🚀 Quick Start Guide
📝 Basic Steps:
- Select your income type (Employed/Self-Employed/Mixed)
- Enter your income details and frequency
- Choose tax regime (8% or Graduated for business)
- Add deductions and tax credits
- Review your tax calculation results
⚖️ Tax Regimes Explained
8% Flat Tax Regime
✅ Eligibility Requirements:
- • Annual gross receipts ≤ ₱3,000,000
- • NOT VAT-registered
- • Professional practice, trade, or business
💰 Tax Calculation:
Pure Self-Employed: (Gross Income - ₱250,000) × 8%
Mixed Income: Gross Business Income × 8%
📋 Filing:
ITR 1701A (annual) + 1701Q (quarterly)
Graduated Tax Regime
📊 Tax Brackets (TRAIN Law):
- • ₱0 - ₱250,000: 0%
- • ₱250,001 - ₱400,000: 15%
- • ₱400,001 - ₱800,000: 20%
- • ₱800,001 - ₱2,000,000: 25%
- • ₱2,000,001 - ₱8,000,000: 30%
- • Above ₱8,000,000: 35%
💰 Deduction Options:
- • OSD: 40% of gross income
- • Itemized: Actual business expenses
📋 Filing:
ITR 1701 (annual) + 1701Q (quarterly)
📊 Mixed Income Tax Rules (TRAIN/RR 8-2018)
🎯 What is Mixed Income?
Mixed income refers to earning from both employment (salary/wages) and business activities (freelancing, consulting, self-employment) in the same tax year. This is common among Filipino taxpayers who have multiple income sources.
💡 Examples: Office worker with weekend freelance projects, employee with online business, consultant with part-time employment
⚖️ TRAIN Law Mixed Income Rules (RR 8-2018)
🚨 Critical: No ₱250k Crossover for Mixed Income
Under RR 8-2018, mixed income earners do NOT get the ₱250,000 personal exemption applied to business income. The exemption is embedded in employment tax brackets only.
1. Combined Income for Tax Bracket Determination
Employment income + business income determines your overall tax bracket position (0%, 15%, 20%, 25%, 30%, or 35%).
2. Separate Tax Calculations
Employment uses standard withholding tax. Business uses your chosen regime with TRAIN-compliant rules.
3. Business Tax Formulas (TRAIN Compliant)
- • 8% Flat Tax: Gross Business Income × 8% (no ₱250k reduction)
- • Graduated Tax: Apply brackets to Net Business Income (gross - deductions, no ₱250k)
4. Credits Applied to Business Only
CWT (BIR 2307) and prior year excess credits offset business tax liability only.
🖥️ How to Use Mixed Income Calculator
Select "Mixed Income" from the user type options on the calculator homepage
Enter Employment Details: Your salary/wages and frequency (monthly/annual)
Enter Business Income: Quarterly business earnings (Q1, Q2, Q3, Q4)
Choose Business Tax Regime: 8% Flat Tax or Graduated Tax (see eligibility below)
Include CWT & Credits from business clients and prior year excess
📋 8% Flat Tax Eligibility Checklist
Your business income qualifies for 8% flat tax if ALL conditions are met:
- ✓ Annual gross business receipts ≤ ₱3,000,000
- ✓ NOT registered for Value Added Tax (VAT)
- ✓ Business income from professional practice, trade, or other business
If not eligible for 8%, you must use graduated tax rates with either OSD (40% of gross) or itemized business expenses.
📋 BIR Forms & Filing Guide
ITR 1700 (Employment)
- • Pure employment income only
- • Annual filing by April 15
- • No quarterly filing required
- • Employer handles withholding
ITR 1701A (Self-Employed)
- • Pure business income (8% or OSD)
- • Quarterly 1701Q filing
- • Annual 1701A summary
- • Self-assessment and payment
ITR 1701 (Mixed Income)
- • Employment + business income
- • Quarterly 1701Q for business
- • Annual 1701 consolidation
- • Separate employment certificate
📅 Quarterly Filing Deadlines (1701Q)
Filing Schedule:
- • Q1: May 15 (Jan-Mar income)
- • Q2: August 15 (Apr-Jun income)
- • Q3: November 15 (Jul-Sep income)
- • Q4: February 15 (Oct-Dec income)
Important Notes:
- • Deadlines may be extended by RMC
- • Always check latest BIR announcements
- • File even if no business income
- • Pay tax due with filing
⚠️ Important: Always verify current deadlines with the latest BIR Revenue Memorandum Circular (RMC) as filing dates may be adjusted annually.
📋 Required Documents
- • BIR 2316 (Certificate of Compensation)
- • BIR 2307 (Creditable Withholding Tax)
- • Business income records
- • Official receipts and invoices
- • Business expense receipts
- • Prior year tax payments
- • Bank statements (if applicable)
- • Business registration documents
💰 CWT (2307) Claiming Guide
📋 CWT 2307 Claiming Checklist
✅ Before Filing:
- ✓ Collect all BIR 2307 certificates from clients
- ✓ Verify 2307 amounts match your actual income
- ✓ Check 2307 validity (not expired/cancelled)
- ✓ Ensure 2307 covers the correct tax year
📝 During Filing:
- ✓ Attach 2307 certificates to your ITR
- ✓ Enter total CWT in the tax credits section
- ✓ Apply CWT only to business income tax
- ✓ Keep copies of all 2307 certificates
✅ What CWT Covers:
- • Professional fees and services
- • Rental income (commercial)
- • Commission income
- • Business income from clients
- • Contractual payments
❌ What CWT Does NOT Cover:
- • Employment income (use 2316 instead)
- • Personal services not in business
- • Investment income
- • Sale of personal property
- • Non-business transactions
⚠️ Important CWT Reminders:
- • Mixed Income: CWT only offsets business tax, not employment tax
- • Timing: CWT must be from the same tax year you're filing
- • Validation: Verify 2307 certificates with BIR's online system
- • Documentation: Keep 2307 certificates for at least 3 years
- • Excess CWT: Can be carried forward to next year or refunded
❓ Frequently Asked Questions
Q: Why is my mixed income tax higher than expected?
A: Under TRAIN/RR 8-2018, mixed income business does not get the ₱250,000 personal exemption. This is different from pure self-employment calculations.
Q: Should I choose 8% flat tax or graduated tax?
A: Compare both options using our calculator. Generally, 8% is better for high-income, low-expense businesses, while graduated with OSD works better for lower-income scenarios.
Q: Can I change my tax regime during the year?
A: No, you must choose at the start of the tax year. If you exceed ₱3M in gross receipts, you automatically switch from 8% to graduated tax.
Q: How do I apply CWT credits?
A: CWT from BIR 2307 certificates offsets your business income tax only, not employment tax. Include the total annual CWT in your calculation.
Q: What if I miss a quarterly filing deadline?
A: File as soon as possible to minimize penalties. Late filing incurs 25% surcharge + 12% annual interest + compromise penalty. Consider consulting a tax professional.
Q: Can I use both OSD and itemized deductions?
A: No, you must choose one method for the entire tax year. OSD is 40% of gross income, while itemized requires actual expense receipts.
Legal Disclaimer: This calculator provides estimates for planning purposes. Tax laws are complex and change frequently. Always consult with a qualified tax professional or CPA for official tax compliance and filing requirements. References: TRAIN Law (RA 10963), RR 8-2018, current BIR regulations.