BIR Form No. 1701 (January 2018) Review

A complete set of vocabulary flashcards covering the specific classifications, alphanumeric tax codes, deduction methods, and calculation schedules found in BIR Form No. 1701.

BIR Form No. 1701

Annual Income Tax Return for Individuals (including MIXED Income Earner), Estates and Trusts.

Alphanumeric Tax Code (ATC) II011

Compensation Income.

Alphanumeric Tax Code (ATC) II012

Business Income-Graduated IT Rates.

Alphanumeric Tax Code (ATC) II013

Mixed Income–Graduated IT Rates.

Alphanumeric Tax Code (ATC) II014

Income from Profession–Graduated IT Rates.

Alphanumeric Tax Code (ATC) II015

Business Income - $8\%$ IT Rate.

Alphanumeric Tax Code (ATC) II016

Mixed Income – $8\%$ IT Rate.

Alphanumeric Tax Code (ATC) II017

Income from Profession – $8\%$ IT Rate.

Optional Standard Deduction (OSD)

A method of deduction representing $40\%$ of Gross Sales/Receipts/Revenues/Fees as per Sec. 34(L) of the NIRC.

Itemized Deduction

A method of deduction under Sec. 34(A-J) of the NIRC.

$8\%$ Flat Income Tax Rate Eligibility

Available if gross sales/receipts and other non-operating income do not exceed Three million pesos ($P3M$).

Centavo Rounding Rule

$49$ Centavos or Less drop down; $50$ or more round up.

Taxable Compensation Income Formula

Gross Compensation Income minus Non-Taxable / Exempt Compensation.

Net Sales/Revenues/Receipts/Fees

Sales/Revenues/Receipts/Fees minus Sales Returns, Allowances and Discounts.

Net Income/(Loss) for Itemized Deduction

Gross Income/(Loss) from Operation minus Total Allowable Itemized Deductions.

Item 29 Allowable Reduction

A reduction of $P250,000$ from gross sales/receipts for purely self-employed individuals and/or professionals using the $8\%$ flat income tax rate.

Schedule 4 Ordinary Allowable Itemized Deductions

Business expenses such as Bad Debts, Charitable and Other Contributions, Depletion, Depreciation, and Rental.

NOLCO

Net Operating Loss Carry Over, calculated by subtracting Ordinary Allowable Itemized Deductions from Gross Income.

General Professional Partnership (GPP)

An entity where a partner receives an Amount/Share in Income, reported as other non-operating income.