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.