How Online Freelance Workers Can Get An ITR

One of the biggest questions online freelance workers have long wanted to ask but are afraid to do so is, “How do I pay taxes?”

Chances are, a good number of online freelance workers today want to pay taxes but have no idea how to do it. They are aware of what taxes are supposed to do.

Bureau of Internal Revenue – image source: philstar.com

You see, taxes are mainly used to allow the government to run. It is used to build roads and bridges. It is used in paying the salaries of public servants. It is used for basic services that some online freelance workers may even take advantage of. In a nutshell, taxes are supposed to be used to make our lives better.

These online freelance workers are also aware of the benefits of getting an Income Tax Return (ITR) from the Bureau of Internal Revenue (BIR). The ITR is quite useful in getting a loan, be it a car loan, housing loan or any other type of loan.

In order to pay taxes and get an ITR, it will be necessary for you to register as a self-employed individual at the BIR. The requirements for a registering as a self-employed individual are as follows:

• NSO Birth Certificate
• Community tax certificate (cedula)
• Barangay captain certification to verify your address
• Mayor's Permit, if applicable
• DTI Certificate of Business Name, if applicable
• BIR Form 1905 (for those who already have a TIN and used to work in an office, to change your Regional District Office)
• BIR Form 1901 (registration form page 1 and page2)
• BIR payment form (Form 0605)

BIR Form 1901

1.     The first form you have to fill up is the BIR Form 1901.

·    Since online freelance workers derived their income exclusively from online work, the taxes they have to declare are income taxes and Other Percentage Taxes Under the National Internal Revenue Code (freelancers should put in “Self-Employed” in this portion of the form.)

·   Under the Registration of Books of Accounts portion, freelancers should put in “Cash Receipt Book” and Cash Disbursement Book.”

o This is necessary since they have to issue receipts for transactions over P25 and maintain a disbursement book for expenses in the business.

2.   The next step is to fill out BIR Form 0605 to be able to pay for the Certificate of Registration (COR) or BIR Form No. 2303.

·         The annual registration fee is P500

3.   Submit BIR Form 1901 and Form 0605 at the local BIR office and attend a seminar to get the COR.

BIR Form 0605

4.     Fill up BIR Form 1906 or the Authority to Print form for your application for Invoices/ Receipts.

5.     Register your books of account and have them stamped at the BIR RDO.

Once you have gone through the entire procedure, it will be necessary for you to keep in mind the following the step, you will have to think about the following taxes to pay and the forms to fill out:

·         Monthly Percentage Tax or 3 percent of the gross income

o Form 0605 and Form 2551M

o Tax is due every 20th day of the month

·         Quarterly Income Tax (based on net income)

o Form 0605 and Form 1701Q

o Tax is due on April 15, August 15 and November 15

·         Yearly and Final Quarter Payment of Income Tax

o Form 0605 and Form 1701

o Tax is due on April 15 of the next year

·         Annual Registration Fee for renewal of the Certificate of Registration

o Forms: 0605

o Registration fee is due on or before January 30 of each year

Since it may take some time before you can get used to the system, it may be good for you to ask for some help from a friend who is an accountant, or better, you can have an accountant work on your books for you.