Interpretation of Section 30(1) of the Tax Code, as added by Presidential Decree No. 69

February 27, 1974 REVENUE MEMORANDUM CIRCULAR NO. 13-74 SUBJECT : Interpretation of Section 30(1) of the Tax Code, as added by Presidential Decree No. 69 TO : All Internal Revenue Officers and others concerned Section 30(1) of the Tax Code, an added by Presidential Decree No. 69 provides: "(1) Standard deduction for working wife . If the gross income reported in the return filed by the taxpayer includes that received by his wife, a standard deduction of ten per cent of the gross income received by his wife but not exceeding P500 shall be allowed as deduction from their combined gross income, regardless of whether the taxpayer uses the itemized deductions under subsection (a) to (j), or the optional standard deduction under subsection (k), of this section." Under the foregoing provision, the working wife is entitled to the standard deduction prescribed therein under the following categories: 1. If the person making the income tax return is the husband who declares an part of the gross income that received by the working wife; 2. If the person making the income tax return is the husband who nevertheless files the return because he falls under any of the categories enumerated in Section 45(a)(3) of the Tax Code and declares in the return the gross income received by the working wife; 3. If the person making the income tax return is the working wife declaring therein the income received by her, irrespective of whether the husband has income or not. The standard deduction for working wife can be availed of regardless of whether the taxpayer uses the itemized deduction or the optional standard deduction in the following manner: Using the Itemized Deduction : Husband's Income P5,400.00 Wife's Income 4,200.00 Total Gross Income P9,600.00 Less: Itemized Deduction P1,200.00 Standard Deduction for working wife 420.00 1,620.00 Net Income P7,980.00 Using the Optional Standard Deduction : Husband's Income P5,400.00 Wife's Income 4.200.00 Total Gross Income P9, 600.00 Less: Optional Standard P960.00 Standard Deduction for Working Wife 420.00 P1,380.00 Net Income P8,220.00 Finally, the gross income of the working wife which shall be the basis of her standard deduction under Section 30(1) of the Tax Code, shall be construed to mean as her income derived from salaries, wages, or compensation for personal service of whatever kind and in whatever form paid, or from her profession, vocation, trade or business. The gross income of the working wife, for the purpose of determining the said standard deduction, does not include gains or profits derived from the sale or dealing in property, real or personal, growing out of the ownership or use of or interest in such property or from interests, rents, dividends, or securities, even if the property out of which the gain or profit was derived is registered in the name of the wife. Such gains or profits not included in the gross income of the working wife for purposes of the standard deduction form part of the consolidated gross income of both spouses. Be guided accordingly. aisa dc MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5