A couple of months in the past, I used to be interviewed by Channel Information Asia (CNA) for recommendation on methods to cut back one’s earnings tax invoice, which I penned right into a weblog submit right here as effectively. With tax season right here, a lot of you’ve gotten requested if there’s a particular one for working mother and father like myself, so this text is for you – could this show you how to to scale back your earnings taxes!
There are 18 methods you should utilize 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 “reduction” vs “rebates”, right here’s the definition offered by IRAS:
- Reliefs – cut back the chargeable earnings 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 totally different reliefs/rebates that working mother and father can use to scale back your earnings tax:
- Parenthood Tax Rebate (one-off)
- Qualifying Little one Aid – $4,000 per baby
- Guardian Aid – for non-working mother and father whom you’re supporting
- Partner Aid – for a non-working partner whom you’re supporting
- Grandparent Caregiver Aid – for working moms who interact their mother and father/in-laws to take care of their baby 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 Payment Aid – 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 while 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. When you didn’t expend the entitlement, it should 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 outdated, then you may overlook about this rebate…till you’ve gotten one other baby, that’s.
Qualifying Little one Aid (QCR)
That is routinely given by IRAS in a 50-50 equal cut up per mum or dad as soon as the kid is born, the place you may also declare QCR of $4,000 per baby or $7,500 HCR per baby so long as your baby will not be incomes an earnings.
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 present the QCR to the upper earnings partner.
Guardian Aid
A minimum of 55 years outdated and earns not more than $4,000 in a 12 months. When you’re staying together with your mum or dad, you may 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 may declare a most of S$2,000 for Partner Aid. Nevertheless, take word that this reduction can’t be claimed along with the Guardian Aid. Right here’s an instance:
e.g. Dad desires to assert for Partner Aid as a result of his spouse will not be working, however on the similar time the siblings wish to declare the Guardian 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 talk about who will get to assert what!
Financially, the smarter method can be to assert the upper reduction i.e. the kids claiming for Guardian 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 ladies, 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 baby has greater than 1 caregiver (e.g. each your mother and pop are retired and serving to to take care of your children), you may 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 earnings. However ranging from YA2024, this will likely be modified to cowl grandparents whose annual earnings not exceeding $4,000 you may 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 case you don’t have a toddler.
You possibly can declare as much as 2 occasions the quantity of levy that you simply paid within the earlier 12 months on 1 home employee.
When you’re wealthy sufficient to afford and make use of greater than 1 home helper, please learn right here for the way a lot reduction you may declare.
CPF Money High-Up Aid
Once you make voluntary money contributions to your CPF account or that of your family members, you may declare for tax reliefs on these. The utmost CPF Money High-up Aid per Yr of Evaluation has additionally lately been raised to $16,000 (most $8,000 for self, and most $8,000 for members of the family) as of final 12 months.
This implies you may declare for the utmost by doing the next strikes:
- Make a voluntary money high as much as your Particular/Retirement/MediSave Account
- High 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 may solely get tax reliefs for top-ups to your partner or siblings’ if they’ve an annual earnings lower than $4,000 within the 12 months prior (wage, financial institution curiosity, dividends and/or pension) or they’re handicapped.
The tax reduction is barely 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 data and eligibility standards right here.
Course Payment Aid
In step with lifelong studying, so long as you’ve gotten attended a course or convention that may result in a better qualification related to your employment or vocation, then you may also 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 common 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 can lapse for YA2026 onwards 🙁
(Supply: IRAS Deputy Director, Particular person Earnings 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 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 wish to think about investing it as a substitute. Learn this for some concepts on what you may make investments your SRS monies in!
If you’d like a less complicated, fuss-free methodology 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 traders are going for.
NSman Aid (self, spouse and mum or dad)
All eligible operationally prepared Nationwide Servicemen (NSmen) are entitled to NSman tax reduction, together with their spouse and oldsters in recognition of the help given.
In case your husband is an NSman, you may also 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 if you’re 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 which means though I’ve two boys, I received’t be capable to declare 2 x the reliefs on every of them sooner or later.
Properly, what if you’re a mom the place each your husband and son are NSmen? In that case, you may solely get EITHER the Spouse OR Guardian reduction 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 may take pleasure in a 250% tax deduction based mostly in your donation quantity.
That is normally routinely calculated and utilized in your tax invoice – offered that your donation went to a registered IPC.
For instance, in case you donated $1k to an accepted charity, $2.5k will likely be deducted out of your complete earnings to be assessed. And if that brings you right down to the decrease earnings tax bracket tier, it’ll positively deliver you much more pleasure than the gratification you felt from doing deed. Discuss killing two birds with one stone!
Reliefs with probably the most monetary influence
Essentially the most vital tax reduction 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 Technique #4 (donate to charity) to try to see if I can deliver myself down one tier.
When you’re in a family the place the husband is the higher-income partner, then it might be price giving the whole QCR, GCR and Guardian Aid to them in order that your complete family earnings taxes payable will turn out to be a lot decrease.
What different earnings tax hacks do you utilize?
Share in case you discovered this text useful!
With love,
Price range Babe
