.

15.Schedules of the following which must be part of the Notes to the audited Financial Statements:

a.Sales/Receipts/Fees

b.Other Taxable Income

c.Cost of Sales/Services

d.Taxes and Licenses

e.Itemized Deductions (if taxpayer did not avail of OSD)

f.Other information prescribed to be disclosed in the Notes to Financial Statements

Note: All Background information must be properly filled up.



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Document Specifics

Fact Name	Description
Form Designation	BIR Form No. 1701 is designated for Self-Employed Individuals, Estates, and Trusts, including those with both Business and Compensation Income.
Form Title	The official title is "Information Return/Annual Income Tax Return."
Usage Frequency	It is filed annually by the specified taxpayers.
Required Copies	Three copies of the form must be filed: one for the BIR file, one for BIR encoding, and one copy for the taxpayer's file.
Filing Amendments	The form allows for the indication of whether it is an "Amended Return."
Method of Deduction Options	Taxpayers can choose between Itemized Deduction and Optional Standard Deduction (OSD) at 40% of Gross Sales/Receipts.
Special Features	It includes sections for availing tax relief under Special Law or International Tax Treaty, and determining tax due under regular and special rates.

Guide to Writing Annual Income Tax Return 1701

Once you have the Annual Income Tax Return 1701 form ready to fill out, it's important to ensure all entries are accurate to comply with tax obligations. This guide will help you fill out each section correctly. Starting with your basic information and progressing through income details, tax computations, and finally, declarations and verification. Remember, this form is critical for self-employed individuals, estates, and trusts, including those with both business and compensation income. Let's get started.

Start by entering the current year in the field marked 1 for the year (YYYY).
Indicate whether this is an Amended Return by shading the applicable circle for "Yes" or "No" next to number 2.
For number 3, shade the circle if this is a Joint Filing. Otherwise, leave it unshaded.
Provide your Taxpayer Identification Number (TIN) in the designated boxes at number 4.
Enter the RDO Code related to your registered address at number 5.
Fill out your name in the fields under number 6: Last Name, First Name, and Middle Name.
For number 7, write your complete Registered Address, including Unit/Room Number, Floor, Building Name, etc.
Indicate your Date of Birth in MM/DD/YYYY format at number 8.
Shade the applicable circle for your Gender at number 9.
Select your Civil Status by shading the appropriate circle at number 10.
Provide your Contact Number and E-mail Address at numbers 11 and 12.
Enter your primary line of business and the corresponding Alphanumeric Tax Code (ATC) at numbers 13 to 14.
Choose your Method of Deduction at number 15 by shading the circle next to the appropriate option and proceed similarly through the form, including details of your spouse if joint filing, income computations, and tax deductions.
Complete details regarding Income Tax Due, payments, and any applicable tax relief or incentives in the sections that follow.
For parts involving calculations of net income, deductions, and taxable business income, follow the instructions provided in the form, ensuring accurate computation.
Detail any tax payments made, including date and amount, in Part IV.
Review and complete the supplemental information required for a comprehensive declaration of all income and tax details.
Sign the declaration section, verifying that all information provided is true and accurate to the best of your knowledge.

Ensure all applicable fields and sections are completed before submitting the form to avoid any delays or issues with your tax filing. Keep copies for your records and for any future reference.

Understanding Annual Income Tax Return 1701

FAQs about the Annual Income Tax Return 1701 Form

What is BIR Form No. 1701?

BIR Form No. 1701, also known as the Annual Income Tax Return for Self-Employed Individuals, Estates, and Trusts, is a document used in the Philippines to report annual income. This includes both business and compensation income, allowing for deductions and taxable income calculation. It serves as the basis for the amount of income tax due to the government.
Who should file BIR Form No. 1701?

This form must be filed by self-employed individuals (such as sole proprietors and professionals), estates, and trusts engaging in trade or business, including those earning income both from business/profession and compensation.
How many copies of BIR Form No. 1701 should be filed and where?

Three copies of the Form 1701 should be filed: one for the BIR file copy, one for BIR encoding, and one for the taxpayer's file. Filing is typically done at the Revenue District Office (RDO) where the taxpayer is registered.
Is Joint Filing allowed for BIR Form No. 1701?

Joint filing is an option for married taxpayers. This section of the form allows spouses to file their income tax returns together, consolidating their income and deductions to streamline the filing process.
What types of income should be declared in BIR Form No. 1701?

Taxpayers must declare compensation income, business income/profession income, and mixed income. This comprehensive declaration helps in accurately determining taxable income.
What are the methods of deduction under BIR Form No. 1701?

The form allows for two methods of deduction: Itemized Deductions, where specific expenses related to the business or profession are itemized and deducted, and the Optional Standard Deduction (OSD), a simpler method allowing a deduction of 40% of gross sales/receipts, without needing to itemize.
How is the tax due calculated in BIR Form No. 1701?

The tax due is calculated by combining the income tax due under the regular rate and special rate (if applicable), subtracting any tax credits/payments, and then adding penalties if any. The form guides the taxpayer through the calculation, from determining gross income to net tax payable or overpayment.

Common mistakes

Filling out the Annual Income Tax Return 1701 form can be a daunting task for many, leading to errors that may complicate the process. Here are seven common mistakes individuals often make when completing this form:

Incorrect or Incomplete Information in the Taxpayer/Filer Section: Many filers forget to fill in all the required fields or inadvertently insert incorrect information, such as the Taxpayer Identification Number (TIN) or the Registered Address. It's crucial to double-check these details for accuracy to avoid processing delays.
Choosing the Wrong Method of Deduction: Filers sometimes select the wrong method of deduction—either the Itemized Deduction or the Optional Standard Deduction (OSD)—without understanding which is more beneficial for their specific situation, potentially leading to higher tax liabilities or missed opportunities for tax savings.
Failing to Declare All Sources of Income: Overlooking or intentionally omitting some sources of income, such as business income, professional fees, or other compensations, can result in penalties. All income, regardless of its source, should be accurately reported.
Misunderstanding Taxable vs. Non-Taxable Income: Not all types of income are subject to tax. Confusion between taxable and non-taxable income can lead to either underreporting or overreporting of income. It’s vital to understand these differences to complete the form correctly.
Incorrect Calculation of Deductions and Taxable Income: Arithmetic errors in calculating deductions, exemptions, and overall taxable income are common. These mistakes can lead to incorrect tax computations and possible conflicts with the Bureau of Internal Revenue (BIR).
Failure to Claim Tax Credits or Exemptions Properly: Taxpayers often miss out on claiming eligible tax credits or exemptions, such as those for dependents, or they claim credits or exemptions they are not eligible for, because of misconceptions or oversight.
Neglecting to Attach Required Documentation: The form requires various attachments, such as proof of income, tax credits, or exemptions. Failing to attach these documents, or submitting incomplete or incorrect ones, can lead to the rejection of the tax return.

In summary, when completing the BIR Form No. 1701, accuracy, attention to detail, and a thorough understanding of one's tax obligations and entitlements are essential to ensure compliance and optimize tax positions. Seeking the advice of a tax professional can also help avoid these common mistakes.

Documents used along the form

Filing the Annual Income Tax Return 1701 form is a comprehensive process that requires meticulous preparation and attention to detail. To ensure accuracy and compliance, taxpayers often need to accompany this form with several other documents and forms. Understanding these additional requirements can streamline the filing process.

BIR Form 2316: This certificate is issued by an employer to certify the income earned and the taxes withheld from an employee within a calendar year. It's crucial for individuals with both compensation and business income.
BIR Form 2307: Also known as the Certificate of Creditable Tax Withheld at Source, this document is essential for self-employed individuals who have undergone withholding taxes through their business transactions.
Financial Statements: These include audited financial statements comprising balance sheets, income statements, and cash flow statements. They provide a comprehensive view of the financial health of a business.
Books of Accounts: For those who engage in business, maintaining and presenting books of accounts is obligatory. These serve as detailed records of all financial transactions undertaken within the fiscal year.
Receipts and Invoices: Supporting documents such as official receipts, sales invoices, and other proof of purchases are fundamental in validating the income and expenses claimed in the tax return.
Proof of Tax Credits/Payments: Evidence of previous quarter tax payments, tax credits, or excess tax payments that will be carried over to the current year's tax liabilities.
Documentation for Exemptions and Deductions: Any official documents that support claims for deductions and exemptions, such as medical expenses, donations, or dependent-related deductions, should be prepared.

Gathering these documents in advance can significantly reduce the complexities of filing the Annual Income Tax Return 1701 form. Each document plays a crucial role in determining the tax liabilities or potential refunds for the taxpayer. Hence, a thorough review and organized preparation of these supporting documents can facilitate a smoother filing process, ensuring compliance with tax regulations.

Similar forms

The United States counterpart to the Philippine BIR Form No. 1701 is the IRS Form 1040, U.S. Individual Income Tax Return. Both forms are used by individuals to report their annual income and calculate the amount of tax owed to the government. The IRS Form 1040 covers various types of income, deductions, and credits similar to the BIR Form 1701, making it a comprehensive document for individuals to consolidate their tax-related information, including wages, salaries, tips, interest, and dividends.

Another similar document is IRS Schedule C (Form 1040), Profit or Loss from Business, which is used by self-employed individuals in the U.S. to report income or loss from a business they operated or a profession they practiced as a sole proprietor. Comparable to certain sections in BIR Form 1701 that concern business income, Schedule C details the income made and expenses incurred in the operation of the said business or profession.

IRS Form 1041, U.S. Income Tax Return for Estates and Trusts, parallels the estate and trust components of BIR Form 1701. This form is utilized for reporting the income, deductions, gains, losses, etc., of estates and trusts. The similarities lie in their function to calculate the income tax liability for entities other than individual or corporate taxpayers, covering aspects like distributions to beneficiaries and special deductions.

Schedule E (Form 1040), Supplemental Income and Loss, is another U.S. tax document related to BIR Form 1701 in that it is used for reporting income or loss from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs. This form encompasses portions of the 1701 form that deal with mixed or passive income sources, showcasing the breadth of income types affecting taxpayer liability.

IRS Form 2555, Foreign Earned Income, shares purposes with sections of the BIR Form 1701 that would be relevant for Filipino taxpayers earning abroad. This form allows U.S. taxpayers to report foreign earned income and claim the foreign earned income exclusion, reducing their U.S. tax liability on income earned outside the United States, mirroring how a taxpayer in the Philippines would report international income.

Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), corresponds with parts of BIR Form 1701 concerning tax credits for education. In the U.S., Form 8863 is used to calculate and claim education credits, which reduce the tax amount dollar-for-dollar. Taxpayers must report expenses for tuition and related fees under certain education programs, much like how the Philippine form might include deductions or credits for educational purposes.

Lastly, IRS Form 5695, Residential Energy Credits, can be likened to elements of BIR Form 1701 that allow for tax relief under special laws or tax treaties. Form 5695 is designed for taxpayers to calculate and claim credits for residential energy-efficient improvements, including solar, wind, geothermal, and fuel cell technology. Though the specifics may vary, both forms reflect government efforts to incentivize particular behaviors through the tax code.

Dos and Don'ts

When filling out the Annual Income Tax Return 1701 form, there are certain practices you should follow to ensure accuracy and compliance. Below are important tips to help you navigate the process smoothly:

Do verify all personal information, including your Taxpayer Identification Number (TIN), Registered Address, and Contact Details, to prevent any delay in processing your return.
Make sure to accurately calculate your income from all sources, distinguishing between compensation, business, and mixed income, to ensure the correct tax computation.
Choose the right deduction method that suits your situation — Itemized Deductions or Optional Standard Deduction (OSD) — for optimal tax savings.
Claim exemptions and credits judiciously. Ensure you’re eligible for any additional exemptions for dependents or tax credits you claim to avoid penalties.
Double-check the math. Errors in computation can lead to incorrect tax amounts, which may result in interests or penalties.
For those availing of tax relief under special laws or international tax treaties, provide complete and accurate details to avoid rejection.
Consult the instructions provided by the Bureau of Internal Revenue (BIR) for any unclear items to ensure compliance and correctness.

Conversely, there are certain pitfalls you should avoid:

Don’t leave any mandatory fields blank. Incomplete forms can lead to processing delays or even penalties.
Avoid making unauthorized changes to the form, as this could invalidate your return.
Don’t underestimate your income to lower your tax liability. This is considered tax evasion and can lead to severe penalties.
Resist the temptation to guess amounts when exact numbers are required. Estimates can lead to inaccuracies and potential audits.
Don’t ignore the deadlines. Submitting your tax return after the due date can attract penalties and interest on due taxes.
Refrain from using pencil or erasable ink to fill in your form. All entries should be made in permanent ink to prevent alterations.
Finally, don’t forget to sign your return. An unsigned tax return is considered invalid and will not be processed by the BIR.

Misconceptions

Misconceptions about the Annual Income Tax Return 1701 form are common, leading to mistakes and confusion for self-employed individuals, estates, and trusts. Understanding these can ensure compliance and accuracy in filing tax returns.

All income is taxed the same way: A prevalent misconception is that all income is taxed under a single rate or method. The 1701 form, however, requires taxpayers to separate their income into compensation, business/profession, and mixed income categories, each potentially subject to different tax rates and methods of deduction.
Joint filing means combining incomes: Some believe that opting for "Joint Filing" allows a taxpayer to combine their income with that of their spouse to benefit from lower taxes. This is inaccurate; "Joint Filing" refers to the administrative process of filing returns together, while each party's income is still assessed separately.
Optional Standard Deduction (OSD) is always advantageous: Taxpayers sometimes think that choosing the OSD is invariably the best option. However, the decision between itemized deductions and the OSD should be based on which method provides the higher deduction, as individual circumstances can greatly affect the outcome.
Foreign tax credits are automatically applied: Another misconception is that taxes paid to foreign governments on income earned abroad are automatically credited against Philippine tax liabilities. In reality, taxpayers must explicitly claim these credits on the 1701 form to benefit from them.
Additional exemptions are unlimited: Some taxpayers mistakenly believe they can claim an unlimited number of additional exemptions for qualified dependent children. The number of allowable exemptions, however, is capped, and specific qualifications must be met for each dependent.
Amendments to returns are discouraged: Lastly, it's falsely assumed that amending a return is discouraged or may lead to penalties. Amending a return can be necessary for correcting errors or omissions and is a provision allowed by the BIR to ensure accuracy in tax reporting.

Understanding these misconceptions and accurately completing the Annual Income Tax Return 1701 form are vital steps in fulfilling tax obligations and avoiding potential issues with the BIR.

Key takeaways

When dealing with the Annual Income Tax Return 1701 form, several key points must be noted to ensure accurate and timely submission. This form is crucial for self-employed individuals, estates, and trusts including those with both business and compensation income. Understanding its requirements and procedures can lead to smoother and more efficient tax filing.

Filling out the form requires attention to detail. Every section should be completed with accurate information in CAPITAL LETTERS. Blank spaces are to be filled, and applicable circles shaded, as incomplete forms may lead to processing delays or inaccuracies in tax assessments.
Three copies of the form must be prepared: one for the BIR file copy, one for BIR encoding, and one for the taxpayer’s records. Ensuring that all three copies are accurately completed and submitted as required helps in maintaining consistency across records and facilitates easy retrieval for reference or auditing purposes.
The choice between the itemized deduction and the optional standard deduction (OSD) is significant. Taxpayers should carefully consider which method is most beneficial for their specific situation - itemized deductions allow for specific expense deductions, while the OSD offers a flat rate deduction. This choice can greatly affect the total taxable income.
Claiming for additional exemptions, including qualified dependent children, can lower the taxable income. Taxpayers with dependents should ensure to accurately declare this section to benefit from potential tax savings. It is important to review and prepare the necessary documentation to support these claims.

Properly completing and utilizing the 1701 form is essential for complying with tax obligations in the Philippines. Each section of the form plays a critical role in determining the taxpayer's liabilities and entitlements, reinforcing the importance of thoroughness and accuracy in its completion. By keeping these key takeaways in mind, taxpayers can navigate the process more confidently and efficiently.

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Annual Income Tax Return 1701 Example

Document Specifics

Guide to Writing Annual Income Tax Return 1701

Understanding Annual Income Tax Return 1701

Common mistakes

Documents used along the form

Similar forms

Dos and Don'ts

Misconceptions

Key takeaways

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