BIR Ruling [DA-007-04]

January 6, 2004 BIR RULING [DA-007-04] Metro Pacific Corporation 5/F Bldg. A., Bonifacio Centre Fort Bonifacio, Taguig, Metro Manila Attention: Ms. Ale-Marie G. Acosta Payroll Officer Gentlemen : This has reference to your letter dated May 12, 2003 which was forwarded to this Office by the Large Taxpayers Service, requesting on behalf of your employee Ms. Ma. Lourdes De Joya Esparrago, for clarification on the following concern, to wit: 1. Can Ms. Esparrago claim the additional exemption for her children instead of her husband? 2. Since her husband is abroad and no longer communicating with her, what supporting documents will she provide to support her claim for additional exemption? 3. Does she need to continue using her husband's surname even if there is no court decision for their legal separation? 4. Can she correct the income tax returns filed for the years 2001 and 2002 to adjust her tax exemption to P32,000.00? If yes, how would she do that? 5. Whose responsibility is to correct the tax status of a taxpayer? In reply, please be informed as follows: 1. Section 2.79.1(A)(5) of Revenue Regulations No. 2-98 provides: "(5) Claimant for exemption for children . The husband is the proper claimant of additional exemptions for qualified children. However, the wife shall claim full additional exemption for children in the following cases: (a) Husband is unemployed; (b) Husband is a non-resident citizen deriving income from foreign sources; (c) The husband waives his right to claim the exemptions of children (waiver should be for all children) in a sworn statement to be attached to his application form for registration (1902) and that of his wife's in accordance with the procedures prescribed in this Section." Thus, if Ms. De Joya-Esparrago can show proof or submit documentary evidence that her husband belongs to the foregoing classification or that her husband waives his right to claim for personal additional exemption for their children, then she may be entitled to claim personal additional exemption pursuant to Section 35 of the Tax Code of 1997. 2. Section 35(B) of the Tax Code provides that "the additional exemptions for dependents shall be claimed by only one of the spouses in the case of married individuals. In the case of legally separated spouses, additional exemptions may be claimed only by the spouse who has custody of the child or children. Provided, that the total amount of additional exemptions that may be claimed by both shall not exceed the maximum additional exemptions herein allowed." It is the considered opinion of this Office that the objective of this provision is to avoid duplication of claims with respect to additional exemption for dependents. Since it is represented that the husband of Ms. De Joya Esparrago is abroad and no longer communicating with her, it is, therefore, indispensable on her part to submit documentary evidence that would prove that her husband is not claiming the additional exemption for their children. 3. Ms. De Joya Esparrago is still required to use her husband's surname. The grant of legal separation is not even an authority to drop the surname of the husband as provided in Article 372 of the New Civil Code, which states: Art. 372. When legal separation has been granted, the wife shall continue using her name and surname employed before the legal separation. 4. If Ms. De Joya Esparrago can prove that she is entitled to claim personal additional exemption for their children, she can correct her income tax returns filed for the year 2001 and 2002 to state the appropriate personal and additional exemptions. This, however, can be done by filing an amended income tax return with the Revenue District Office where she had filed her 2001 and 2002 income tax returns. HDICSa 5. It is the obligation of every employer to provide necessary data to her employer so that appropriate withholding of taxes may be done accordingly. On the other hand, all employers shall require their employees to accomplish in duplicate the Application for Registration (BIR Form No. 1902). In case of changes in the information previously given, an Exemption Certificate (BIR Form No. 2305) reflecting the changes together with the required documents/evidence of changes, must be submitted to the employer within ten (10) days after such change. Please be guided accordingly. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group