How to Claim Interest Expense as Tax Deduction

[@migueljose5547]

Thank you for sharing! One question, does this apply if I use my personal credit card to borrow cash? Say I bought a 100k motor bike for delivery. What documents do I need to deduct the interest charged by the credit card?

[@gerardcarpizo]

Hi Miguel. If the interest incurred qualifies in the deductibility requirement, then yes. Tho take note of item J. You could attach your statement of account as proof of interest incurred.

[@Zuriel_CPA_MBA]

Maraming salamat po, pang board exam

[@gerardcarpizo]

You're welcome Zuriel. You can also watch my other tax videos related to CPALE

[@rogue66v]

sir may vid po kayu sa difference between OR and sales invoice?

[@gerardcarpizo]

No video currently. In general, the difference is sales invoice could be used for sales whereas OR is primarily used for service revenue.

[@genesytimonera7263]

Hi Sir! I just wanna ask on how to determine the Arbitrage limit. It says that it is determined by the net of final tax divided by 80%. is the 80% the standard or do we change it depending on the interest income or final tax? Thank you!

[@theinsights7564]

Hi Sir, is it required to withhold 2% if we are top 20,000 Corp. In order for our interest expense on loans to become deductible expense?

[@gerardcarpizo]

Yes, interest from borrowings used in the business is normally allowed as a deduction most esp for corps required to withhold 2% being in top 20k.

[@ezrajoy5116]

Thank you Sir!

[@gerardcarpizo]

Welcome Ezra, tho check the rate as there was an update on this recently but tje computation is still the same. :)

[@chinchinjapin6708]

Hi sir! Ask lang ako kasi I'm still confused on the interest income in consideration of the arbitrage limit, does it pertain to the few hundred pesos interest income on bank savings deposit released by banks on a quarterly basis?

[@gerardcarpizo]

Hi Chinchin, yes as interest income from bank deposits are subject to final tax. Tax arbitrage is used in claiming deduction on interest expense.

[@chinchinjapin6708]

@@gerardcarpizo thank you for replying po :)

[@marketbuy]

How about investment interest expense (margin)?

[@gerardcarpizo]

The general qualification of expenses should be followed for it to be deductible as mentioned in the video, one deviation thereof could make it disallowed.

[@renzonicolas6801]

Sir kapag special corp at exempt corp, fully deductibel? Ung int exp

[@gerardcarpizo]

Hi Renzo. No, subject padin sa limits ng arbitrage sa interest, considering also na ordinary and/or necessary yung interest sa operation ng special corp.

[@renzonicolas6801]

@@gerardcarpizo Thank u sir sa reply. Pero diba ang computation ng deductiin sa int expense for example hindi siya msme Rcit 25 minus rate of fwt of 20 percent equals 5 percent divide by rcit 25 equals 20 percent ng int income subj to fwt.

[@renzonicolas6801]

Samantalang kapag msme 20 percent rcit minus fwt rate of 20 eqauls 0 dive by 20 na rcit. Edu fully deductible sa.msme without reduction ng int income?

[@renzonicolas6801]

Pero tama po kapag msme, fully deductible ang interest expense ng wlaang reduction ng int income from banks na 20%

[@obiaspatriciamae5485]

Hi sir. Ask ko lang po kung yung 33% sa pagcompute ng arbitrage limit is constant po, regardless kung domestic corp or individual taxpayers?