Taxes done in philippines??

[dj3642]

On 1/9/2020 at 10:55 AM, davewe said:

As I understand it most all rules for filing are the same whether you live in the US or abroad. As I said I always file out of habit, but here's the rules:

"Not all Americans need to file a federal tax return. Those who don’t earn enough in income aren’t required to by law. Whether you make the cut depends on your filing status and age.

Single filers must file a return if they earn at least:: $12,000 if under 65; $13,600 if 65 or older

Married filing jointly filers must file a return if they earn at least:: $24,000 if both spouses are under 65; $25,300 if one spouse is under 65 and one is 65 or older; $26,600 if both spouses are 65 or older"

Then i guess i misunderstood. .. so i have earned NO income for the last year EXCEPT interest on bank accounts here in the philippines and it comes no where near the tipping point..  but do we need to file PHILIPPINE taxes?? or does that go the same way?? usually interest on bank accounts does not have taxes taken out.. 

[dj3642]

14 hours ago, OnMyWay said:

You don't have to file Philippine taxes just because of interest income.  Your bank already deducts taxes.  Unless you have a LOT of money in the bank here, the interest and taxes are piddling amounts and not worth worrying about for Philippine taxes.

For U.S. taxes, you do need to report that Philippine bank interest on your U.S. return, unless it is below a threshold.  I think the threshold is $10 or something a bit higher.  The banks report it to the IRS via FACTA rules.  However, you can report the PH taxes withheld on your U.S. return and get a tax credit.

If you do start a business here and have income, you need to file PH income taxes, but I suspect many do not.  The you also have to report that income to the U.S. IRS, but as mentioned for interest income, you can get a tax credit for the PH taxes paid.  This can get complicated and I'm fairly certain you have to file a long 1040 and then use the proper additional forms.

ok well i DO have interest exceeding 10 dollars over here. i was foolish enough to move my money over from the US only to find out here the insured amount in the US IS guaranteed up to 250000 ( way  more than i have LOL).. but over here in the PH its only guaranteed to 10K.. i have since moved money back to US.. but i do have interest that i need to report for this past year. i didnt know PH takes taxes out for interest. my banks in US never did that..  

[OnMyWay]

6 hours ago, dj3642 said:

i didnt know PH takes taxes out for interest. my banks in US never did that..  

Look at your statements.  Philippines is not very confident that citizens will report that interest as income, so they grab it directly from the bank.  In the U.S., it is more of an honor system.

[Gentleman.Jack.Darby]

8 hours ago, dj3642 said:

Then i guess i misunderstood. .. so i have earned NO income for the last year EXCEPT interest on bank accounts here in the philippines and it comes no where near the tipping point..  but do we need to file PHILIPPINE taxes?? or does that go the same way?? usually interest on bank accounts does not have taxes taken out.. 

Without knowing the specifics of your tax situation, I would recommend filing a Philippines return, just to make sure all the "i"s are dotted and "t"s are crossed

It may be that the interest earned on your Philippines account is not enough to trigger a Philippines tax liability and the withheld tax is refunded;

IF your U.S. return was ever selected for audit (the IRS performs what are called "compliance" audits to see how well taxpayers understand and are following the tax laws - they are not auditing because they necessarily think a specific taxpayer is cheating, they are auditing to be confident, using a random sample, that, statistically speaking, MOST taxpayers understand the rules and are complying), having proof (a copy of a Philippines income tax return) showing that you paid Philippines tax (or not, if the withheld tax was refunded) would give an IRS auditor a much "warmer and fuzzier" feeling regarding Philippines income and tax than would a simple bank statement showing simply that interest was earned and tax withheld

[Gentleman.Jack.Darby]

3 hours ago, OnMyWay said:

Look at your statements.  Philippines is not very confident that citizens will report that interest as income, so they grab it directly from the bank.  In the U.S., it is more of an honor system.

As you say, in the U.S., the IRS considers most folks to be honest, with that "honor" being helped along by the fact that banks and other financial institutions provide information directly to the IRS regarding interest earned, dividends earned, etc.

However, even with that reporting, there are some folks that the IRS just plain old doesn't trust as far as they could throw them - for those folks, the IRS designates them as subject to backup withholding; when one of those folks sets up a financial account, they designate on the account application that they are subject to backup withholding and the financial institution will withhold a percentage of account earnings and submit them to the IRS, much like employers do with income tax withholding

[Yeochief]

On 1/8/2020 at 12:49 PM, RickTacloban said:

Last November I married a Filipina while she was in the US.  I wonder how to file my taxes since she is not an American and has no immigration status.

If your wife has a social security number, she will be able to draw off your social security when she is old enough.  I'm 15 years older than Olivia and she will be taken care of long after I'm gone.

Edited January 10, 2020 by Yeochief

[OnMyWay]

5 hours ago, Yeochief said:

If your wife has a social security number, she will be able to draw off your social security when she is old enough.  I'm 15 years older than Olivia and she will be taken care of long after I'm gone.

His wife will have to meet the 5 year residency requirement to get SS from his account.  I think there are some ways around that if you are U.S. military.

[hk blues]

I'm not 100% convinced interest has tax deducted at source here, at least not for basic accounts. Certainty, if you have fixed deposit accounts and bonds etc it is but for other accounts I'm not convinced. If I'm not mistaken, it's possible to open an account here without a TIN so how would the bank report tax deducted?

I actually asked this very question 3 or 4 years ago at the BIR - they said if the amounts are negligible then don't waste time doing any reporting here - a pragmatic approach which probably isn't actually the law but...

[OnMyWay]

13 hours ago, Gentleman.Jack.Darby said:

It may be that the interest earned on your Philippines account is not enough to trigger a Philippines tax liability and the withheld tax is refunded;

I keep money is the Philippines and declare the interest income on my U.S. income taxes.  My wife's accounts too, as we file married filing jointly.  I do it because Fatca rules probably mean that BPI is reporting the interest to the U.S. IRS.  The tax withheld by PH is then claimed on my U.S. return as a foreign tax credit on form 1116.  Last year the interest earned at BPI was $244 and the tax withheld was $48.

So, if I were to file a PH income tax return just to get that $48 back, it would just complicate my U.S. return.  Not worth it.

[OnMyWay]

3 hours ago, hk blues said:

I'm not 100% convinced interest has tax deducted at source here, at least not for basic accounts. Certainty, if you have fixed deposit accounts and bonds etc it is but for other accounts I'm not convinced. If I'm not mistaken, it's possible to open an account here without a TIN so how would the bank report tax deducted?

I actually asked this very question 3 or 4 years ago at the BIR - they said if the amounts are negligible then don't waste time doing any reporting here - a pragmatic approach which probably isn't actually the law but...

Here is a screenshot of my BPI regular savings account quarterly statement.  I don't have any experience with other banks here but my wife says this is the normal practice.