A number of months in the past, I used to be interviewed by Channel Information Asia (CNA) for recommendation on the best way to cut back one’s earnings tax invoice, which I penned right into a weblog publish right here as properly. With tax season right here, a lot 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 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 “aid” vs “rebates”, right here’s the definition supplied 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 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 completely different reliefs/rebates that working dad and mom can use to scale back your earnings tax:

• Parenthood Tax Rebate (one-off)
• Qualifying Youngster Reduction – $4,000 per little one
• 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 little one whereas they return to work
• Overseas 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 High-Up Reduction – for voluntary top-ups made to your / your family members’ CPF
• Course Charge Reduction – 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 simple abstract desk:

Parenthood Tax Rebate (PTR)

That is solely one-off, within the yr that your little one is born. For those who didn’t deplete the entitlement, it can 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 little one is older than 1 yr previous, then you may overlook about this rebate…till you will have one other little one, that’s.

Qualifying Youngster Reduction (QCR)

That is robotically given by IRAS in a 50-50 equal cut up per mother or father as soon as the kid is born, the place you too can declare QCR of $4,000 per little one or $7,500 HCR per little one so long as your little one is just not incomes an earnings.

This may be cut up between you and your partner, if want be.

Tip: As confirmed by IRAS, it will be a financially smarter choice to provide the QCR to the upper earnings partner.

Guardian Reduction

At the least 55 years previous and earns not more than $4,000 in a yr. For those who’re staying together with your mother or father, 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 Reduction both.

Partner Reduction

If one partner is staying house and never working, you may declare a most of S$2,000 for Partner Reduction. Nevertheless, take notice 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 is just not working, however on the identical time the siblings need to declare the Guardian Reduction on the mom as properly, then each reliefs can’t be claimed on the identical time on the identical dependent. On this case, the household might want to talk about who will get to say what!

Financially, the smarter approach could be to say the upper aid i.e. the youngsters 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 handle their younger children in order that they’ll return to work.

And even when your little one has greater than 1 caregiver (e.g. each your mother and pa 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 below 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.

Overseas 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 when you don’t have a toddler.

You may declare as much as 2 occasions the quantity of levy that you simply paid within the earlier yr 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 a way a lot aid you may declare.

CPF Money High-Up Reduction

While 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 Reduction per 12 months of Evaluation has additionally just lately been raised to $16,000 (most $8,000 for self, and most $8,000 for relations) as of final yr.

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

Be aware: Family members refer to folks, 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 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.

Try extra data and eligibility standards right here.

Course Charge Reduction

In keeping 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 too can 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 common expertise (e.g. baking / social media / fundamental 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 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 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 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 would possibly need 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 an easier, 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 Reduction (self, spouse and mother or father)

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, you too can declare $750 below the NSman Spouse Reduction. Consider it because the nation thanking you for supporting your husband in his service to the nation.

And if you’re a mother or father whose son is an NSman, every mother or father can declare $750 whatever the variety of kids who’re NSmen. Sure, so meaning regardless that 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 aid of $750 (and never $750 x 2). Not truthful? Yeah, I feel so too 🙁

Donate to charity

While 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 often robotically calculated and utilized in your tax invoice – supplied that your donation went to a registered IPC.

For instance, when you donated $1k to an accepted charity, $2.5k will likely be deducted out of your whole 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 a superb deed. Discuss killing two birds with one stone!

Reliefs with essentially the most monetary affect

Essentially 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 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.

For those who’re in a family the place the husband is the higher-income partner, then it could be value giving your complete QCR, GCR and Guardian Reduction to them in order that your whole family earnings taxes payable will turn into a lot decrease.

What different earnings tax hacks do you employ?

Share when you discovered this text useful!

With love,
Finances Babe