A couple of months in the past, I used to be interviewed by Channel Information Asia (CNA) for recommendation on the right way to scale back one’s revenue tax invoice, which I penned right into a weblog submit right here as effectively. With tax season right here, lots of you will have requested if there’s a particular one for working dad and mom like myself, so this text is for you – could this aid you to scale back your revenue taxes!
There are 18 methods you need to use 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 offered by IRAS:
- Reliefs – scale back the chargeable revenue that you simply’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, will probably 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 Little one Aid – $4,000 per youngster
- Father or mother Aid – for non-working dad and mom whom you’re supporting
- Partner Aid – for a non-working partner whom you’re supporting
- Grandparent Caregiver Aid – for working moms who have interaction their dad and mom/in-laws to take care of their youngster whereas they return to work
- International Home Employee Levy Aid – for working moms who rent a home helper to take care of the family whereas they return to work
- CPF Money Prime-Up Aid – for voluntary top-ups made to your / your family members’ CPF
- Course Charge Aid – for related upgrading programs taken within the 12 months
- Supplementary Retirement Scheme – for many who voluntarily top-up your SRS account
- Donate to charity – get 250% tax deduction whenever you donate to IPCs
There are some that may solely be claimed by working moms vs. working fathers, so right here’s one other straightforward abstract desk:
Parenthood Tax Rebate (PTR)
That is solely one-off, within the 12 months that your youngster is born. For those who didn’t dissipate the entitlement, it’ll carry ahead and you need to use it to offset your subsequent years tax payments till the rebate has been totally used up.
So in case your youngster is older than 1 12 months previous, then you’ll be able to overlook about this rebate…till you will have one other youngster, that’s.
Qualifying Little one Aid (QCR)
That is robotically given by IRAS in a 50-50 equal cut up per guardian as soon as the kid is born, the place you can even declare QCR of $4,000 per youngster or $7,500 HCR per youngster so long as your youngster isn’t incomes an revenue.
This may be cut up between you and your partner, if want be.
Tip: As confirmed by IRAS, it might be a financially smarter resolution to provide the QCR to the upper revenue partner.
Father or mother Aid
At the least 55 years previous and earns not more than $4,000 in a 12 months. For those who’re staying together with your guardian, 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 Aid both.
Partner Aid
If one partner is staying house and never working, you’ll be able to declare a most of S$2,000 for Partner Aid. Nonetheless, take word that this aid can’t be claimed at the side of the Father or mother Aid. Right here’s an instance:
e.g. Dad desires to say for Partner Aid as a result of his spouse isn’t working, however on the similar time the siblings need to declare the Father or mother Aid 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 focus on who will get to say what!
Financially, the smarter approach can be to say the upper aid i.e. the kids claiming for Father or mother Aid on their non-working mom would get $9,000 vs. the dad claiming $2,000 through Partner Aid.
Grandparent Caregiver Aid
Solely claimable by married ladies, and designed for conditions the place the mom asks the grandparents to assist deal with their younger children in order that they will return to work.
And even when your youngster has greater than 1 caregiver (e.g. each your mother and pop are retired and serving to to take care of your children), 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 performing some salaried work (e.g. part-time roles) and incomes an revenue. However ranging from YA2024, this will probably be modified to cowl grandparents whose annual revenue not exceeding $4,000 you’ll be able to nonetheless declare.
International Home Employee Levy Aid
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 toddler.
You possibly can declare as much as 2 instances the quantity of levy that you simply paid within the earlier 12 months on 1 home employee.
For those who’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 Aid
While 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 Aid per 12 months 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 high 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. Nonetheless, 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 just as much as the Full Retirement Sum (FRS), so it’s a good suggestion to examine whether or not you and/or your family members are approaching the FRS in your CPF account(s) earlier than you make the contribution.
Try extra info and eligibility standards right here.
Course Charge Aid
Consistent with lifelong studying, so long as you will have attended a course or convention that may result in a better qualification related to your employment or vocation, then you can even declare as much as a most of $5,500 in course charges reliefs every year.
Word: You can not declare for programs which are for leisure functions or normal abilities (e.g. baking / social media / fundamental web site constructing). Neither are you able to declare for programs that had 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!
Nonetheless, IRAS has stated that this may lapse for YA2026 onwards 🙁
(Supply: IRAS Deputy Director, Particular person Earnings Tax Division, Sau Hing Chin)
Supplementary Retirement Scheme (SRS)
One other straightforward hack is to open an SRS account with any of the three native banks and contribute money into the account, which can let you take pleasure in 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’d like an easier, fuss-free technique of investing your SRS funds that doesn’t want a lot monitoring, try ETFs as a substitute – listed here are among the hottest ones that fellow SRS traders are going for.
NSman Aid (self, spouse and guardian)
All eligible operationally prepared Nationwide Servicemen (NSmen) are entitled to NSman tax aid, together with their spouse and fogeys in recognition of the assist given.
In case your husband is an NSman, you can even declare $750 underneath the NSman Spouse Aid. Consider it because the nation thanking you for supporting your husband in his service to the nation.
And in case you are a guardian whose son is an NSman, every guardian can declare $750 whatever the variety of kids who’re NSmen. Sure, so which means despite the fact that I’ve two boys, I gained’t be capable of declare 2 x the reliefs on every of them sooner or later.
Effectively, 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 Father or mother aid of $750 (and never $750 x 2). Not honest? Yeah, I feel so too 🙁
Donate to charity
While you donate to any charity that’s an permitted Establishment of a Public Character (IPC), you’ll be able to take pleasure in a 250% tax deduction based mostly in your donation quantity.
That is normally robotically calculated and utilized in your tax invoice – offered that your donation went to a registered IPC.
For example, in the event you donated $1k to an permitted charity, $2.5k will probably 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 convey you much more pleasure than the gratification you felt from doing a great deed. Discuss killing two birds with one stone!
Reliefs with essentially the most monetary affect
Essentially the most vital 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 in addition 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 each time I discover myself on the sting of 1 revenue tax bracket, I’ll resort to Technique #4 (donate to charity) to attempt to see if I can convey myself down one tier.
For those who’re in a family the place the husband is the higher-income partner, then it might be price giving your complete QCR, GCR and Father or mother Aid 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,
Price range Babe
