File a tax return / It’s tempting to think you don’t need to file a tax return if you didn’t make enough money to owe any tax. However, there are still good reasons to file your taxes every year, whether you owe money or not.
Filing Is Required By Law
First and foremost, the law requires you to file a return if your income exceeds a certain threshold. In the Philippines, you must file if your annual gross income exceeds Php 250,000.
Even if you didn’t make enough to ace any tax, not filing when required can lead to penalties, interest charges, and other problems with the Bureau of Internal Revenue (BIR).
Don’t skip out just because you think your tax bill will be zero.
You May Be Owed a Refund
If your employer withheld taxes from your paycheck, you could be due for a refund when you file your return. The only way to get that money back is to file.
The BIR won’t just send you a refund without a filed return showing you overpaid during the year. Don’t leave that money on the table if it rightfully belongs to you.
Claim Tax Benefits You’re Entitled To
There are tax benefits like deductions and credits you can claim by filing, which will reduce your taxable income and taxes owed.
For example, contributions to PhilHealth and Home Development Mutual Fund are deductible. Lower income Filipinos may also qualify for refundable tax credits. But you have to file a return to claim them.
Establish a Compliance Track Record
Regularly filing taxes builds a compliance record with the BIR. This can facilitate smoother tax situations for you down the road, compared to someone who skips years of filing. Establishing a history of compliance is just good practice.
Filing a Tax Return Is Fast and Easy
Modern e-filing makes submitting your simple return fast and efficient. The BIR website provides softwares for taxpayers to use. So there’s really no good excuse for not taking a few minutes to file a tax return, even if you don’t owe anything for the year. Stay compliant, establish a track record, and claim any refunds by filing.