In this article you will find five (5) easy and understandable tips. Before you come to this point, make sure…
Are you looking for tips on solving estate tax under train tax law in the Philippines? You will find a lot, but in effect, you will come up with the same tips. In this article, you will find five (5) easy and understandable tips in solving the estate tax problem. Before you come to this point, make sure you understand the concept of the estate tax in the Philippines.
(Relevant story: Estate Tax Train Law in the Philippines)
Let us assume that you’ve understood the basic concept of this tax. Well, understanding is not enough to fully understand this. Make sure you know how to compute and file estate tax in the Philippines. Everyone knows that the computation of the estate tax is sometimes it’s not easy and it takes a long process.
Let me give little tips on what you should know first before solving problems. Make sure you know what gross estate, estate tax rate, real properties, and exclusions from the estate is — after knowing those things, still trying to compute and no knowledge how and where to start? Let’s start these easy steps.
The decedent is the person who dies with properties left. Decedents might be classified as residents and citizens or non-resident aliens.
Although the estate tax rate is similar regarding your citizenship, your estate, or properties is subject to tax in a different way. Aside from the composition of the gross estate, deductions or exclusions might be different because of some special laws might protect some of that estate.
The law also protects the interest of others like the surviving spouse and heirs. Before you move to the next steps, make sure you know the status of the decedent. If married, identify the property relations between husband and wife. According to the family code (Art. 109), the properties of the husband is husband’s capital, while the properties of the wife are wife’s paraphernalia. In the absence of any contract or marriage settlement executed before the celebration of a marriage, either the conjugal or absolute community of properties shall govern the property owner of the husband and wife.
According to the family code, all properties acquired during the marriage, whether the acquisition is either constructed or registered in the name of one or both spouses are considered as conjugal unless:
During the marriage, there is no marriage settlement of properties; the absolute community will be presumed. Therefore, all properties owned by the spouses at the time of marriage or acquired after that shall form part of the husband and wife, except the following:
What are the properties of the decedent you should accumulate? In general, all properties of the decedent, either tangible, real, or intangible properties. For more information about the list of the composition of the gross estate, you may click this article Estate Taxation in the Philippines.
Not all properties of the decedent are subject to tax. Some of those properties are covered by special laws in the Philippines. Section 87 of the NIRC provides the following exclusions from the gross estate that are exempted from the estate tax.
After the death of the decedent, there are some expenses incurred that should be deducted from the gross estate of the decedent. Make sure you read these updates about estate tax before solving any estate tax problem. Here are some ordinary expenses that you should know:
There are many problems in a book or on the internet where you can practice in solving the estate tax under this new tax reform. In solving any problem, make sure to follow these steps. No matter how long the problem is, make it shorter by grouping or finding first what you need.
I know at first, the solving problem is not easy. It takes patience and diligence to fully understand the estate tax. But, for sure if you keep on solving problems about the estate tax, you will start to love it. Furthermore, solving many comprehensive problems will help you to encounter different issues you might encounter in the board exam or other examinations.
There is no shortcut to being a tax master, but your patience and diligence will help you to succeed in solving estate tax in the Philippines. Having tips from those who are tax master will have the same result or advice. All of them will have the same opinion – “practice, practice, practice.”
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