How Much Personal Exemption Can I Claim?
August 12, 2017
Disclaimer: All the information below are own construction of the tax code and statutes by the author. This is not a legal advice and in no way Josquine Diaz's name can be used as reference in any purpose.
What are the possible exemptions that I can avail?
The current tax code in the Philippines allows each taxpayer to claim two kinds of personal exemption namely:- Basic Personal Exemption
- Additional Personal Exemption
Resident citizens and non-resident citizens engaged in business in the Philippines are allowed to claim P50,000 personal exemption annually. Resident aliens deriving income within the Philippines are allowed to claim both basic and additional personal exemption only if there is reciprocity.
Resident Citizens and non-resident citizens deriving income within the Philippines are also allowed to claim P25,000 additional personal exemption for each qualified dependent. However, taxpayers, who are either a head of the family or a married individual, can only be allowed to claim for a maximum number of 4 dependents. Qualified dependents include the following:
- Children, whether legitimate or illegitimate (please see the qualifications below)
- Children by legal adoption (naturally adopted children are not qualified dependents)
- PWDs within the fourth degree of consanguinity or affinity regardless of age (by blood or by law)
- Foster child provided that you are already providing the foster child chief support for a minimum of 1 year.
In default, the husband claims additional personal exemption not exceeding four qualified dependents. However, there are instances when wife can claim additional exemptions. Please refer to this article to know more about it.
How Can a Child be a Qualified Dependent?
All of the following must be satisfied:
1. Must be living with the parent who intends to claim additional personal exemption (however, if the child is, say, studying in a different place, as long as the parent is giving him chief support, this still can be allowed)
2. Not more than 21 years old
3. Unmarried
4. Not gainfully employed
Is Senior Citizen a Qualified Dependent?
Although Senior Citizen falls under the definition of dependent, they are still not qualified dependents for income tax purposes, thus, no additional personal exemption can be claimed. Whether he/she is your parent, or a closely related relative, the BIR does not allow it.
Section 7 Revenue Regulation 4-2006 clarifies that the benefactor of a senior citizen shall NOT, however, be entitled to claim the additional exemption of P25,000.
Illustrative Example
Spouses Jaime and Alejandra, both employed and resident citizens, have the following dependents:
- Alejandro, son 21 years old, not gainfully employed.
- Basilio, 18 living with his grandparents
- Carlos, 20, not gainfully employed but married
- Dante, 16 years old living with the tax payer.
- Enrique, son, 17 years old
- Felipe and Gustavo, twins, 19 years old.
- Henrico, brother of Jaime, blind.
- Ignacio, Jaime's father, senior citizen
How much total personal exemption can Alejandra claim?
The answer is just P50,000. Alejandra, since she is the wife, is only allowed to claim basic personal exemption.
How much is the total personal exemption of Jaime?
The answer is P150,000. (Basic Personal Exemption + Additional Personal Exemption).
1. Alejandro is a qualified dependent.
2. Basilio, although not more than 21 years old, is not a QD because he is living with his grandparents.
3. Carlos is not qualified because he is married.
4. Dante is a qualified dependent.
5. Enrique is a qualified dependent.
6. Felipe and Gustavo are qualified dependents.
7. Henrico is a qualified dependent because he is a PWD within the fouth degree of consanguinity.
8. Ignacio is not a QD.
There are six qualified dependents but according to our tax code, a maximum of four qualified dependents can only be allowed. So Jaime's additional personal exemption is P100,000.
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