Personal income tax is a matter that many people try to understand, but they still say that they don’t understand. Some people say that it is difficult to understand, causing many working people to miss out on the opportunity to use their rights to reduce their taxes.
Or in other words, pay the full tax. In fact, if you have a little knowledge or understanding of how to calculate personal income tax, you may be able to save a lot more tax.
So in this article, the admin will take us to understand personal income tax and how to calculate income tax (for 2020).
Who is required to file taxes?
In terms of filing personal income tax, for working people and people with income, there are 2 types:
- Form Por.Ngor.Dor.90: For people who have both salary and other income (multiple income sources) or do business as individuals, dividends, or others.
- Form Por.Ngor.Dor.91: For people who have a salary, bonus (regular employees without other income)
The Revenue Department has stipulated that people who earn income, even if their income does not reach the threshold for paying taxes, must still submit an income tax return in the following cases:
Single people, in the case of having income from employment (salary, wages) only, must submit a tax form when the income exceeds 120,000 baht, or in the case of having income from employment (salary, wages) and other types of income, or in the case of having only other types of income that are not income from employment, must submit a tax form when the income exceeds 60,000 baht.
Couples who have income from employment (salary, wages) only must file a tax form when their income exceeds 220,000 baht, or in the case of income from employment (salary, wages) and other types of income, or in the case of only income other than income from employment, must file a tax form when their income exceeds 120,000 baht.
Personal income tax rates 2020
The 2020 personal income tax rate is a new tax structure that will make working people pay less tax because there are many types of deductions added.
Steps for preparing to file personal income tax (for 2020)
When it comes to personal income tax, many people often don’t know what they need to prepare, or they only find out when the tax officer asks for additional information after they’ve already filed their taxes. In fact, if you understand the documents and know what you need, filing your taxes isn’t difficult at all. The benefit may be getting back thousands or tens of thousands of baht in taxes you paid.
“Many people don’t know how much tax they pay each year because they’ve never filed their taxes themselves. They have someone else do it for them.”
Know the tax filing channels
Normally, we can file personal income tax for 2020 from January 1 – March 31, 2021. We can file taxes in many ways, such as filing online via the E-Filing website or via RD Smart Tax , the Official app from the Revenue Department. We can file documents the same as filing via the website or we can file in person at the local revenue office where we work.
“If we don’t understand taxes, if we don’t understand the process, we won’t be able to plan for tax deductions.”
One of the biggest problems with tax planning is that many people have others file their taxes for them because they don’t understand or care. This results in missing out on the chance of getting a tax refund (tax credit) because they’ve already asked or asked someone else to file for them.
Documents to prepare
When it comes to filing taxes, no matter which channel you file through, supporting documents are very important because the Revenue Department officials will not believe just the numbers we fill in. They must also look at and verify the supporting documents we submit. If we file taxes and do not submit all the documents, there may be delays or problems later.
The documents required for personal income tax are as follows:
1. Salary and tax deduction certificate (50 bis): This is a document issued by the employer to us. This document will state our annual income (including salary, bonuses and various special payments), withholding tax, tax withheld and remitted, money we remit to the Social Security Fund, Provident Fund or Government Pension Fund/Provincial Employees Welfare Fund/Private School Teachers Welfare Fund, etc.
2. Documents certifying the deduction of parental care expenses: We can use the right to deduct 30,000 baht for our own parents, as well as 30,000 baht for our spouse’s parents. Both our parents or our spouse’s parents must be 60 years old or older, and the income earner will be the one taking care of our parents. Both our parents or our spouse’s parents must have an income in the tax year not exceeding 30,000 baht.
3. Personal documents (additional): such as marriage certificates, in case the Revenue Department requests an inspection, if the spouse who has no income is using the tax deduction right or has income but chooses to calculate the tax together, or child certification documents or child birth certificates, in case the Revenue Department may request an inspection.
4. Documents regarding health and life insurance: This group includes the following. We can request these documents from the insurance company with which we have made transactions (normally, the company will send them to us by post, and we can also request them directly through the company’s website).
- Health insurance premium payment documents for parents can be deducted up to the actual amount paid, but not exceeding 15,000 baht. The parents must have income in the tax year not exceeding 30,000 baht.
- Health insurance premium payment documents (2020 only) can be deducted up to the actual amount paid, but not exceeding 25,000 baht. When combined with life insurance premiums, it must not exceed 100,000 baht.
- Life insurance premium payment certificates can be used for actual deductions, up to a maximum of 100,000 baht. Pension life insurance can be used for actual deductions, up to a maximum of 15 percent of assessable income, but not exceeding 200,000 baht. However, when the pension insurance premiums are combined with savings in the provident fund, savings in the government pension fund, savings in the welfare fund under the Private School Act, and mutual funds for retirement, it must not exceed 500,000 baht in each tax year.
5 Documents for interest on housing loans: In this group, you can actually deduct the amount, up to a maximum of 100,000 baht.
6. Documents certifying the purchase of investment units in the retirement mutual fund (RMF): In this group, the maximum right to use is no more than 30 percent of the income, and when combined with savings in the provident fund or savings in the civil service pension fund or savings in the welfare fund according to the Private School Act, must not exceed 500,000 baht in each tax year.
7 documents certifying the purchase of investment units in SSF or SSFX mutual funds: SSFX will be available only in 2020. SSF can be invested, but together with RMF, provident fund savings or government pension fund savings or private school welfare fund savings, it must not exceed 500,000 baht in each tax year.
8. Donation documents: In this group, you can bring a donation receipt for general public charities. You can deduct the actual amount, not exceeding 10 percent of net income. However, if it is for educational support, social assistance, hospitals, and donations to the Justice Fund, you can deduct twice the amount of the donation.
9. Pregnancy and childbirth expenses: In this group, we can deduct prenatal and childbirth expenses from our taxes up to 60,000 baht, based on the actual amount paid for each pregnancy. We can use the tax deduction for expenses incurred from January 1, 2020 onwards.
10 Shop Dee Mee Kuen projects: In this group, you can use a full-form tax invoice for purchasing products in the Shop Dee Mee Kuen project or a receipt for purchasing books or OTOP products from the Shop Dee Mee Kuen project, with a total cost of up to 30,000 baht (available only in 2020). Caution: Do not shop beyond your means or shop beyond the tax ceiling.
11 First Home Projects: In the case that we purchase the first home that is registered for transfer of ownership during 13 October 2015 – 31 December 2016, we can also use the tax deduction privilege. We must have a certificate of the amount paid for the purchase of real estate, a certificate of the purchase of real estate that it is the first residence (can view the form of the Revenue Department), a copy of the real estate purchase-sale, and a copy of the loan agreement (in the case of requesting a loan from a bank or financial institution).
12 Certificate of deduction for the care of disabled or handicapped people. Deduction of 60,000 baht per person. The conditions are that the disabled person must have a disabled person ID card and indicate the name of the income earner as the caregiver on the disabled person ID card. The disabled person must have income in the tax year not exceeding 60,000 baht or the disabled person must have been disabled for at least 180 days, have a medical certificate issued in the tax year for which the deduction is requested, and have a certificate of being a caregiver for the disabled person.
13. Other income certificates or documents other than salary
Other documents such as dividend tax credit documents for those who invest in stocks, withholding tax certificates, various mutual funds, in the case that we invest in mutual funds that pay dividends, the dividends received will be subject to a 10% tax deduction (if our tax base is lower than 10%, we can get a tax credit back on this dividend).
Let’s check and see how much tax we will have to pay?
Admin would like us to understand and try to calculate our own taxes from now on because we still have a little over a month left until the end of the 2020 tax year. Therefore, we must hurry to plan to reduce taxes for our own benefit.
At this stage, the admin uses SCBAM’s tax calculation form, which is a simple tax calculation program that helps us prepare and plan our taxes better. You can download it here: Download tax calculation form
Tax calculation form for 2020 which is very good. It has everything for deductions and also has English language options for foreigners working in Thailand.
Case study
Mr. A has a full-time job (single) with a salary of 50,000 baht (has only one source of income, must submit form Por.Ngor.Dor.91). Mr. A’s income is 600,000 baht (in the case of no bonus) and he has a 5% provident fund and no other additional deductions.
Mr. A’s income, after deducting 50% of expenses (but not exceeding 100,000 baht) = 100,000 baht, deducting 79,000 baht in deductions, and deducting 20,000 baht in exempted income.
Mr. A’s net income is 401,000 baht.
If we enter this information into the tax calculation program, the details will be as shown in Figure 2.
From Figure 2, it shows that if no tax deductions are taken into account, Mr. A must pay 2020 tax of 17,600 baht, approximately 4.4% of Mr. A’s total annual income.
Therefore, if Mr. A increases the tax deduction in some matters, such as:
- Deduction for parental support: For your own expenses, you will get an additional 60,000 baht in deductions. However, be careful because if Mr. A has already used this right, his remaining siblings will not be able to use this deduction anymore.
- Health and life insurance: Working people should have some insurance. In this case, Mr. A should have health and life insurance, 15,000 baht each.
- Shop Dee Mee Kuen Project: If you have it, you have to use it. Let’s say Mr. A spends 10,000 baht on new clothes for work next year.
Just by using the tax deductions, plus what working people need (health insurance and life insurance) and using the additional tax deduction scheme, Mr. A saved 10,000 baht in taxes because from the calculation, he actually had to pay only 7,600 baht.
If he files his personal income tax form with the above conditions, Mr. A will be able to claim the excess tax paid (tax credit) of up to 10,000 baht.
And if Mr. A has foresight and plans for retirement by investing in retirement mutual funds (RMF) and savings mutual funds (SSF) at 30,000 baht each, totaling 60,000 baht, Mr. A will pay only 4,550 baht in taxes for 2020.
From Mr. A’s example, it can be seen that if Mr. A lets others help him file his taxes without understanding them, he will have to pay 17,600 baht in taxes for 2020. However, if Mr. A tries to understand and file himself, he has the option to pay less taxes by 7,600 baht (10,000 baht tax credit) or 4,550 baht (13,050 baht tax credit).
Conclusion for this story
Taxes are the duty of every Thai person to pay. Therefore, personal income tax, especially for working people like us, is something we must understand and take responsibility for planning and filing taxes ourselves, not for anyone, but for our own benefit.
Finally, we recommend that you start planning today. Download the tax calculator and try it out to make a preliminary assessment of how much tax you will have to pay and what measures or matters you will use to reduce your tax. This will allow you to save as much tax as possible and make your future financial planning easier.
Source: https://www.rd.go.th and https://www.scbam.com/th/service-channel/service-income-tax/
For more articles about taxes , please read: Taxes: Why do we have them? Why do we have to pay them? Where do they go after we pay?
