MARY JOY P.

JUNIO, CPA Notre Dame of Midsayap College Midsayap, Cotabato

means the pertinent items of gross income, less the deductions and/or basic personal and additional exemptions, and special deductions, if any, authorized for such types of income by the NIRC or other special laws.

Compensation income Less: Personal exemptions Health insurance paid Net taxable compensation Business income Less: Business expenses allowed Net Business income Add: Capital gains Passive income without Total taxable income

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Is based on his/her net taxable income. The income tax rate to be used is the normal income tax rate as provided by Section 24(A) of the NIRC.

Mr. Cruz Compensation income P300,000 Withholding taxes 34,000

Mrs. Cruz P180,000 24,500

Rent income of P120,000 is derived from the couples conjugal property. Mr. and Mrs. Cruz have 4 qualified dependent children.

Mr. Cruz Mrs. Cruz Compensation income P300,000 P180,000 Less: Personal exemptions Basic 50,000 50,000 Additional 100,000 Taxable compensation 150,000 130,000 Add: Rent Income 60,000 60,000 OSD (40%) (24,000) (24,000) Total taxable income P186,000 P166,000

Mr. Cruz Income tax on P140,000 P 22,500 Income tax on excess (25%) Mr. Cruz 11,500 Mrs. Cruz Income tax due 34,000 Less: Withholding tax 34,000 Income tax payable P-0-

Mrs. Cruz P 22,500

6,500 29,000 24,500 P 4,500

Interest, prizes, royalties, etc. Cash or property dividends

Are imposed on sales or exchanges of properties not used in business.