During the taxable year, Mr. Romeo Dy separated legally from his wife, JaneLee. The legally separated spouses have five qualified dependent children. Both spouses were earning with the following gross taxable income: Mr. Dy, P380,000: Ms. Lee, P290,000. For custody, the court granted Mr. Dy awarded two children and Ms. Lee the remaining children. Meanwhile, Mr. Dy is supporting his niece who is 21 years old, unmarried and incapable of self- support. Both spouses have monthly premium payment for health insurance of P150 each and P1,000 each for yearly life insurance. The taxable income of Ms. Lee is:Select one:a.P240,000b.P188,200c.P165,000d.P190,000
Question
During the taxable year, Mr. Romeo Dy separated legally from his wife, JaneLee. The legally separated spouses have five qualified dependent children. Both spouses were earning with the following gross taxable income: Mr. Dy, P380,000: Ms. Lee, P290,000. For custody, the court granted Mr. Dy awarded two children and Ms. Lee the remaining children. Meanwhile, Mr. Dy is supporting his niece who is 21 years old, unmarried and incapable of self- support. Both spouses have monthly premium payment for health insurance of P150 each and P1,000 each for yearly life insurance. The taxable income of Ms. Lee is:Select one:a.P240,000b.P188,200c.P165,000d.P190,000
Solution
To calculate Ms. Lee's taxable income, we need to consider her gross income, the personal and additional exemptions she is entitled to, and the allowable deductions.
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Gross Income: Ms. Lee's gross income is P290,000.
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Personal Exemption: As per the tax laws in the Philippines, a single individual is entitled to a personal exemption of P50,000.
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Additional Exemption: For the dependent children, Ms. Lee was awarded custody of three children. The additional exemption is P25,000 per dependent child. So, for three children, it would be P75,000.
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Health and Life Insurance: The monthly premium payment for health insurance is P150 and yearly life insurance is P1,000. So, the total for the year would be (P150*12) + P1,000 = P2,800. However, only the health insurance premiums are deductible up to P2,400 per year. The life insurance premiums are not deductible.
So, the total exemptions and deductions would be P50,000 (personal exemption) + P75,000 (additional exemption for dependents) + P2,400 (health insurance) = P127,400.
Subtracting the total exemptions and deductions from the gross income, we get P290,000 - P127,400 = P162,600.
Therefore, Ms. Lee's taxable income would be P162,600. However, this option is not available in the choices given. The closest option would be c. P165,000. But please note that this is not the exact calculation. The exact taxable income should be P162,600.
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