HOW TO UPDATE THE PERSONAL EXEMPTION WITH THE BIR

For taxpayers who are having difficulty in updating their status with the BIR, this might be of help. 

The following are the procedures: 

1)     Fill out four (4) copies of BIR Form 2305 (Certificate of Update of Exemption and of Employer's and Employee's Information) to be submitted to your employer.

 

The following sections of form 2305 are needed to be filled out by the employee:

            1. Part I - Employee Information

            2. Part II – Personal Exemptions

            3. Part III – Additional Exemptions

2) Have your employer accomplish Part V (Employer Information) of the Form and have them sign.

3) Submit the duly accomplished form to the Revenue District Office (RDO) where the TIN is registered.  Attach copies of the birth certificate to the form as evidence of relationship to dependent as well as to validate the ages. The RDO will receive the form, take 2 copies and return 2 copies to you. One copy must be kept for your file and the other copy to be submitted to the employer for purposes of updating withholding tax rates on payroll.  Submission to the RDO may be done by either the employee personally or thru the company's liaison officer. 

4) Inquire from the receiving officer when the account be updated.

The following attachments/documents are required only if applicable:

(1) Marriage Contract;

(2) Birth Certificate of each qualified dependent child(ren), certified by the Local Civil Registry Office/National Statistics Office(NSO)/equivalent document issued by a government office previously requiring certified copy showing the name of parent/s and the name of the QDC with birthdate (e.g. passport of QDC as certified by company’s Human Resource Officer);

(3) Certificate of employment of the husband if he is working abroad;

(4) Sworn Declaration and Waiver of Right to Claim Exemptions of Qualified Dependent Child(ren) by the Husband (Annex “F”of RR 10-2008) in case wife is claiming the additional exemptions of the children;

(5) Medical Certificate of qualified dependent child, if physically/mentally incapacitated;

(6) Court decision of legal adoption of children;

(7) Death Certificate; and

(8) Other documentary evidence, where the above documents are not available

In regards to the personal exemptions, I recently spoke with acquaintances regarding the allowable deduction and the additional exemption in filing of the Income Tax Return and they were confused on why the BIR does not allow parents or siblings as dependents. 

The RA 8424 and the RA 9504 provided  the  old and the new Personal Exemption and I made a concise comparison and this is what I found:

 

SUMMARY OF THE PERSONAL EXEMPTION \ ADDITIONAL EXEMPTION
Personal Exemption		RA 8424        (RR 2-1998)		RA 9504     (RR 10-2008)
Single	P	20,000.00	P	50,000.00
Head of the Family		25,000.00
Married		32,000.00		50,000.00
Additional Personal Exemption
Per Qualified Dependent	P	8,000.00	P	25,000.00

The RR also stated that the only Qualified Dependents are children. Thus, the Head of the Family was not included in the said new regulations.

 

The  new personal exemption is effective upon receipt of the BIR Form 2305 by RDO. You need to submit a copy of the said BIR Form to the employer for them to be able to update their record and the computation of the tax due.