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A number of months in the past, I used to be interviewed by Channel Information Asia (CNA) for recommendation on easy methods to cut back one’s earnings tax invoice, which I penned right into a weblog put up right here as nicely. With tax season right here, a lot of you may have requested if there’s a particular one for working dad and mom like myself, so this text is for you – could this provide help to to scale back your earnings taxes!
There are 18 methods you should use to scale back your earnings 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 – cut back the chargeable earnings 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 yr, 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 totally different reliefs/rebates that working dad and mom can use to scale back your earnings tax:
- Parenthood Tax Rebate (one-off)
- Qualifying Youngster Aid – $4,000 per little one
- Dad or mum 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 interact their dad and mom/in-laws to take care of their little one 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 High-Up Aid – for voluntary top-ups made to your / your family members’ CPF
- Course Charge Aid – for related upgrading programs taken within the yr
- Supplementary Retirement Scheme – for many who voluntarily top-up your SRS account
- Donate to charity – get 250% tax deduction if 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 yr that your little one is born. Should you didn’t expend the entitlement, it can carry ahead and you should use it to offset your subsequent years tax payments till the rebate has been totally used up.
So in case your little one is older than 1 yr previous, then you possibly can overlook about this rebate…till you may have one other little one, that’s.
Qualifying Youngster Aid (QCR)
That is robotically given by IRAS in a 50-50 equal break up per mum or dad as soon as the kid is born, the place it’s also possible to declare QCR of $4,000 per little one or $7,500 HCR per little one so long as your little one will not be incomes an earnings.
This may be break up between you and your partner, if want be.
Tip: As confirmed by IRAS, it will be a financially smarter resolution to present the QCR to the upper earnings partner.
Dad or mum Aid
A minimum of 55 years previous and earns not more than $4,000 in a yr. Should you’re staying along with your mum or dad, you possibly can 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 residence and never working, you possibly can declare a most of S$2,000 for Partner Aid. Nevertheless, take notice that this aid can’t be claimed at the side of the Dad or mum Aid. Right here’s an instance:
e.g. Dad needs to say for Partner Aid as a result of his spouse will not be working, however on the similar time the siblings need to declare the Dad or mum Aid on the mom as nicely, 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 youngsters claiming for Dad or mum Aid on their non-working mom would get $9,000 vs. the dad claiming $2,000 by way of Partner Aid.
Grandparent Caregiver Aid
Solely claimable by married girls, and designed for conditions the place the mom asks the grandparents to assist maintain their younger children in order that they will return to work.
And even when your little one has greater than 1 caregiver (e.g. each your mother and pop are retired and serving to to take care of your children), you possibly can nonetheless solely declare for a most of $3,000 on one associated caregiver beneath 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 earnings. However ranging from YA2024, this might be modified to cowl grandparents whose annual earnings not exceeding $4,000 you possibly can 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 should you don’t have a toddler.
You may declare as much as 2 instances the quantity of levy that you just paid within the earlier yr on 1 home employee.
Should you’re wealthy sufficient to afford and make use of greater than 1 home helper, please learn right here for a way a lot aid you possibly can declare.
CPF Money High-Up Aid
Once you make voluntary money contributions to your CPF account or that of your family members, you possibly can declare for tax reliefs on these. The utmost CPF Money High-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 yr.
This implies you possibly can declare for the utmost by doing the next strikes:
- Make a voluntary money prime as much as your Particular/Retirement/MediSave Account
- High up your family members Particular/Retirement/MediSave Account
Be aware: Family members refer to folks, parents-in-law, grandparents, grandparents-in-law, partner and siblings. Nevertheless, you possibly can solely get tax reliefs for top-ups to your partner or siblings’ if they’ve an annual earnings lower than $4,000 within the yr 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 test 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 Charge Aid
According to lifelong studying, so long as you may have attended a course or convention that may result in the next 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.
Be aware: You can’t declare for programs which are for leisure functions or basic expertise (e.g. baking / social media / fundamental web site constructing). Neither are you able to declare for programs that had been paid by way of 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 stated that this may lapse for YA2026 onwards 🙁
(Supply: IRAS Deputy Director, Particular person Revenue 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 can help 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 would possibly need to take into account investing it as a substitute. Learn this for some concepts on what you possibly can make investments your SRS monies in!
If you would like 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 here are a number of the hottest ones that fellow SRS buyers are going for.
NSman Aid (self, spouse and mum or dad)
All eligible operationally prepared Nationwide Servicemen (NSmen) are entitled to NSman tax aid, together with their spouse and oldsters in recognition of the help given.
In case your husband is an NSman, it’s also possible to declare $750 beneath 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 mum or dad whose son is an NSman, every mum or dad can declare $750 whatever the variety of youngsters who’re NSmen. Sure, so meaning regardless that I’ve two boys, I gained’t be capable to 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 possibly can solely get EITHER the Spouse OR Dad or mum aid of $750 (and never $750 x 2). Not honest? Yeah, I believe so too 🙁
Donate to charity
Once you donate to any charity that’s an accepted Establishment of a Public Character (IPC), you possibly can take pleasure in a 250% tax deduction based mostly in your donation quantity.
That is normally robotically calculated and utilized in your tax invoice – supplied that your donation went to a registered IPC.
For instance, should you donated $1k to an accepted charity, $2.5k might be deducted out of your whole earnings to be assessed. And if that brings you all the way down to the decrease earnings tax bracket tier, it’ll positively carry you much more pleasure than the gratification you felt from doing deed. Speak about killing two birds with one stone!
Reliefs with probably the most monetary impression
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 likewise to my very own SRS account.
The opposite reliefs barely transfer the needle, however assist to inch nearer to the utmost earnings reliefs cap of $80,000. And every time I discover myself on the sting of 1 earnings tax bracket, I’ll resort to Methodology #4 (donate to charity) to attempt to see if I can carry myself down one tier.
Should you’re in a family the place the husband is the higher-income partner, then it might be price giving your entire QCR, GCR and Dad or mum Aid to them in order that your whole family earnings taxes payable will turn out to be a lot decrease.
What different earnings tax hacks do you employ?
Share should you discovered this text useful!
With love,
Finances Babe
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