How can employees claim their income tax refund? If you are an employee, you may notice that your employer is deducting and withholding a tax amount on your compensation income on a monthly basis. Your employer is just actually complying with the Bureau of Internal Revenue (BIR).
Employers as withholding agents
In the Philippines, employers are required by the National Internal Revenue Code to deduct and withhold income tax from the compensation of their employees with some exemptions (SEC. 79.A, NIRC, as amended), and then remit them to the BIR by filing the monthly BIR Form 1601-C (Monthly Remittance Return of Income Taxes Withheld on Compensation). At the end of the year and before January 31 following that year, employers also file the annual BIR Form 1604-CF (Annual Information Return of Income Tax Withheld on Compensation and Final Withholding Taxes) to report all the withholding taxes on compensation they have remitted to the BIR based on the BIR Form 1601-C they have filed for the entire calendar year.
In a simple explanation, here’s how it goes: employees earn salary or compensation income – compensation income is taxable and should be paid with the BIR. But instead of requiring the employees to file and pay their income tax directly to the BIR, employers are the ones who are deducting, collecting, withholding, and, remitting their income tax to the BIR. In other words, employers serve as withholding agents for the employees’ income tax dues to the BIR. This is also called substitute filing because the employers are the ones who are filing the BIR forms to the BIR instead of the employees.
Employers compute each of their employee’s income tax payable for the month using methods and withholding tax tables prescribed by the BIR. Those computed amounts are what they remit to the BIR.
The excess of tax withheld over tax due of the employee
Now, at the end or before the end of the calendar year prior to the payment of the last payroll, employers compute the total income tax due from the compensation of each employee for the entire taxable year. During the computation, differences may arise between the “tax due from the employee for the entire year” and the “sum of taxes the employer has withheld from January to November”.
Sometimes, the “tax withheld by an employer on the compensation of the employee from January to November” exceeds the “actual income tax due from the compensation of the employee for the calendar year”. This excess is to be refunded by the employer to the employee.
Reasons why tax refunds exist
Over withholding or remittances of employees’ income tax on compensation usually happens when errors in computations occur or when an employee adds a dependent child before the closing of the year causing this to increase the amount of his or her additional exemption, which also reduce his or her income tax due.
An example of this event is when an employee gives birth to a child just before the year ends and claims him or her as an additional dependent for the taxable year.
How to claim your income tax refund
Your tax refund will usually be computed by your employer on or before the end of the calendar year but prior to the payment of the compensation for the last payroll period to determine year-end adjustments. However, when an employee changes status, he or she should file with the employer a new or updated withholding exemption certificate reflecting the change within 10 days from such change (SEC. 79.D.2, NIRC, as amended). This is why when your status changes, you should notify your employer immediately to reflect the change. The withholding exemption certificate you file with your employer is used by him in the determination of the amount of taxes to be withheld.
Once it is determined that the tax withheld from the employee’s compensation has exceeded his or her tax due for the entire year or that he has an overpayment of income tax, the employer is required to give the tax refund to such employee not later than January 25 of the succeeding year (SEC. 79.H, NIRC, as amended).
Take note that employers who will fail or refuse to refund excess withholding tax to employees are liable to a penalty, as imposed by the NIRC (SEC. 252, NIRC, as amended).
Therefore, if it is determined that you have a refundable tax from your compensation, you will ask it from your employer.
However, you need to make sure that you will provide your employer with your accurate and most updated withholding exemption certificate. This is because if you fail or refuse to file the withholding exemption certificate or if you commit fraud by willfully supplying false or inaccurate information in it, you will not be refunded and it will be forfeited in favor of the Government (SEC. 80.B, NIRC, as amended).
Reference: National Internal Revenue Code, as amended, BIR Form 1601-C, BIR Form 1604-CF
Disclaimer: New and subsequent tax rulings, issuances and or laws in the future may render the whole or part of the article obsolete or inaccurate. This article was published for informational use only and is not provided to serve as legal, tax, or investment advice. Hence, we do not guarantee and is not liable for the accuracy or completeness of any information provided herein or in any outcome as a result for using this information.
Victorino Q. Abrugar is a marketing strategist and business consultant from Tacloban City, Philippines. Vic has been in the online marketing industry for more than 7 years, practicing problogging, web development, content marketing, SEO, social media marketing, and consulting.
Hi! What should I do if the employer failed to give my tax refund? I already passed my 2316 in our HR department but when they released the ITR, some of us didn’t receive any and they do not have any explanation. They are not responding to our e-mails and inquiries as well, Please help. I want this to be done and necessary action to be done as well
Hi,
I was employed by a different company in the same year and did not get a tax refund for Company A. Do you think I can still get my tax refund after more than 2 years?
Left Company A – Oct 20, 2014
Joined Company B – Oct 27, 2014
Hi! Just like to ask regarding income tax returns. I am working in a BPO industry. The last job I had was last March 2016 and I start working in another BPO call center Oct 10, 2016. My colleagues received a refund and our contract is only for 3 months then. All of my colleagues received the same amount except me. They received P3, 200 while me they only gave P769.83. And the reason according to them was because I received a tax refund from my previous employer. I am somewhat confused because this was just the first time that I did not received the same ITR as my colleagues did. This is also the first time that I work for 3 months because they offered a big salary but this is just base pay where you will receive that particular amount based on your attendance and performance. But what I know is that if this is just for 3 months, the salary should be fix and there should not be any deductions since you will not your full time with them. Please clear me on this matter as I want to know if I deserve more for the tax refund. Thanks
Good afternoon! Nag file po ako ng Certificate of Update of Exemption last Dec 2016 together with the required birth certificate of my son (i ka 4 child na). Makakatanggap po ba ako ng Tax refund? I work in the PNP po. Salamat
Hi. If because of your tax status updates the income tax withheld by your employer exceeds the income tax you should only pay, then you are entitled to a tax refund. You may ask your accountant a computation of your tax withheld vs. your income tax due for the year to check if there are over payment or over withholding of your income tax.
I would like to ask what are the sactions of your company if they do not give your income tax. We are still not receiving our income tax return where they already told us that we have tax return. And how to file it? Thank you so much.
Employers must issue BIR Form 2316 to employees on or before the 31st of January of the succeeding year in which payment was made. In case of termination of employment, the form must be issued on the same day when the last payment of wages is paid. Failure to issue the form to employees on the said date can cause the company penalties.
During the time I was still employed with GC Services, I filed my 2316 and all other necessary documents to be able to correct my tax status from S to ME4. I asked for a refund from my prev employer and was told by Cha, HR rep that it will be given year end unless I resigned. Due to unexpected circumstance, I resigned. Upon receiving my back pay, I wasn’t given any tax refund and was told that my current employer will be the one to provide the tax refund. How is it true?
Hi. As stated in the article, the employer is required to give you the tax refund not later than January 25 of the succeeding year if such employer has indeed over withheld income tax on your compensation.
morning. i was employed only by this September
and my gross income is 12500(semi monthly). but my tax is just only 36.83, how it could be happened?
tnx
I was employed 2 times in a year and did not finished the 6 months terms, Is it possible I can get a refund from my previous companies. My HR friends said that if not finish the term, the employee who resigned can get their deducted tax. Please advise
Hello. If the actual income tax withheld by your employer and remitted to the BIR is greater than your actual income tax due and payable at the end of the year, then you may be entitled to tax refund. Please ask computation from your employer’s accountant.
Hi,
I was working for company “A” from January til July and i had to resign because the ownerof the company offered me a better position in his other company which is company “B” so i had to resign. Company “A” gave me my tax refund when I left. And now I just resigned from company “B” as well. Will I also get a tax refund from company B? They are also telling me that they have to consolidate my taxes from comp a and B. Is that really normal?
Hello. You will receive a tax refund if the taxes they withheld is more than the actual tax you are liable to pay to the BIR. Thus, it will still depend on the computation and other variables. If their filing of BIR Form 1604CF is also consolidated then it may be normal.
Hello! Ask ko po nag start ako Jan. 9, 2017 hanggang ngayon employed pa rin po ako. Makaka kuha pa rin ba ako itr kahit naka 1 year na ako sa company? Kase yon reason ng employer ko wala daw ako tax refund kase naka 1 year na ako.
Thank u in advance for the speed reply. I need the answer quick. Thanks!
Hi, I am a single mom of two, I got employed back in 2016. Recently I checked my kiosk and find out that my tax exempt code is S and not S2 though I declared my 2 children as my dependents, from then until December of 2017 I got taxed as a single individual and not a single with 2 children, How can I file for tax return or maybe tax correction, that was a whole year of tax overpayment. Thank you in advance:)
For update of information, BIR Form No. 2305 Certificate of Update of Exemption and of Employer’s and Employee’s Information is filed with the RDO within 10 days from the change of status. A copy is also given to the employer for their reference of computation of withholding tax. But if you have already furnished the right information before, then it should be your employer who will correct the computation of your income tax withheld at the end of the year, and refund to you the overpayment of income tax, if any.
I’m resigning from my current job in April to join my husband who relocated to another country. Will I get a full tax refund for all the taxes withheld by my company from Jan-March since I won’t reach the taxable annual income of P250k?
If yes, when should I get my tax refund according to law? Can I get it with my back pay? Hope to hear from you. Thank you in advance.
Hello. Yes, you should get your tax refund from your employer for the overwithholding of your income tax. Sorry, but I can’t find a particular law at this moment, but the tax refund should be computed upon your separation from your employer. If I am the employer, I would pay the tax refund upon separation, along with other backpays to avoid liability in the future.
i have 2 kids since 2015 and my salary will be less by employer every month for tax until now 2018 how can i get i tax refund because the accounting said i dont have a tax refund but most of all they have a tax refund i am regular from the company and my salary is 15k thank you .
ask lng po bakit yung eployer namin hindi nag sabi na meron palang rfundable sa tax sence 2011 pa po kami kinakaltasan ng tax ni isang refund wala nga eh pano po namin makuha e ang tagal na piro dito paren kami nag tatrabaho sa kanilang agency,,,,pa help naman po kahit TIN # namin wala kami nyan panu ng yari yun? need help tnks
ask q lng po .. makakakuha po ba aq ng refunds dahil wala na pong tax minimun wage earners ? employed last year .. june 14 to dec 30 2017 ..