BIR Taxable S.7-4 (Previous Employer)

In the context of BIR (Bureau of Internal Revenue) tax reporting in the Philippines, the S-7.4 (Previous Employer) code is used for Alphalist Reporting, which is part of the tax compliance process for employers. The Alphalist, or Alphabetical List of Employees, is a required submission for employers to report details of their employees' earnings, taxes withheld, and other relevant information for a specific tax year.

The S-7.4 code, specifically referring to taxable income from a previous employer, is used when an employee has earned income from more than one employer during the year. It allows the reporting of taxable income and taxes withheld by a previous employer before the employee joined the current one. This is essential for ensuring that the total taxable income is accurately accounted for, and the correct tax is applied when the employee files their tax returns.

Key Elements:

1. Purpose of the S-7.4 Code in Alphalist Reporting:
   • The S-7.4 (Previous Employer) code is used to identify and report income that an employee received from a previous employer during the same calendar year.
   • This ensures that the employee’s total income is properly consolidated for tax purposes, including income from multiple sources.
   • It helps the current employer report the total taxable income that includes earnings from both the present and previous employers, facilitating accurate tax computation and withholding tax adjustments.
2. When Is the S-7.4 Code Used?
   • The S-7.4 code is specifically used when an employee has worked for more than one employer within a single calendar year and has received taxable income from a previous employer.
   • This situation can occur when an employee has moved from one job to another or worked for more than one company during the year.
3. What Should Be Reported with S-7.4?
   • Total taxable income from the previous employer(s): This includes the salary, bonuses, and any other taxable earnings that the employee received from the previous employer during the year.
   • Taxes withheld by the previous employer(s): This refers to the amount of taxes that the previous employer withheld from the employee's income. These taxes are deducted and reported to ensure that they are not double-counted when filing tax returns.
   • Taxable benefits received: In addition to regular income, any taxable benefits provided by the previous employer should be included.

   These details should be included in the Alphalist submitted to the Bureau of Internal Revenue to ensure proper tax reporting and compliance.

4. Why Is It Important for Alphalist Reporting?
   • Avoidance of Over-taxation: By reporting income and taxes withheld from previous employers, the current employer ensures that the employee is not taxed on the same income twice.
   • Tax Adjustments: If the employee has overpaid taxes through the previous employer, this can be taken into account during the current tax year’s tax return or withholding tax adjustment.
   • Compliance with BIR Regulations: Ensuring accurate reporting of all income sources helps meet the BIR's requirement for comprehensive tax reporting, reducing the risk of penalties or audits.
5. How to Report S-7.4 in the Alphalist:
   • Employee's Previous Employer Details: The employer must correctly input the employee's previous employer details, including the employer’s Taxpayer Identification Number (TIN), income earned from that employer, and taxes withheld.
   • Income Reporting: The income and taxes from the previous employer are typically entered in a separate section of the Alphalist to distinguish them from the current employer’s earnings and tax withholding.
   • Verification of Total Income: The employee's total taxable income for the year is calculated, factoring in both current and prior employment. The current employer needs to cross-check that the total taxable income and withholding tax are consistent with the BIR's taxable income guidelines.
6. Key Considerations:
   • Employee Responsibility: It is the responsibility of the employee to provide accurate records of income earned from previous employers, such as Income Tax Returns (ITR) or Certificates of Compensation Payment/Tax Withheld (BIR Form 2316) from prior employers.
   • Timely Submission: Employers must ensure the Alphalist is submitted on time to the BIR, along with the correct S-7.4 coding for any previous employer-related taxable income.
   • Tax Filing Implications: For employees filing their tax returns, the correct reporting of income from previous employers (using S-7.4) ensures that their total tax liability is accurate, preventing over- or under-payment.

Conclusion:

The S-7.4 (Previous Employer) code in Alphalist reporting is a crucial tool in the Philippines’ tax compliance process. It allows employers to accurately report taxable income and taxes withheld from an employee's previous employment, ensuring that employees are taxed fairly and consistently across different employers within the same year. Correctly applying this code helps avoid over-taxation, ensures compliance with the BIR, and enables accurate tax return filings.