A young professional’s guide to understanding and managing taxes—minus the jargon, plus expert advice.
How can we understand and discuss taxes? Honestly, I don’t know much about them—I just know that every month, a part of my salary goes toward taxes. So, I did what any clueless but curious person would do: I Googled “how do taxes work” and immediately got overwhelmed by words like “withholding,” “deductions,” and “BIR Form 1701A.” At one point, I found myself on a government website from 2009 that looked like it hadn’t been updated since Friendster was still a thing.
However, I knew it would always be there. I remembered what Benjamin Franklin once said (not verbatim): the only certainties in life are death and taxes. It may sound dull and serious—but as adults (lol), staying informed about taxes is an essential part of living, or “adulting.” Sadly, taxes can be incredibly intimidating. Missing a single filing can lead to charges of tax evasion—not to mention the risk of having your liberty restricted; and let’s be honest, not everyone looks good in an orange jumpsuit.
To get a grasp on the concept of taxes, Lifestyle Asia phoned a friend—an expert even—to talk about dealing with taxes in your early 20s and 30s. Thanks to Russ Aquino, a Certified Public Accountant (CPA) with 12 years of experience, for translating the confusing syntax of taxes.
READ ALSO: LA Asks An Expert: Are Veneers Worth It?
Ask The Expert
After graduating and earning his license as a Certified Public Accountant (CPA), Russ Aquino built a career spanning 12 years in tax compliance and advisory services. From honing his expertise at RT&Co. to leading tax operations at multinational and local companies like Sony Philippines, Shopee Philippines, and TLDC (where he served as Tax Manager and later Head of Tax), Russ has navigated the complexities of both corporate and regulatory landscapes with precision and professionalism.
Today, Russ leads his own tax consultancy business, offering tailored solutions to clients in need of tax compliance support, audit assistance, and guidance in their dealings with the tax authority. With a deep understanding of Philippine tax regulations and a commitment to practical, client-focused service, Russ is redefining what it means to have a trusted partner in the ever-changing world of taxation.
What’s the biggest tax mistake you see young professionals making?
Russ: I think the biggest mistake that young professionals are making is not declaring their income and filing their tax returns. It may seem like a daunting task to some people (not to mention the current political climate, which may discourage some from paying their taxes), but there are benefits to having a basic understanding of the applicable taxes and how to comply with them. A common problem I encounter with clients is when tax returns are asked for as part of loan requirements or visa applications. They will be forced to pay penalties for late filing of tax returns, which could have been saved had they bothered to file the returns on time.
Young professionals who are fully employed in companies also tend to accept the tax deduction that they see in their monthly payroll. They should be aware that not all employers correctly compute their monthly tax deductions, and in such cases, it should have been refunded to them had they tried to recompute their annual compensation tax due.
If I’m freelancing or side hustling, how should I handle my taxes differently?
Russ: There are various options available to freelancers, especially for those whose gross receipts/sales do not exceed PHP 3,000,000 for the year. They can avail of the 8% Income Tax, which will cover both their income taxes and percentage taxes. This option simplifies the tax requirements for freelance individuals, assuming, of course, that they meet the other requirements for this option to apply.
Are there any easy tax deductions or benefits most people in their 20s and 30s miss?
Russ: As mentioned, they can avail themselves of the 8% income tax option, which simplifies their tax filing requirements. If this doesn’t apply to them, they can explore the availability of the 40% optional standard deduction for their income tax, which also lessens the amount of receipts that they have to collect to substantiate their expenses.
As employees, they can also ask their employers if they can maximize the de minimis benefits on their compensation structure instead of including everything in their basic pay.
How can I keep my finances organized so that tax season isn’t a panic attack?
Russ: Information is key. As long as we are aware of the upcoming deadlines, then there’s no need to panic. The tax system is fairly fixed when it comes to the deadlines (except if some regulations or circumstances change the deadlines). The information is readily available online, and even the BIR posts tax calendars and deadline reminders for the benefit of the taxpayers. Knowing which taxes apply to you and which tax returns you should file will help a lot in managing deadlines and preparing the funds to pay taxes.
There is little to no room for surprises when it comes to the tax deadlines. Awareness of such is a different story.
Do I really need a CPA, or can I handle taxes on my own with apps?
Russ: Personally, as a practicing CPA myself, I always tell my clients that my goal, aside from ensuring their tax compliance during the engagement, is to share with them my knowledge until they reach a point where they won’t need my services anymore.
I call it a success whenever a client tells me that they compute on their own and that they are able to handle the filing and payment of their taxes by themselves.
There are also a lot of AI tools that people can use as a jumping point or guide, should they decide to learn by themselves. Just make sure that the information is reliable and always double-check with different sources.
However, CPAs are usually up-to-date with the regulations of the BIR and can provide really sound advice in particular situations and cases. While it is possible to learn and do your taxes, it is always best to consult a professional. My advice is you ENGAGE THEM TO LEARN FROM THEM. Don’t just let us CPAs “do our thing.” Understand what we are doing and ask questions about the advice given.
What’s one simple habit that can save me money on taxes every year?
Russ: Taxes are quite difficult to avoid daily. We are indirectly taxed with almost every purchase that we make (by way of VAT). There’s no single habit that I can recommend; however, with the new tax on digital services, perhaps we can check our current subscriptions to see if we are using these services. Apps and websites that offer streaming services and digital storage are now more expensive to the end consumer because of this new tax. Being judicious in choosing the applications and subscriptions we make may save us money from taxes.
If I inherit property or start investing in real estate, what taxes should I know about?
Russ: Taxes on inheritance and onerous purchase of real property investments can be complicated. These transactions may involve similar taxes but with very different applications. But for starters, you may take a look at the documentary stamp taxes, transfer tax, and capital gains tax.
