TAXATION QUIZ CHAPTER 7

• Earned income


  Any income that you receive from a job or self-employment, including wages, tips, salary, commissions, or bonuses
• Passive income


  Earnings generated from activities in which the individual is not actively involved, such as rental income from real estate, royalties from intellectual property, or income from a business in which the individual has limited involvement
• Portfolio income


  Earnings generated from various financial investments such as stocks, bonds, mutual funds, and other securities, including interest, dividends, capital gains, and any other distributions received from these investments
• Classification of income


  • Ordinary income (wages, salaries, commissions, bonuses, tips, interest earnings)
  • Capital gains (profit from selling capital assets held for more than one year (long term) or less than one year (short term))
  • Tax-exempt income (interest earned on municipal bonds, certain government benefits, qualified scholarships, Roth IRA distributions)
• Income within


  Earned inside a specific country or jurisdiction
• Income without


  Earned outside of a specific country or jurisdiction
• Classification of individual taxpayers

  • Resident citizens
  • Non-resident citizens
  • Resident aliens
  • Non-resident aliens engaged in trade or business
  • Non-resident aliens not engaged in trade or business
• Resident citizens


  Filipino citizens who are permanently residing in the Philippines or stay outside the Philippines for less than 183 days in a taxable year, taxed on all income earned domestically and abroad

  
• Non-resident citizens


  Filipino citizens who establish residency abroad with the intention to stay, generally only taxed on income sourced from the Philippines

  
• Resident aliens


  Foreigners with a permanent residency visa in the Philippines, taxed similarly to resident citizens

  
• Non-resident aliens engaged in trade or business


  NRAs who run a business in the Philippines, taxed on income derived from that business
• Non-resident aliens not engaged in trade or business


  NRAs who don't run a business in the Philippines, generally taxed on Philippine-sourced income like salaries or rental income
• Domestic corporation


  Subject to tax on its worldwide income
• Resident foreign corporation


  Foreign corporations engaged in trade or business in the Philippines through a branch office, taxed in the same manner as domestic corporations but only on Philippine-source income

  
• Non-resident foreign corporation


  Taxed on gross income derived from sources within the Philippines