BIR Form 1902, also known as the "Application for Registration for Individuals Earning Purely Compensation Income, and Non-Resident Citizens/Resident Alien Employee" is an essential document required by the Bureau of Internal Revenue (BIR) in the Philippines. This form serves a specific purpose and holds significant importance for both employees and employers. Here are some points that highlight the purpose of Bir Form 1902:
1. Employee Registration: The primary purpose of Bir Form 1902 is to register individuals earning solely compensation income, such as salaries, wages, and other forms of employee compensation. It includes both resident and non-resident citizens, as well as resident aliens working in the country.
2. Tax Identification Number (TIN) Application: The form serves as an application for a Tax Identification Number (TIN), a unique identifier given by the BIR to individuals and entities for tax-related purposes. TIN is required when filing tax returns and conducting other transactions with the BIR.
3. Compliance with Tax Laws: The completion and submission of Bir Form 1902 ensures that employees fulfill their legal obligations regarding taxation. It allows the BIR to track and regulate the income and tax liabilities of individuals earning purely compensation income.
4. Employee Information Update: The form requires individuals to provide personal and employment details, including full name, address, birthdate, contact information, and employer details. This information helps the BIR maintain accurate records of taxpayers.
5. Withholding Tax Computation: By submitting Bir Form 1902, employees can declare their exemptions, dependents, and other relevant information that impacts the computation of their withholding tax. This ensures that the correct amount of tax is deducted from their monthly income.
6. Documentation for Social Benefits: Employers often require a completed Bir Form 1902 to process an employee's enrollment in various social benefits, such as health insurance, retirement plans, and loans. The form validates the individual's status as an eligible employee.
7. Verification of Employment Status: The form provides proof of an individual's employment status, whether they are a resident or non-resident citizen or a resident alien working in the country. This information is crucial in determining the individual's tax responsibilities.
In summary, Bir Form 1902 plays a vital role in the proper registration, identification, and taxation of individuals earning solely compensation income in the Philippines. It ensures compliance with tax laws and allows for accurate withholding tax computation, while also serving as a necessary document for various employment and social benefit purposes.