Filing personal income tax is an important responsibility for people whose income meets the legal threshold. Understanding tax rules can help with financial planning and accurate filing. This article covers 2021 income filed in 2022, as described in the source. Tax rules and thresholds may have changed; verify current requirements with the Revenue Department before filing.
How personal income tax is calculated
Before filing, understand the calculation methods so you can determine how much tax may be due and which method applies.
Two calculation methods: net income and assessable income
There are two main methods described in the source: calculating tax on net income and calculating tax on assessable income.
Net income: Deduct expenses and allowances permitted by law from total income. The result is net income, which is then used to calculate tax under the personal income tax rates.
Assessable income: The source describes this method as adding income other than salary and multiplying it by a 0.5% tax rate. Confirm whether this applies to your income and filing period under current law.
The source says that the net-income method generally results in more tax and is more familiar to many people. Do not rely on this generalization without calculating your own case under current rules.
Choose the method that produces the higher tax
The source advises comparing the tax under both methods and choosing the one that produces the higher amount. Verify the rule and any exceptions with current official guidance before filing.
Personal income tax rate table
After calculating net income, compare it with the personal income tax brackets to calculate the amount due. The source describes rates ranging from 0% to 35% depending on net income.
What counts as income?
When filing taxes, it is important to understand how “assessable income” differs from the broader term “income.”
The difference between income and assessable income
Income: Money received from work or other activities, such as salary, wages, or sales.
Assessable income: Income used to calculate tax after applying expenses and allowances allowed by law.
Eight categories of assessable income
The source groups assessable income into eight categories for calculating tax and eligible expenses:
- Category 1: Salary and wages
- Category 2: Fees and commissions
- Category 3: Royalties
- Category 4: Interest
- Category 5: Rent
- Category 6: Professional services
- Category 7: Contract work
- Category 8: Other income, such as online sales
How to report interest and dividends
For interest and dividends, the source says a taxpayer may choose whether to include them in the main tax calculation or pay tax separately. Eligibility and current options depend on the applicable rules.
Expenses that may be deducted
After identifying the income category, review which expenses may be deducted. Eligible expenses can reduce taxable income.
Tax deductions are not every real-life expense
Deductible expenses are not all the costs you pay in everyday life. Only expenses allowed by law may be deducted.
Standard expense deductions
A standard deduction is a percentage set by law for a particular income category. The source gives a personal expense deduction of 40% of assessable income, capped at 60,000 baht. This is a historical figure from the source; verify the current amount and eligibility.
Actual expenses
Actual expenses may be deducted when supporting documents show they relate to earning the income, such as business costs or other income-related expenses.
Examples for employees and online sellers
Employees: The source says salary earners may deduct 40% of income, up to 60,000 baht, under the historical rules it describes.
Online sellers: It says actual expenses may be deducted when supported by relevant records, such as product costs, shipping, and advertising.
Tax allowances
In addition to expenses, tax allowances may reduce taxable income when the applicable conditions are met.
Three allowance groups: personal responsibilities, government policy, and saving or investing
The source groups allowances into three broad areas:
- Personal responsibilities: Personal, spouse, and child allowances, and support for parents
- Government policy: Life and health insurance premiums and interest on a home loan
- Saving and investing: Retirement Mutual Funds (RMF), Super Savings Funds (SSF), provident fund contributions, and annuity life insurance premiums
Details vary by allowance
Each allowance has different conditions and limits. Study the details before claiming it.
Donations and tax deductions
Donations may qualify for a deduction, subject to the conditions and limits set by law.
Summary and reminders
Online filing may be straightforward when you understand the requirements and prepare your records. This article concerns tax year 2021 and is not a current filing guide.
Gather income information and documents
Collect all income information and related documents, such as withholding tax certificates (50 bis), expense evidence, and documents supporting allowances.
Deduct expenses under the correct income category
Choose deductions that apply to the type of income you received.
Collect eligible allowance records
Gather documentation for allowances you may be entitled to claim.
Keep supporting documents
Keep your supporting records in case they are requested later. The source says they do not all need to be submitted with the filing itself; check the current filing process.
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