Claiming Tax Exemption for a Dependent after Your Company Has Already Filed Its Annual Income-Tax Return
(Philippine rules, updated to 15 May 2025)
1 | Why the issue still comes up
Many employees discover after their employer has finished year-end “annualization,” issued BIR Form 2316, and filed the employer’s own return (BIR Form 1604-C), that they forgot to declare a new child, a PWD parent, or a change in marital status. They ask whether they can still lower the tax that has already been withheld and reported. The correct answer depends almost entirely on what tax year you are talking about:
| Taxable year | Is there any ordinary “dependent exemption”? | What can still be claimed? | Key forms |
|---|---|---|---|
| 2017 and earlier | Yes – ₱50 000 personal exemption + ₱25 000 per qualified dependent (max 4) under NIRC §35 (A-B) | You may still file (or amend) an individual return and get a refund or carry-over credit | BIR 1700/1701 + supporting proofs |
| 2018 → present (TRAIN era) | No – TRAIN Law (RA 10963) repealed the personal & additional exemptions | Only the controversial ₱25 000 deduction per PWD dependent under RA 10754 may still be asserted | BIR 1701/1701-A, “Special Allowable Itemized Deductions” line |
(NTIA Research Center, RESPICIO & CO., KPMG Assets)
2 | The pre-TRAIN mechanics (TY 2017 and earlier)
Who qualified – legitimate, illegitimate, adopted, or step-children younger than 21, unmarried, not gainfully employed, and living with (chiefly supported by) the taxpayer; any age if mentally/physically incapacitated. Only one parent could claim unless the husband waived in writing. (Respicio & Co.)
How to claim on payroll – an employee filed BIR Form 1902 on hiring and BIR Form 2305 within ten days of any status change; the employer adjusted withholding and reflected the dependents in Form 2316 and the annual alphalist. (Respicio & Co., Grant Thornton Philippines)
Fixing omissions after the employer’s ITR –
- Ask payroll to re-annualize and issue corrected Form 2316 before the employer’s April-15 deadline for 1604-C.
- If that window is missed, file your own BIR Form 1700/1701 (even if you would otherwise qualify for substituted filing); attach the original 2316 plus birth/adoption certificate, waiver (if any), and a computation showing the over-withholding. The return can be filed anytime within the prescriptive period because you are claiming a refund/credit, not paying extra tax. (Tax Summaries, PwC, Reddit)
Refund route – choose either (a) cash refund (file via the RDO that has jurisdiction over the employer; expect audit) or (b) carry-over credit to the next year (simpler; irreversible once chosen). NIRC §76 applies. (Forvis Mazars)
3 | TRAIN Law reset (TY 2018 → present)
- RA 10963 deleted the whole exemption regime and replaced it with a universal ₱250 000 zero-tax bracket; tax rates are now the same whether you are single, married, or supporting four children. Claiming ordinary dependents therefore no longer reduces your income-tax due. (Respicio & Co., Respicio & Co.)
- BIR stopped accepting Form 2305 for exemption updates; RMC 42-2018 told employers to ignore additional-exemption fields in payroll software. (KPMG Assets)
- Employees who discover status changes after the company’s filing can do nothing for tax-saving purposes (there is no exemption left to miss). Updating HR records is still advisable for PhilHealth, SSS, Pag-IBIG and fringe-benefit purposes. (Respicio & Co.)
4 | The lone surviving exception – RA 10754 (PWD dependents)
| Rule | Practical status in 2025 |
|---|---|
| RA 10754 (2016) amended NIRC §35(B) to allow an extra ₱25 000 deduction for every qualified PWD dependent, with no four-dependent cap. | The statutory text was not expressly repealed by TRAIN, but BIR e-forms after 2019 dropped the field. Practitioners are split: some still claim it manually under “Special Allowable Itemized Deductions,” prepared to defend the position in audit; others await a clarifying revenue issuance. (RESPICIO & CO., Respicio & Co.) |
| Documentary burden | PSA birth/affinity proof, PWD ID, medical certificate, sworn declaration that you “chiefly support” the PWD, and (if spouses) a signed waiver showing only one benefactor claims. |
| Risk note | Disallowed claims trigger deficiency tax, 25 % surcharge (or 50 % if wilful) + interest under NIRC §§247-249. (Respicio & Co.) |
If your employer’s return is already filed, you can still assert the PWD-dependent deduction by filing an original (or amended) BIR Form 1701/1701-A on or before 15 April following the year end (or later if you are only claiming a refund). Attach the full PWD dossier. (Tax Summaries)
5 | Step-by-step guide when you do have a legitimate claim
- Gather evidence – birth certificate, PWD ID, sworn declaration, waiver from spouse (if applicable), and the Form 2316 issued by the employer.
- Compute the correct tax – redo the annual tax computation with the allowable deduction; determine the refundable excess withholding.
- File BIR Form 1701/1701-A (eFPS/eBIRForms or manually) plus attachments. Check “Amended Return” if you already filed an original.
- Pick your remedy in Part II: “To be REFUNDED” or “To be CARRIED OVER.”
- Submit supporting documents through eAFS within 15 days of e-filing (or hand-carry to the RDO for manual returns). Retain originals for three years (ordinary) or ten years (if you cross ₱5 million gross). (Omni HR, Lawphil)
6 | Penalties for incorrect claims
- Disallowed pre-TRAIN exemption – deficiency basic tax + 25 % surcharge + interest.
- False PWD-dependent claim – 50 % surcharge (wilful understatement) + interest; criminal prosecution is possible under NIRC §255. Employers that knowingly reflect phantom dependents in payroll are solidarily liable for compromises and penalties. (Respicio & Co.)
7 | Frequently asked questions (quick answers)
| Question | Answer | Authority |
|---|---|---|
| I had a new baby in 2024 but forgot to tell HR. Can I still lower my 2024 tax? | No. Ordinary child exemptions no longer exist. | RA 10963 (Respicio & Co.) |
| My 2016 return never claimed my two kids. Can I still amend? | Yes, within 3 years from the original filing date if you are claiming a refund. | NIRC §204(C) |
| Do I still need Form 2305? | Only for SSS/PhilHealth/Pag-IBIG records; not for tax exemptions. | RMC 42-2018 (KPMG Assets) |
| Our payroll software still shows “ME1/ME2” etc. Does it change my tax? | No. Since 2018 the tax table ignores status codes; they remain for HR convenience only. | (RESPICIO & CO.) |
8 | Take-away checklist for employees and payroll teams (2025)
- Eliminate legacy exemption fields in payroll systems to avoid accidental over-refunding.
- Map dependents separately for statutory benefits (SSS/PhilHealth) versus income-tax-relevant PWD dependents.
- Keep a live folder of PWD documents if you intend to claim the RA 10754 deduction.
- Amend proactively – the sooner you file an individual return, the faster the refund processing clock starts.
- Monitor BIR issuances – the Bureau is expected to release a definitive ruling on RA 10754 vis-à-vis TRAIN; subscribe to RMC alerts.
Bottom line
For tax year 2018 onward, there is generally no income-tax exemption for dependents to lose or to retroactively recover once your company has filed its ITR. The only potential deduction left on the table is the ₱25 000 allowed for each qualified PWD dependent under RA 10754 – and even that must be claimed personally, with full substantiation, via your own BIR Form 1701/1701-A.