TAXATION- The act of collecting taxes. - This power is vested in the government, whether local or national.TAXES - are compulsory payments associated with income, consumption, or holding of property that individuals and corporations are required to make each year.THE NEED FOR TAXATION- 1. As funds to maintain the various functions of the government, and the different activities it deems important.THE NEED FOR TAXATION. To sustain viability of the government in providing the necessary services for the people.OBJECTIVES OF TAXATION1. to raise funds. to redistribute wealth3. to regulate consumption4. to protect local industriesINCOME TAXTAX ON INDIVIDUALSndividuals, as income taxpayers, fall into two general categories:a. citizens b. aliensINCOME TAXA citizen may be a resident citizen or a non-resident citizen.INCOME TAXAlien individuals1. are classified into resident aliens, and non-resident aliens.. are in turn classified into a. those engaged in trade, business or practice of profession in the Philippines and b. those not engaged in trade, business or practice of profession, in the Philippines.An individual is a citizen of the Philippines by definition of the Constitution of the Philippines.Under the Constitution, a. an individual may be a citizen of the Philippines at birth (i.e. one whose father or mother is a citizen of the Philippines), b. or may become a citizen of the Philippines sometime after birth (i.e. one who is naturalized in accordance with law). Philippine citizenship may be lost or required in the manner provided by law.A non-resident citizenis a citizen who:a. establishes to the satisfaction of the Commissioner of nternal Revenue the fact of his physical presence abroad with a definite intention to reside therein; orb. leaves the Philippines during the taxable year to reside abroad;1. as an immigrant; or. for employment on a permanent basis; or3. for work and derives income from abroad and whose employment thereafter requires him/her to be physically abroad most of the time during the taxable year; orc. was previously a non-resident citizen and who arrives in the Philippines at any time during the taxable year to reside permanently in the Philippines.He shall be considered a non-resident citizen for the taxable year in which he arrives in the Philippines with respect to his income derived from sources abroad until the date of his arrival in the Philippines.A citizen of the Philippines who shall have stayed outside the Philippines for 183 days or more by the end of the year is a non-resident citizen for the year.PERSONAL EXEMPTIONS OF CITIZENS AND RESIDENT ALIENSa. Married person:f only one spouse is deriving taxable income, only said spouse may claim the personal exemption.f a married person is not legally separated from his spouse, his basic personal exemption is P32,000.f legally separated from the spouse, without any dependent, his basic personal exemption is P20,000.f legally separated from the spouse with a dependent, he may qualify as head of the family, with a basic personal exemption of P25,000 and with an additional exemption of P8,000, if the dependent is a child.b. Head of the Family:(Under the National nternal Revenue Code)An unmarried or legally separated man or woman with:a. one of both parents, b. or both parents, c. or with one or more brothers or sisters, d. or with one or more legitimate, recognized natural or legally adopted children, Living with and dependent upon him or her:a. for their chief support, b. where such brothers, sisters or children are not more than twenty-one years of age, unmarried, and not gainfully employed, c. or where such brothers, sisters or children, regardless of age, are incapable of self-support because of mental or physical defect.The term "chief support means more than one-half of the requirements for support.Thus, if two children contribute equal amounts for the support of a parent, neither one of them may qualify as head of the family.s a taxpayer, a parent, brother, or sister may qualify forhead of the family, and is entitled to the basic personal exemption of P25,000, but not entitled to additional exemption.c. DependentA dependent, for whom a head of family or a married person may claim an additional exemption of P8,000.1. is a legitimate, illegitimate or legally adopted child,. chiefly dependent upon and living with the taxpayer, 3. if such dependent is not more than twenty-one years of age, 4. unmarried and not gainfully employed, 5. or if such dependent, regardless of age, is incapable of self-support because of mental or physical defectd. Single individual, widow/widower or married individual judicially decreed as legally separated with no qualified dependent has a basic personal exemption of P,.arginal ncome Earner -refers to individuals:1. not deriving compensation as an employee under an employer-employee relationship . but who are self-employed and deriving gross sales/receipts not exceeding P1, during any 1-month period.They shall file this return reflecting herein the net income from business.hen to File- The Returns of the taxpayers shall be filed on or before the 15th day of April of each year covering income for the proceeding year.- r. Robert de Castrondividual ncome Tax ReturnDecember 31, 5Gross Compensation ncomeP 375,.Less: Exemptions:a. arried 5,b. children 4x51, 15,.Taxable ncome P 5,.Tax Duea. Basic Rate ,5.b. Excess (5, - 14,)85, x 5% 1,5.Tax Due 43,75.Less: Tax withheld 3,.Tax refundable/payable 13,75. If the tax withheld is equal to the tax due then there is no tax refund or payable.- r. Robert de Castrondividual ncome Tax ReturnDecember 31, 5Gross Compensation ncomeP 375,.Less: Exemptions:a. arried 3,b. children 4x8 3, 4,.Taxable ncome P 311,.Tax Duea. Basic Rate 5,.b. Excess (311, -5,)1, x 3% 18,3.Tax Due 8,3.Less: Tax withheld 11,.Tax refundable (41,3.) If the tax withheld is greater than the tax due, you have a tax refund.- r. Robert de Castrondividual ncome Tax ReturnDecember 31, 5Gross Compensation ncomeP 375,.Less: Exemptions:a. arried 3,b. children 4x8 3, 4,.Taxable ncome P 311,.Tax Duea. Basic Rate 5,.b. Excess (311, -5,)1, x 3% 18,3.Tax Due 8,3.Less: Tax withheld 59,.Tax payableP9,3.If the tax withheId is Iesser than the tax due you are stiII IiabIe to pay the remaining amount.W r Erwin Red is a successful judo instructor. He is legally separated with 7 children ages, 25,24,23,22,21,18,16.. He earns an annual income of P501,275.00.He lives with his mentally challenged father. His tax withheld is P 75, 450.00 Solve for his income tax return.