Just a few months in the past, I used to be interviewed by Channel Information Asia (CNA) for recommendation on learn how to scale back one’s revenue tax invoice, which I penned right into a weblog publish right here as effectively. With tax season right here, lots of you might have requested if there’s a selected one for working dad and mom like myself, so this text is for you – could this provide help to to scale back your revenue taxes!
There are 18 methods you should utilize to scale back your revenue taxes, aptly summed up within the visible (by IRAS) above. For these of you who’re confused about why sure schemes are named as “aid” vs “rebates”, right here’s the definition supplied by IRAS:
- Reliefs – scale back the chargeable revenue that you just’ll get charged taxes on i.e. earlier than the invoice.
- Rebates = used to offset your tax legal responsibility after the invoice has been ascertained, so if it wasn’t used totally on this 12 months, it will likely be carried over to your following tax payments till it’s used up.
Earlier than we dive into particulars, right here’s a fast overview of the completely different reliefs/rebates that working dad and mom can use to scale back your revenue tax:
- Parenthood Tax Rebate (one-off)
- Qualifying Baby Reduction – $4,000 per baby
- Guardian Reduction – for non-working dad and mom whom you’re supporting
- Partner Reduction – for a non-working partner whom you’re supporting
- Grandparent Caregiver Reduction – for working moms who interact their dad and mom/in-laws to take care of their baby whereas they return to work
- International Home Employee Levy Reduction – for working moms who rent a home helper to take care of the family whereas they return to work
- CPF Money Prime-Up Reduction – for voluntary top-ups made to your / your family members’ CPF
- Course Payment Reduction – for related upgrading programs taken within the 12 months
- Supplementary Retirement Scheme – for individuals who voluntarily top-up your SRS account
- Donate to charity – get 250% tax deduction once you donate to IPCs
There are some that may solely be claimed by working moms vs. working fathers, so right here’s one other simple abstract desk:
Parenthood Tax Rebate (PTR)
That is solely one-off, within the 12 months that your baby is born. In the event you didn’t expend the entitlement, it is going to carry ahead and you should utilize it to offset your subsequent years tax payments till the rebate has been totally used up.
So in case your baby is older than 1 12 months previous, then you’ll be able to neglect about this rebate…till you might have one other baby, that’s.
Qualifying Baby Reduction (QCR)
That is routinely given by IRAS in a 50-50 equal cut up per dad or mum as soon as the kid is born, the place it’s also possible to declare QCR of $4,000 per baby or $7,500 HCR per baby so long as your baby will not be incomes an revenue.
This may be cut up between you and your partner, if want be.
Tip: As confirmed by IRAS, it will be a financially smarter resolution to offer the QCR to the upper revenue partner.
Guardian Reduction
At the very least 55 years previous and earns not more than $4,000 in a 12 months. In the event you’re staying together with your dad or mum, you’ll be able to declare as much as $9,000 – however that is shared between siblings. The identical dependent can’t be used to concurrently declare for Partner Reduction both.
Partner Reduction
If one partner is staying house and never working, you’ll be able to declare a most of S$2,000 for Partner Reduction. Nevertheless, take word that this aid can’t be claimed at the side of the Guardian Reduction. Right here’s an instance:
e.g. Dad desires to say for Partner Reduction as a result of his spouse will not be working, however on the similar time the siblings need to declare the Guardian Reduction on the mom as effectively, then each reliefs can’t be claimed on the similar time on the identical dependent. On this case, the household might want to talk about who will get to say what!
Financially, the smarter manner could be to say the upper aid i.e. the kids claiming for Guardian Reduction on their non-working mom would get $9,000 vs. the dad claiming $2,000 through Partner Reduction.
Grandparent Caregiver Reduction
Solely claimable by married ladies, and designed for conditions the place the mom asks the grandparents to assist deal with their younger youngsters in order that they will return to work.
And even when your baby has greater than 1 caregiver (e.g. each your mother and pa are retired and serving to to take care of your youngsters), you’ll be able to nonetheless solely declare for a most of $3,000 on one associated caregiver underneath GCR.
Previously, you couldn’t declare this if the grandparent was nonetheless doing a little salaried work (e.g. part-time roles) and incomes an revenue. However ranging from YA2024, this will likely be modified to cowl grandparents whose annual revenue not exceeding $4,000 you’ll be able to nonetheless declare.
International Home Employee Levy Reduction
That is additionally solely claimable by working moms, for conditions the place they rent a home employee to assist take care of the family whereas they work. Doesn’t matter in the event you don’t have a baby.
You possibly can declare as much as 2 instances the quantity of levy that you just paid within the earlier 12 months on 1 home employee.
In the event you’re wealthy sufficient to afford and make use of greater than 1 home helper, please learn right here for the way a lot aid you’ll be able to declare.
CPF Money Prime-Up Reduction
If you make voluntary money contributions to your CPF account or that of your family members, you’ll be able to declare for tax reliefs on these. The utmost CPF Money Prime-up Reduction per Yr of Evaluation has additionally lately been raised to $16,000 (most $8,000 for self, and most $8,000 for relations) as of final 12 months.
This implies you’ll be able to declare for the utmost by doing the next strikes:
- Make a voluntary money prime as much as your Particular/Retirement/MediSave Account
- Prime up your family members Particular/Retirement/MediSave Account
Word: Family members refer to oldsters, parents-in-law, grandparents, grandparents-in-law, partner and siblings. Nevertheless, you’ll be able to solely get tax reliefs for top-ups to your partner or siblings’ if they’ve an annual revenue lower than $4,000 within the 12 months prior (wage, financial institution curiosity, dividends and/or pension) or they’re handicapped.
The tax aid is barely as much as the Full Retirement Sum (FRS), so it’s a good suggestion to verify whether or not you and/or your family members are approaching the FRS in your CPF account(s) earlier than you make the contribution.
Take a look at extra data and eligibility standards right here.
Course Payment Reduction
In step with lifelong studying, so long as you might have attended a course or convention that may result in a better qualification related to your employment or vocation, then it’s also possible to declare as much as a most of $5,500 in course charges reliefs annually.
Word: You can’t declare for programs which are for leisure functions or normal abilities (e.g. baking / social media / primary web site constructing). Neither are you able to declare for programs that have been paid through SkillsFuture credit or your employer. I do know, as a result of I attempted and needed to name in to make clear!
Nevertheless, IRAS has mentioned that it will lapse for YA2026 onwards 🙁
(Supply: IRAS Deputy Director, Particular person Revenue Tax Division, Sau Hing Chin)
Supplementary Retirement Scheme (SRS)
One other simple hack is to open an SRS account with any of the three native banks and contribute money into the account, which is able to will let you get pleasure from as much as $15,300 of tax reliefs ($35,700 for foreigners).
The one draw back of that is that deposits in your SRS account earn solely 0.05% p.a. curiosity, so that you may need to think about investing it as a substitute. Learn this for some concepts on what you’ll be able to make investments your SRS monies in!
If you need an easier, fuss-free technique of investing your SRS funds that doesn’t want a lot monitoring, take a look at ETFs as a substitute – listed below are among the hottest ones that fellow SRS traders are going for.
NSman Reduction (self, spouse and dad or mum)
All eligible operationally prepared Nationwide Servicemen (NSmen) are entitled to NSman tax aid, together with their spouse and oldsters in recognition of the assist given.
In case your husband is an NSman, it’s also possible to declare $750 underneath the NSman Spouse Reduction. Consider it because the nation thanking you for supporting your husband in his service to the nation.
And in case you are a dad or mum whose son is an NSman, every dad or mum can declare $750 whatever the variety of kids who’re NSmen. Sure, so which means though I’ve two boys, I gained’t be capable of declare 2 x the reliefs on every of them sooner or later.
Properly, what in case you are a mom the place each your husband and son are NSmen? In that case, you’ll be able to solely get EITHER the Spouse OR Guardian aid of $750 (and never $750 x 2). Not truthful? Yeah, I believe so too 🙁
Donate to charity
If you donate to any charity that’s an authorized Establishment of a Public Character (IPC), you’ll be able to get pleasure from a 250% tax deduction primarily based in your donation quantity.
That is normally routinely calculated and utilized in your tax invoice – supplied that your donation went to a registered IPC.
For instance, in the event you donated $1k to an authorized charity, $2.5k will likely be deducted out of your complete revenue to be assessed. And if that brings you right down to the decrease revenue tax bracket tier, it’ll undoubtedly carry you much more pleasure than the gratification you felt from doing deed. Speak about killing two birds with one stone!
Reliefs with essentially the most monetary affect
Probably the most important tax aid that I get is unquestionably the WMCR, adopted by my strikes in topping up money to my CPF, my dad’s CPF and likewise to my very own SRS account.
The opposite reliefs barely transfer the needle, however assist to inch nearer to the utmost revenue reliefs cap of $80,000. And at any time when I discover myself on the sting of 1 revenue tax bracket, I’ll resort to Technique #4 (donate to charity) to try to see if I can carry myself down one tier.
In the event you’re in a family the place the husband is the higher-income partner, then it could be value giving all the QCR, GCR and Guardian Reduction to them in order that your complete family revenue taxes payable will develop into a lot decrease.
What different revenue tax hacks do you employ?
Share in the event you discovered this text useful!
With love,
Funds Babe
