Yes it is tax season again and it is the busiest time for accountants who do ITR(Income Tax Return) preparations as a living. I know too that many people hate filling ITR specially when they end up paying additional tax.
But aside all things there is good in filling your Income Tax Return. First of all you filing your Income Tax Return and paying the right tax are contributing to the progress of the country. As a citizen you should be helping in the development and progress of your nation. Your tax money helps build roads and bridges, provide basic medical care to, compensates our police and armed forces to protect and defend our country, and so much more.
Yes unfortunately some of that tax money is stolen, mismanaged, and misused but we should always think of the good side why we are paying taxes. It is up to us to make sure every peso we pay in our tax serves the purpose.
Now here are some benefits when you file your income tax return.
Proof of Income
Your income tax return once filed and stamp becomes a proof that you are earning income. Such document shows how much you have earned for the past year and this will be the proof when you are applying for loans or any other applications requiring you to show proof of income.
Proof of Identity
Before you are able to file your Income Tax Return you are required to get a TIN(Taxpayer Identification Number) which acts as your proof of identity. Such TIN will be use on all payments you will transact with the government specially when you are paying taxes. It may not be equated to the level of the Social Security Number in the US(in the US the primary identification use is the Social Security Number) but it does serve the same purpose.
Proof of credit worthiness
In a way filing your Income Tax Return is an indicator of your credit worthiness. As mentioned it serves as a proof of income thus creditors gets a picture of your finances. You may not be granted a huge loan but it will help you in one way or another in getting approved.
Tax Refund or tax credit(if you overpaid)
Most people specially in the Philippines don’t have refunds because if you are only employed with one employer your tax payments are actually calculated and adjusted on your last pay for the year thus making sure you don’t overpay or underpay. Also if you are employed with only one employer with a certain number of employees, your employer files your ITR in your behalf which is called Substituted Filling.
Now if the case is you are self-employed, have several employment(one permanent and several part-time), have businesses you are likely to pay several and periodical taxes and at the end of the year upon computing you might have overpaid thus you end up having a refund(which I believe is rare in the Philippines or you end up getting a tax credit instead).
File accurately and avoid being questioned by the tax authority
You know how notorious our tax agencies with corruption(I am not telling that people at our tax agencies are corrupt, only a few who have no shame in disgracing the agencies that eventually makes the people see the whole agency as corrupt). You will hear stories of a businessman, celebrities, and other personalities being sued or run after by the tax agency for not paying so and so tax periods only to know after a while that the person run after made “padulas” or grease money to stop the agency from bugging them.
This is one of the reasons why many foreigners see it hard to do business in the Philippines because of the very same agency(again it is not actually the agency but a few people in the agency but it is viewed that the whole agency is corrupt) that is supposed to implement the law is the same accepting bribes or grease money.
Filing an accurate Income tax return won’t spare you(specially when you have huge revenues which easily attracts corrupt people inside the agency) but in a way prepares you from rebutting against the antics of such people in the agency. A simple misfiling or a year not filed will surely cost you a lot of penalties, interest, surcharges; and interest on unpaid taxes, surcharges, and interest(yes even the interest on what you are supposed to pay plus all other penalties and charges is again charge with interest if you don’t pay on time).
Preparing an Income Tax Return forces you to neatly arrange your documents and other proofs(specially when you have your own business or self-employed) thus when you are questioned about your taxes you have all the proofs to show them(and yes unfortunately at times even with all proper documentation the bad people inside will keep on bugging you just for you to give “under the table” to end such stupidity, I hope with the good outlook of the Philippines our statesmen will truly clean the government and be a government that the people respects).
If you have no idea how to prepare your tax return you ask people around you for tax help. There are also free tax help sites you can check out(like ), or go online to seek tax preparation software. If you have a CPA friend who prepares income tax returns ask them for their help of course at a discount.
Please be reminded that the last filing day for Income Tax Return for 2012 is on April 15, 2013, on a Monday.