Since the wedding month is just around the corner, I wondered where the idea of the “June Bride” comes from. So I did a little research and found that the tradition dates back to the Roman times when June 1st was the day of the festival celebrating the marriage of the deity Juno and his wife Jupiter, the goddess of marriage and childbirth. The popularity of June as a good month for weddings continues to this day.
One thing that has nothing to do with Juno and Jupiter, however, is the tax requirement that comes with the union of two people. Today, for married couples, or for those planning to marry their June brides or those who are June brides themselves, it’s good to note the following:
From single to married
Personal tax exemptions under the old Tax Code of 1997 was P20,000 for single individuals and P32,000 for married individuals. Previously, being married meant you were entitled to an additional P12,000 personal exemption, a provision meant to give soon-to-be parents additional savings for their expanding family.
Republic Act 9504 provided for an increase in personal exemption allowance to a uniform amount of P50,000, whether the individual is single or married. Nevertheless, the married individual is required to update his civil status from “Single” to “Married” by submitting the Certificate of Update of Exemption and of Employer’s and Employee’s Information (BIR Form No. 2305). With the issuance of Revenue Memorandum Circular (RMC) No. 59-2015, the filing of BIR Form No. 2305 is now the responsibility of the employer.
Only one of the spouses is allowed to claim an additional exemption of P25,000 for each qualified dependent (QD), up to a maximum of four. The general rule is that the husband claims the additional exemption for a QD, unless he waives this in writing in favor of the wife (the waiver should be acknowledged by both employers of the husband and the wife, if employed), or if the husband is not gainfully employed, or is a non-resident whose income is from foreign sources.
It should be noted that on January 17, 2017, the House of Representatives filed House Bill (HB) No. 4774, which simplifies the computation characterized by low tax rates. However, the bill also intends to remove the basic and additional exemption enjoyed by individuals. If this bill is approved and signed by the President, the same amount of tax will be imposed on all taxpayers, whether single or married with QDs.
Joint or separate
Spouses are encouraged to jointly file their Income Tax Return (ITR), separately computing their individual income tax based on their respective taxable income, which shall be signed by the tax filer or the spouse, or their authorized representative. However, if one of the spouses is registered in another Revenue District Office (RDO), the spouses have to file separately with their respective RDOs. Purely compensation income earners need not file their ITRs if they fulfill ALL of the following requisites:
a. Spouses are purely compensatiom-income earners
b. They only have one employer during the taxable year
c. Taxes are properly withheld and remitted by their employer
If one of the spouses does not fulfill all the requisites, then both spouses are disqualified and, therefore, both spouses are required to file their ITR.
The cost of gift-giving
Before the wedding day, the sponsors family, and friends make it a point to find the perfect gift for the start of the bride and groom’s new life together. Considering the Filipino tradition of gift-giving, not just during weddings but for many other special occasions throughout the year, the Bureau of Internal Revenue (BIR) has been very lenient when it comes to taxing gifts. It is worth mentioning that donor’s tax shall apply whether the donation is real or personal property, including cash. However, some gifts are exempted from the tax, such as the following:
• Dowries or gifts made on account of marriage and before its celebration, or within one year thereafter, by the parents to each legitimate, recognized natural or adopted child to the extent of P10,000
• Wedding gifts, in cash or in kind, amounting to not more than P100,000 from relatives up to the fourth degree of consanguinity
Wedding gifts, in cash or in kind, from relatives exceeding the P100,000 threshold shall be subject to the graduated donor’s tax table of 2 percent to 15 percent. Otherwise, a donor shall be considered a “stranger” and is liable to pay 30 percent donor’s tax. Moreover, the liability is not transferable to donees or beneficiaries of the donation.
So whether you’re a bride this June, or simply attending the June wedding of your friend or family member, enjoy it! Just remember, it pays to be compliant to avoid tax penalties. And as the song says, “When you marry in June, you’re a bride all your life, and the bridegroom who marries in June, gets a sweetheart for a wife.”
The author is a senior with the Tax & Corporate Services division of Navarro Amper & Co., the local member firm of Deloitte Southeast Asia Ltd. – a member firm of Deloitte Touche Tohmatsu Limited – comprising Deloitte practices operating in Brunei, Cambodia, Guam, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.