Doctor’s Taxation: How to Compute your Income Tax Return (Part 5)

Compute Income taxDr. Angelo is a budding Internist, married, his wife is not employed or engaged in any business. They have a 3 year old daughter Cassandra. He is practicing in 3 hospitals and clinics.  How would he compute his income tax?  How much does he need to pay in filing his Annual ITR before the April 15 deadline?

 

This guide is for doctors or physicians that are considered as self-employed or professional. Not under the employed sector. You must have filled up the registration BIR Form 1901 when you registered or you are considered employed but has more than 1 employer (mixed income).

As long as you already have with you your Form 2307, you can already compute tax due on your Annual ITR. You can get this form 2307 from the institution/hospital/clinic where you are practicing.

Once you have completed collecting all your form 2307. You are now ready to compute.

This guide will be for those who opted to use the OSD or Optional Standard Deduction.

Optional Standard Deduction (OSD) – A maximum of 40% of their gross sales or gross receipts shall be allowed as deduction in lieu of the itemized deduction. This type of deduction shall not be allowed for non-resident aliens engaged in trade or business. An individual who opts to avail of this deduction need not submit the Account Information Return (AIF)/Financial Statements.

 

In a Nutshell, this is how you compute your Taxable income:

 

Gross Sales/Receipts

Less: Optional Standard Deduction

Net Income

Less: Personal & Additional Exemptions

Taxable Income

Tax Due                                                                              xxx

 

Let us answer the sample case:

If you were Dr. Angelo, here are the steps you need to do:

 

Step 1: Get your Form 2307. 

You need to consolidate all of them and add them up per quarter based on months they were withheld. From first quarter (January – March), second quarter (April – June), third quarter (July – September) and fourth quarter (October – December). Add them all up as seen below.

doctor income tax

Step 2: To compute the Annual Income tax due:

doctor income tax

 

Dr. Angelo has 1 qualified dependent, so there is additional tax exemption of 25,000. Each family is allowed to deduct 25,000 per dependent up to maximum of 4 dependents or 100,000. Please take note too, that if both couple are working, the husband is given the first priority to deduct unless he declares in writing that he is allowing his wife to get the necessary deductions of their dependent/s instead of him.

 

 

To compute for the Income Tax due, see this table:

doctor income tax

 

From the computation above, the tax that still needed to be paid for the filing of the Annual Income tax return of Dr. Angelo is still, Php 18,250.48. He need to file form 1701 along with this payment before the April 15 deadline.

 

Even though April 15 is the deadline for Annual Income Tax Return filing. You should have known the importance of filing early. In fact, as early as January of the year, you can now file your Income Tax return to avoid the hassle and traffic once the deadline is near.

 

Are you excited to compute yours?

 

Good News! Due to MyFinanceMD’s 3rd Anniversary this January. I have a free gift to all my doctor friends and fans!!!

 

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By joining this group, you are also be receiving my monthly exclusive newsletter especially made for doctors like you. The topics will range from investments, tips and insights especially tailored to your needs as doctors to improve your financial health. Doctors need financial doctors!

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Yes, I would like to Join the exclusive “MyFinanceMD Doctor’s Corner” and get my Free Tax Calculator. Click here now!

 

Be informed,

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Learn more here:

Part 1: The Ultimate Guide on How to Register as a Doctor/Physician in BIR

Part 2: How to Issue Receipts: Guidelines for Moonlighters/Starting Private Practice

Part 3: How to  file INCOME TAX RETURN as a Physician

Part 4: Penalties for late filing of Income Tax Return for Doctors FILIPINO DOCTORS AND TAXATION

Why are Most Filipino Doctors not RICH? Top 5 Obstacles Keeping Filipino Doctors from Becoming Wealthy

 

 

Do you need a Financial Consultant that knows exactly what you need to retire you and rich? Ask me here!

 

 Disclaimer: Though this article was based on reliable resources and comprehensive research, this article was provided for educational and informational purposes only, and doesn’t constitute formal professional advice. New laws, rules, issuance, and regulations may render this article obsolete or inaccurate in whole or in part. For more clarifications, please visit and inquire personally with your RDO.

 

 

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Pinky De Leon-Intal, MD, RFC
Doc Pinky is a licensed Medical Physician, Internationally Registered Financial Consultant, Certified Investment Solicitor and Associate Wealth Planner and Estate Planner of the Philippines. She loves to educate and spread financial literacy. She is a Lactation Consultant. She loves to travel. She is a devoted wife and mother.
Pinky De Leon-Intal, MD, RFC

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44 thoughts on “Doctor’s Taxation: How to Compute your Income Tax Return (Part 5)

  1. Diane De Leon

    Hi! I graduated recently from my residency training and i will start working at a clinic which is one of my consultants this month for certain days only. Do i need to register with BIR as self employed already? Or should i ask if they will file a form 2307 for me. Thanks

    • Hi dra Diane, what was your previous qualification? Employee or self-employed?

      • Diane de leon

        I am previously employed.

        • Diane de leon

          -employee

          • Hi Dra, if you are planning to practice privately na. It’s better if you register na as self employed kasi you would be needing that in practicing privately. Register ka na. Refer to my post on how to register. Use your old TIN.

          • Diane de leon

            Thank you

  2. Thank you for this information! It would be nice to check my accountants work in reference to this.

  3. Philip madrid

    Mam ask ko po yung osd po ba ay fixed n po ba na 40 percent as mandated by law po

  4. Marirose Valenzuela

    Hi, Doc Pinky!

    Thank you for this guide! When choosing OSD, are Philhealth/SSS/Pag-ibig payments no longer deducted?

    • You have the option to choose either the 40% “OSD” or the “Regular Allowable Itemized Deductions”.

      If you opt for OSD (which is 40% of your gross sales/receipts for individuals), the OSD would be your “Deductions” instead of the Regular Allowable Itemized Deductions. SSS, GSIS, Medicare, HDMF and Other Contributions are included in the Regular Allowable Itemized Deductions. Hence, the OSD you will claim would be as if it already includes your SSS and PhilHealth.

      Moreover, please be reminded that OSD should be opted throughout the year. If you opt OSD for the first quarter ITR – you must use OSD for the rest of the year (1st, 2nd, 3rd quarterly ITR and annual ITR). If you opt for the Itemized deductions, then Itemized deductions should be used throughout the year.

      • Marirose Valenzuela

        I see. Thanks, Doktora! 🙂

      • cristina

        im previously using 40% deduction. can i change to regular allowable deduction this year? what will be the process . tnx

        • You have to just choose between osd or itemized at the start of the year. Once you have decided what to use, you can’t change it for the entire taxable year.

        • You have to start using the itemized deduction at the start of the taxable year. Whatever you used at the start of the year, that is what will be used in the entire year.

  5. cristina

    hi mam , can you also illustrate how to compute the quarterly tax. tnx

  6. Cherie

    Hello Doc, how do I declare and pay taxes for moonlighting duties na petty vouchers Lang ang iniissue? They don’t get my TIN nor I issue receipts to them. I will be filing for my ITR as mixed income (I’m a corporate MD with moonlighting jobs). Sa company, I simply ask for form 2307 right? How about dun sa mga Hindi ako employed doc? Thanks very much doc.

    • hi dra, Text me here 09258895433. (para i can advise you better). I need to tell some things i cannot post here.

  7. Richmond

    Hello po Doc, good morning, just read “My Finance MD” thank you for the information. I would like to ask doc because im currently working as a company physician and i get paid by Retainers fee. I started working Since April 2013 but i havent filed anything. Now planning to file my ITR. What can i do po? Thank you very much.

    • Just file as is. Download the excel file on how to compute for your income tax and file as is. follow the instructions in the post.

  8. Kim

    Hi Doc Pinky. Would like to clarify a few things about the topics you posted on taxes. I have moonlighted in 2012 for 1 year before I went into residency training th following year. Had just finished the training last December and is currently moonlighting while preparing for the Diplomate exam. I was unable to register as a physician at the BIR when I first moonlighted. Can I still register now? Registration is at my RDO right?
    Also, I am currently receiving PF with 10% tax deduction from the hospital I’m moonlighting. Should I issue receipt for every PF I receive? Do we get the receipts from the RDO as well po? Am I required to file percentage tax and VAT as a moonlighter? If I will receive honorarium from a clinic aside from the hospital that deducts tax on my PF, am I under the mixed income classification po? If the hospital declares me as a junior consultant reliever going on 24 hour duties and they’re deducting 10% tax from my PF, am I considered employed po? Thank you so much. Hope you will enlighten me on this. God bless po

    • Hi dra, I think if ever you register, you will be classified as mixed income since you have different sources for your income. If ever you have already registered, you will be receiving your receipts. You can issue receipts to those pf you are receiving. Then required ka na rin to file Monthly percentage tax. Vat di pa siguro depends on the income you are currently receiving.

  9. Jm

    Hi doc, im an er consultant starting my private practice. Im already registered at BIR. I receive my pf from the hospital with 10% withholding tax. Im am not required to issue receipts since they just give me vouchers and checks. How do i compute my tax? What is 3% monthly? Can i file my itr quarterly?

  10. Debbie

    Hi dra. So this is my dilemma, I have been moonlighting since 2012 but have not filed my taxes since. No 2307 or 2316 either from previous years. And I wasn’t able to work from may 2014-june 2016. Im working for a clinic now and as a moonlighter in a private hospital. The clinic is asking me to acquire form 2303, and I’m planning to file taxes early next yr. How do i go about this? Please help. Thank you.

  11. Debbie

    Hi dra, thank you for this post . So this is my dilemma, I have been moonlighting since 2012 but have not filed my taxes since. No 2307 or 2316 either from previous years. And I wasn’t able to work from may 2014-june 2016. Im working for a clinic now and as a moonlighter in a private hospital. The clinic is asking me to acquire form 2303, and I’m planning to file taxes early next yr. How do i go about this? Please help. Thank you.

  12. Mel

    Hi Dra! Thank you sa post mo. 🙂

    Just want to ask. Paano yung mga filed na 2551M? saan siya i-apply sa 1701?

    Thank you!

  13. John Z

    Hello. Im not an MD but im also a self employed. I was wondering about the OSD option, just a quick question this calculation would also apply to me as a self employed right? Please advise thanks in advance

  14. anna

    Hi, can I deduct the monthly percentage tax from my annual ITR if I’m using OSD? Thanks.

  15. anna

    Hi just asking if I can deduct my monthly percentage tax from my annual itr payment even if I’m using OSD.? Thanks.

    • Percentage tax is deducted as expenses in the itemized method. Hence, if you are using OSD, expenses are already computed there. You cannot deduct anymore the percentage taxes.

  16. DA

    Good day Doc. I already obtained a certificate of registration as a physician. Do I still have to register with DTI if I plan to have my own clinic? I will not be selling any product, just purely consults. Thanks a lot!

    • hi Doc, no need na. Your main clinic will be your address that you indicated in your COR, if you plan to put up another clinic, you can make it your branch of your main. You just need to register that too.

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