BIR Ruling [DA-173-04]

April 6, 2004 BIR RULING [DA-173-04] Sec. 35 (A) & (C) BIR Ruling No. 195-91 Ms. Tessie Minerva Sta. Rita National High School Oton, Iloilo M a d a m : This refers to your letter dated November 29, 2002 requesting for a ruling on whether a widow/widower with dependent children is considered as head of family for purposes of taxation. In reply, please be informed that Section 35(A) of the Tax Code of 1997, defines "head of family" to mean an unmarried or legally separated man or woman with one or both parents, or with one or more brothers or sisters, or with one or more legitimate, recognized natural or legally adopted children living with and dependent upon him for their chief support, where such brothers or sisters or children are not more than twenty-one (21) years of age, unmarried and not gainfully employed or where such children, brothers or sisters, regardless of age are incapable of self-support because of mental or physical defect. Based on the foregoing, in order to be classified as head of family, one should be unmarried or legally separated with dependents. Death of spouse is one of the ways to terminate a marriage under the Family Code of the Philippines or E.O. No. 209, modifying the Civil Code of the Philippines or R.A. No. 386. Accordingly, for tax purposes, a widow/widower is considered head of family if she/he has a dependent(s) in which case she/he can claim personal exemption in the amount of Php25,000.00 and Php8,000.00 additional exemption for each of her/his dependents not exceeding four (4). If however, the widowed taxpayer has no dependent, she/he is considered single for tax purposes and therefore, entitled to claim personal exemption in the amount of P20,000.00 only. Section 35(C) of the same Tax Code provides that, viz : "(C) Change of Status . If the spouse or any of the dependents dies or if any of such dependents marries, becomes twenty-one (21) years old or becomes gainfully employed during the taxable year, the taxpayer may still claim the same exemptions as if the spouse or any of the dependents died, or as if such dependents married, became twenty-one (21) years old or became gainfully employed at the close of such year." This means that a widowed taxpayer can still claim Php32,000.00 personal exemption of a married individual but only in the taxable year when her/his spouse died. If in the same taxable year her/his qualified dependent(s) got married, became twenty-one (21) years old or became gainfully employed, the widowed taxpayer can claim in the same period Php8,000.00 additional exemption for every dependent not exceeding four (4) in addition to the Php32,000.00 personal exemption. On the succeeding taxable year and thereafter, she/he is entitled to claim only the amount of personal exemption which is in accord with her/his new tax status. Moreover, she/he continues to be entitled to additional exemption for each of her/his qualified dependents. cSHATC This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group