Computation for Tax Refund
People normally pay for their withholding tax and the necessary deductions are being computed by the accounting department of a given company. There is a table that serves as a guide to employers on how much should be deducted from their employee’s actual gross income. Normally it is between 5 to 32 percent depending on the employee’s income bracket. Big companies have particular software to compute for the taxes that’s why there are instances wherein tax adjustments should be made.
It is important for you to know the exact computation of the taxes that should be withheld from your salary so as to give you an idea on how much money goes to your taxes. Having the right information can be helpful so you’ll know if you’re eligible for a tax refund or not. Deductions are done on a monthly basis and at the end of the year when the final taxes are computed, the company that you are working for will know if they have deducted more than enough or not. If yes, they will give you a tax refund. There are three ways on how they can credit back the adjustment return.
- Some companies give the tax refund during the first month of the coming year. They usually credit it back to your account within the month of January. The actual date may vary depending on the company that you are working for.
- There are those who give the tax refund together with the 13th month pay and other bonuses. Bonuses are usually given on the first week of December. However, there are companies who give their refunds and bonuses on the 15th of December together with the salary. Companies have their own calendar dates and it would be better if you’re familiar on the dates when they give out these refunds and bonuses.
- There are companies who no longer withhold taxes during the last month of the year and this is their way of giving you your adjustment return. Most companies use the annualized withholding tax method for them to know if they have deducted too much from your salary.
Here is a sample computation for a tax refund though this may vary depending on your income bracket.
Gross: P180, 000.00
Less: P15, 000.00 >>> 13th Month Tax Exempt
P6, 000.00>>> Government Dues or exemptions (this is just an example and there may be variations on this part)
Taxable Income: P159, 000.00
Tax Due For the Year: P39, 750.00
Tax w/held from Jan to Dec: P43,250.00 / 12 = P3, 604.17 (that means that the average withholding tax being deducted from your salary each pay day is P1, 802.085)
Tax Refund: P3,500.00 (this should be the total amount that you should be getting from your tax refund)
You can ask the accounting department in your office if you have any further questions regarding your taxes and tax adjustments for that matter. They will surely oblige and give you the exact computation that you are asking for to further enlighten you why they came up with such numbers. After all, it’s your money and you worked hard to earn that salary.
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