Dr. Angelo is a budding Internist, married, his wife is not employed or engaged in any business. They have a 3 year old daughter Cassandra. He is practicing in 3 hospitals and clinics. How would he compute his income tax? How much does he need to pay in filing his Annual ITR before the April 15 deadline?
This guide is for doctors or physicians that are considered as self-employed or professional. Not under the employed sector. You must have filled up the registration BIR Form 1901 when you registered or you are considered employed but has more than 1 employer (mixed income).
As long as you already have with you your Form 2307, you can already compute tax due on your Annual ITR. You can get this form 2307 from the institution/hospital/clinic where you are practicing.
Once you have completed collecting all your form 2307. You are now ready to compute.
This guide will be for those who opted to use the OSD or Optional Standard Deduction.
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 Return (AIF)/Financial Statements.
In a Nutshell, this is how you compute your Taxable income:
Gross Sales/Receipts
Less: Optional Standard Deduction
Net Income
Less: Personal & Additional Exemptions
Taxable Income
Tax Due xxx
Let us answer the sample case:
If you were Dr. Angelo, here are the steps you need to do:
Step 1: Get your Form 2307.
You need to consolidate all of them and add them up per quarter based on months they were withheld. From first quarter (January – March), second quarter (April – June), third quarter (July – September) and fourth quarter (October – December). Add them all up as seen below.
Step 2: To compute the Annual Income tax due:
Dr. Angelo has 1 qualified dependent, so there is additional tax exemption of 25,000. Each family is allowed to deduct 25,000 per dependent up to maximum of 4 dependents or 100,000. Please take note too, that if both couple are working, the husband is given the first priority to deduct unless he declares in writing that he is allowing his wife to get the necessary deductions of their dependent/s instead of him.
To compute for the Income Tax due, see this table:
From the computation above, the tax that still needed to be paid for the filing of the Annual Income tax return of Dr. Angelo is still, Php 18,250.48. He need to file form 1701 along with this payment before the April 15 deadline.
Even though April 15 is the deadline for Annual Income Tax Return filing. You should have known the importance of filing early. In fact, as early as January of the year, you can now file your Income Tax return to avoid the hassle and traffic once the deadline is near.
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wait for the updated Income tax calculator. Above is from previous 1997 Tax code.
Update on the TRAIN Law 2018:
Be informed,
Learn more here:
Part 1: The Ultimate Guide on How to Register as a Doctor/Physician in BIR
Part 2: How to Issue Receipts: Guidelines for Moonlighters/Starting Private Practice
Part 3: How to file INCOME TAX RETURN as a Physician
Part 4: Penalties for late filing of Income Tax Return for Doctors FILIPINO DOCTORS AND TAXATION
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Disclaimer: Though this article was based on reliable resources and comprehensive research, this article was provided for educational and informational purposes only, and doesn’t constitute formal professional advice. New laws, rules, issuance, and regulations may render this article obsolete or inaccurate in whole or in part. For more clarifications, please visit and inquire personally with your RDO.
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Hi! I graduated recently from my residency training and i will start working at a clinic which is one of my consultants this month for certain days only. Do i need to register with BIR as self employed already? Or should i ask if they will file a form 2307 for me. Thanks
Hi dra Diane, what was your previous qualification? Employee or self-employed?
I am previously employed.
-employee
Hi Dra, if you are planning to practice privately na. It’s better if you register na as self employed kasi you would be needing that in practicing privately. Register ka na. Refer to my post on how to register. Use your old TIN.
Thank you
Thank you for this information! It would be nice to check my accountants work in reference to this.
thank you
Mam ask ko po yung osd po ba ay fixed n po ba na 40 percent as mandated by law po
Hi Philip, yes it’s fixed as law dictates it.
Hi, Doc Pinky!
Thank you for this guide! When choosing OSD, are Philhealth/SSS/Pag-ibig payments no longer deducted?
You have the option to choose either the 40% “OSD” or the “Regular Allowable Itemized Deductions”.
If you opt for OSD (which is 40% of your gross sales/receipts for individuals), the OSD would be your “Deductions” instead of the Regular Allowable Itemized Deductions. SSS, GSIS, Medicare, HDMF and Other Contributions are included in the Regular Allowable Itemized Deductions. Hence, the OSD you will claim would be as if it already includes your SSS and PhilHealth.
Moreover, please be reminded that OSD should be opted throughout the year. If you opt OSD for the first quarter ITR – you must use OSD for the rest of the year (1st, 2nd, 3rd quarterly ITR and annual ITR). If you opt for the Itemized deductions, then Itemized deductions should be used throughout the year.
I see. Thanks, Doktora! 🙂
im previously using 40% deduction. can i change to regular allowable deduction this year? what will be the process . tnx
You have to just choose between osd or itemized at the start of the year. Once you have decided what to use, you can’t change it for the entire taxable year.
You have to start using the itemized deduction at the start of the taxable year. Whatever you used at the start of the year, that is what will be used in the entire year.
hi mam , can you also illustrate how to compute the quarterly tax. tnx
Sige soon.
Hello Doc, how do I declare and pay taxes for moonlighting duties na petty vouchers Lang ang iniissue? They don’t get my TIN nor I issue receipts to them. I will be filing for my ITR as mixed income (I’m a corporate MD with moonlighting jobs). Sa company, I simply ask for form 2307 right? How about dun sa mga Hindi ako employed doc? Thanks very much doc.
hi dra, Text me here 09258895433. (para i can advise you better). I need to tell some things i cannot post here.
Hello po Doc, good morning, just read “My Finance MD” thank you for the information. I would like to ask doc because im currently working as a company physician and i get paid by Retainers fee. I started working Since April 2013 but i havent filed anything. Now planning to file my ITR. What can i do po? Thank you very much.
Just file as is. Download the excel file on how to compute for your income tax and file as is. follow the instructions in the post.
Hi Doc Pinky. Would like to clarify a few things about the topics you posted on taxes. I have moonlighted in 2012 for 1 year before I went into residency training th following year. Had just finished the training last December and is currently moonlighting while preparing for the Diplomate exam. I was unable to register as a physician at the BIR when I first moonlighted. Can I still register now? Registration is at my RDO right?
Also, I am currently receiving PF with 10% tax deduction from the hospital I’m moonlighting. Should I issue receipt for every PF I receive? Do we get the receipts from the RDO as well po? Am I required to file percentage tax and VAT as a moonlighter? If I will receive honorarium from a clinic aside from the hospital that deducts tax on my PF, am I under the mixed income classification po? If the hospital declares me as a junior consultant reliever going on 24 hour duties and they’re deducting 10% tax from my PF, am I considered employed po? Thank you so much. Hope you will enlighten me on this. God bless po
Hi dra, I think if ever you register, you will be classified as mixed income since you have different sources for your income. If ever you have already registered, you will be receiving your receipts. You can issue receipts to those pf you are receiving. Then required ka na rin to file Monthly percentage tax. Vat di pa siguro depends on the income you are currently receiving.
Hi doc, im an er consultant starting my private practice. Im already registered at BIR. I receive my pf from the hospital with 10% withholding tax. Im am not required to issue receipts since they just give me vouchers and checks. How do i compute my tax? What is 3% monthly? Can i file my itr quarterly?
That’s fine. But if they asked for a receipt you need to issue them. The 3% monthly is the percentage tax, different from quarterly income tax return that you must file. Read more on the this: http://www.myfinancemd.com/filipino-doctors-taxation-monthly-percentage-tax/
Hi dra. So this is my dilemma, I have been moonlighting since 2012 but have not filed my taxes since. No 2307 or 2316 either from previous years. And I wasn’t able to work from may 2014-june 2016. Im working for a clinic now and as a moonlighter in a private hospital. The clinic is asking me to acquire form 2303, and I’m planning to file taxes early next yr. How do i go about this? Please help. Thank you.
Have your registered as a doctor already?
Not yet po dra.
That’s the first step you need to do first.
Hi dra, thank you for this post . So this is my dilemma, I have been moonlighting since 2012 but have not filed my taxes since. No 2307 or 2316 either from previous years. And I wasn’t able to work from may 2014-june 2016. Im working for a clinic now and as a moonlighter in a private hospital. The clinic is asking me to acquire form 2303, and I’m planning to file taxes early next yr. How do i go about this? Please help. Thank you.
Please register first as a physician.
See this post: http://www.myfinancemd.com/filipino-doctors-and-taxation-part-1-the-ultimate-guide-on-how-to-register-as-a-doctorphysician-in-bir/
Hi Dra! Thank you sa post mo. 🙂
Just want to ask. Paano yung mga filed na 2551M? saan siya i-apply sa 1701?
Thank you!
It’s the monthly percentage tax. It is applied as expenses if you are using the itemized ITR
Hello. Im not an MD but im also a self employed. I was wondering about the OSD option, just a quick question this calculation would also apply to me as a self employed right? Please advise thanks in advance
Yes. 🙂
Thanks Doc 🙂
Hi, can I deduct the monthly percentage tax from my annual ITR if I’m using OSD? Thanks.
Hi just asking if I can deduct my monthly percentage tax from my annual itr payment even if I’m using OSD.? Thanks.
Percentage tax is deducted as expenses in the itemized method. Hence, if you are using OSD, expenses are already computed there. You cannot deduct anymore the percentage taxes.
But doc u still to file quarterly right if u would like to do osd
Yes.
Good day Doc. I already obtained a certificate of registration as a physician. Do I still have to register with DTI if I plan to have my own clinic? I will not be selling any product, just purely consults. Thanks a lot!
hi Doc, no need na. Your main clinic will be your address that you indicated in your COR, if you plan to put up another clinic, you can make it your branch of your main. You just need to register that too.
hello. can i have a copy of your tax calculator? this would be very helpful! thanks!
wait for the updated one with the train.
Hi Doc! how to compute tax of employed doctors who receive commissions aside from basic salary? thank you.
How was your commissions taken? Are they taxed already? from where does it come from?
Good pm doc. Ask ko lang po if everyone needs to have PTR? What if I work under a company as a retainer? Do I still need PTR po? Thank you.
Yes doc, if from private ka. You need to get every year. But if you’re from public service, no need. 🙂
Hi doc. Thanks for this post, it is truly helpful but I’m still confused. My dilemma is that I’m currently moonlighting as a retainer physician in a clinic for few days a month. I’ve been with them since around July-Oct 2017 & then again since Dec 2017 until now. I receive copies of 2307 from them and just recently been told about filing taxes (since it’s fast approaching). My question doc is, is the BIR registration as physician a different form from filing for TIN (TIN was filed years prior to becoming a dr)? are SSS, Philhealth and PAGIBIG already part of OSD & how do I know how much is to be paid? I got all those prior to becoming a physician and my contributions are paid by my family, is it still deducted?
Getting registered to BIR and having a COR (certificate of registration) is different from just getting a TIN, you need to go to BIR, get registered before you can file and pay for your taxes.
Good day Dra. I just passed the board exam last year and been moonlighting as RELIEVER physician for 2 mons. I don’t have any regular schedule in companies and clinics and they pay me hourly. I did not get my PTR yet since it renews every year so I plan to get it this January, 2019. I have not registered yet as Physician but I plan to do it together with applying for my PTR. If ever, do I also declare in my ITR (in the future) the fees I acquired as reliever physician? Do they fall under an HONORARIUM because most clinics do deduct around 10% from the PF they give you. Thank you Dra.
Hello Dra Pinky! it is Feb 2019 and deadline for Annual ITR is fast approaching. I have obtained all my 2307s and 2316 from my employers, I am a mixed income earner and have already filed my 1701Q with the new TRAIN law updates. I tried filing my 1701 for 2018 and saw that the form in the latest version of ebirforms (v7.3) still uses the old tax table and not the updated table using the TRAIN law. They have a new 1701(A) form from the menu list but this only applies to purely business/sales earners. Should I wait for BIR to release a new version and hope that there is an updated form applying the TRAIN law? can you double check also, i might be doing something wrong or i might not have understood what the new 1701(A) form was for. I have been doing my taxes myself since i started my practice and don’t want to rely on an accountant who cannot understand my practice and how i earn my income. BTW, your website has been my go-to guide whenever I file my taxes or when i have questions about anything finance related! I have yet to catch your book in NBS, they are somehow not on display all the time. Thank you for your help!