1. COMPUTATION OF
INCOME TAX

2. Computation of Income Tax
 In order to understand the concept described above, let us
use the hypothetical data:
Mr. De Castro is gainfully employed as a full-time
professor at the Far Eastern Academy. His monthly salary is
P85, 000.00 and said academy deducted 32% of his salary
for tax. He is married, with five (5) children namely: Jackie,
25 years old but mentally retarded; Celine, 22years old;
Andrew, 19 years old; Ely, 18 years old; and Ben, 15 years
old. Solve the monthly and annual tax of Mr. De Castro.
Identify if there is an overpayment/tax payable using the
following allowable deductions:
SSS= P700.00/Monthly
Pag-IBIG= P200.00
PhilHealth= P200.00
Union Due= P100.00

3. Given:
 Total allowance reductions
: P1, 200.00/month x 12 = P14, 400.00/year
 Gross income
: P85, 000.00/month x 12 = P1, 020, 000.00/year
 Tax deduction from his employer (32% of his salary)
: P1, 020, 000.00 x 0.32 = P 326, 400.00

4. Given:
 Tax income
: P85, 000.00(month income) –P1,200.00(allowance deductions)
= P83, 800.00
 Annual tax of Mr. De Castro
: P83, 800.00 x 0.32 = P26, 816.00(monthly tax) x 12 = P321,
792.00

5. Computation:
 A. Single
 Gross income
: P1, 020, 000.00 - P14, 400.00(allowance
deductions) = P1, 005, 600.00
 Gross taxable income
: P1, 005, 600.00 – P50, 000.00 (personal
exemptions) = P955, 600.00

6. Computation:
 Taxable income (Notes: Using the tax
table, tax table, tax due is P125, 000.00 + 32%
of the excess of P500, 000.00)
: P955, 600 – P500, 000 = P455, 600 x 0.32 =
P145, 792 + P125, 000 = 270, 792.00
 Tax due from his employer
: P326, 400.00
 Tax withheld per BIR 1700
: P270, 792.00

7. Computation:
 Overpayment of Mr. De Castro from
his employer
: P55, 608.00(refundable)

8. Computation:
 B. Married with 4 Qualified Dependents
 Gross income
: P1, 020, 000.00 - P14, 400.00(allowance
deductions) = P1, 005, 600.00
 Gross taxable income
:P1, 005, 600.00 – P150, 000.00 (personal
exemptions + 4 Qualified dependant) = P855,
600.00

9. Computation:
 Taxable income (Notes: Using the tax table,
tax table, tax due is P125, 000.00 + 32% of the
excess of P500, 000.00)
: P855, 600 – P500, 000 = P355, 600 x 0.32 =
P113, 792 + P125, 000 = 238, 792.00
 Tax due from his employer
: P326, 400.00
 Tax withheld per BIR 1700
P238, 792.00

10. Computation:
 Overpayment of Mr. De Castro from
his employer
: P87, 608.00(refundable)