BIR Form 2316 is also known as the Certificate of Compensation Payment or Tax Withheld, an annual tax return form. If your company or business had employees in the previous fiscal year, you are obliged to submit the BIR Form 2316 to the Bureau of Internal Revenue. The form is an official document that stipulates the employees’ gross income and taxes withheld by the employer for a particular year. It also serves as evidence to show that the employee’s salary or pay is subject to income tax.
This document is crucial for both the employees and employers because this form allows BIR to monitor them and see if they are complying with taxes. During the filing of this form, the information about employees will be analyzed. This is so that there are no errors and mistakes in getting the correct amount of tax subject to the company or business. This form will also be crucial for employees who are switching jobs because the new employer will need to compute the tax withheld for the remaining time of the year.
Apart from that, the form can also be used as evidence or proof of a person’s financial capacity for loans, visas, credit card applications, and many more. It can also be used as an official document to meet certain requirements. For this reason, proper accounting and bookkeeping is crucial to keep this form properly filed and correctly filled out.
How To File the BIR Form 2316
1. Go to the BIR Certificates Page and download the Form 2316
2. Gather all the necessary information about your employees in Part I
A. Note that for employees that were hired within the year, the stated date should be the exact date of when the employee was hired.
B. 9-11 is applicable to minimum wage earners only.
3. Fill out the required information in the employer information found in Parts II AND III. In items 12 to 15, you can use the BIR Form 2303 as a reference for the required details.
A. For full-time employees, select Main Employer
B. For part-time employees, select Secondary Employer.
C. For newly hired employees, ensure that the details about their previous employer are correct.
4. List and put all the benefits, remunerations, and government contributions in Part IV
Note: In this portion, you will dictate the benefits your employees will receive whether it’s taxable or non-taxable. Some examples of this would be the 13th-month pay or SSS.
5. Follow the steps below:
A. Item 51 – signed by an authorized signature
B. Item 52 – signed by the employee along with their current valid ID number or Tax certificate number, place where it was issued, and the amount paid indicated.
C. Items 53 & 54 – will only apply if the employee is allowed for substitute filing. This is only allowed for employees who don’t have an employer or source of income during the year.
6. Complete the forms and send them to your employees and make sure that they have their signatures found in the document.
7. Get four copies of the filled-out BIR Form 2316 and set aside one copy for your employee.
8. Set aside two copies for BIR or Bureau of Internal Revenue when you submit the form in January of the following year.
9. Keep the last copy for yourself as a part of good accounting and bookkeeping practices. It would be a good idea to store them in one area or place and make sure to have scanned copies of them in case you lose or misplace them.
Employers who have a lot of employees may elect to take advantage of payroll services from a reputable accounting firm. This ensures proper payments of tax dues and compliance with all the documentary requirements of the BIR.
What Employees Must Know
Employees must also keep a copy of this form. It will usually come from the human resources department or the one handling the payroll services. Noteworthy, you must remember the following:
- Switched Jobs in the same year – Submit another form to your new employer. Your new employer needs to be aware of how much income you have earned already for the year so they can correctly compute the taxes for it.
- Left the company -You can request the form from your previous employer. They are obligated to give you a copy of the form.
- Employer won’t give a copy – Argue that it is a regulation they need to comply with. If they still won’t give you a copy of it, call the BIR and ask what steps you need to take.
Always File Taxes on Time
You can get really excited about the upcoming year but you should not forget your responsibilities. If you want to avoid future issues and want a smooth year ahead, make sure you file your BIR Form 2316 on time and provide copies to your employees. If you need assistance, call our team of CPAs as we don’t only provide accounting, bookkeeping, and tax services, but we also handle payroll services.