Optional Standard Deduction of Husband and Wife

November 19, 1959 BIR RULING NO. 604-59 Mr. Julian C. Paculan 1350 San Andres Sta. Ana, Manila S i r : In reply to the query contained in your letter dated October 14, 1959, I have the honor to quote hereunder a pertinent provision of the Tax Code: "Sec. 30(k) Optional standard deduction . In lieu of the deductions allowed under this section an individual, other than a nonresident alien, may elect a standard deduction. Such optional standard deduction shall be in the amount of one thousand pesos or in an amount equal to ten per centum of his gross income, whichever is the lesser. Unless the taxpayer signifies in his return his intention to elect the optional standard deduction he shall be considered as having availed himself of the deductions allowed in the preceding subsection. The Secretary of Finance shall prescribe the manner of the election. Such election when made in the return shall be irrevocable for the taxable year for which the return is made." By virtue of the afore-quoted provision of law, husband and wife filing a consolidated return may claim an optional standard deduction equivalent to 10% of their total gross income which shall in no case exceed P1,000.00. For that purpose, they shall signify in their return such intention to elect the optional standard deduction; otherwise, they shall be considered as having availed themselves of the itemized deductions. This election once made in the return so filed shall be irrevocable for the taxable year for which the return is made. In other words, a taxpayer cannot avail himself of both optional standard deduction and itemized deductions at the same time. It should either be one or the other but never both in the same return filed for the taxable year. Accordingly, in computing your net income, you may either use the optional standard deduction of 10% of your total gross income, which includes your salary and the earnings of your wife or take the sum total of your itemized deductions and deduct the same from your total gross income. cdta Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue