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tax exemptions/status should only be used once a year ??

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femme fatal


Arresto Menor
Hello CPAer's

I just started with my new company\employer this past last week of August. On my 3rd payroll, I noticed that my tax was higher than usual. Below was their reply after requesting clarification.


"The increase in your WTAX deduction this October 14th payroll is due to change of your tax exemption to Zero.

As per tax regulations, tax exemptions/status should only be used once a year.
As per checking, you havee confirmed previous employment prior joining us that’s why your tax exemption has been updated to Zero (since you already claimed your tax exemption from your previous employer.)
Please note however that the purpose of the waiver is to ensure that tax exemption is only use once in a year and not mainly to exempt the employee from incurring tax payable as a result of tax annualization"

Is this true? Even if nothing changed with my civil status, I lost the right to any tax exemption just coz I changed employers?

Would appreciate advice from those who knows and where I can find an official ruling of this in the web? i've emailed BIR but has not received any reply.

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Patok


Reclusion Perpetua
Tax exemption should be applied at the end of the year, when you have annualized your tax from your 2 employers for this year.

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mikos23


Reclusion Perpetua
Actually they explained it wrong, and stated / used the word tax exemption. if they "zeroed" your tax exemption, then it's the wrong process


If you came in your current company in the middle or latter of the year, its SOP for Payroll to re-compute all the taxable income and tax withheld and the possible taxable income for the remaining months. Technical term, annualization of taxes. Once they computed the remaining taxes to withheld, they will ensure that all taxe deductions are evenly distributed on the remaining payroll months instead of deducting it one time from the employee.

Hope this helps

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