Last updated on March 20th, 2018 at 03:47 pm
I opened my mailbox today and 2 IRAS letters caught my eye. Yes, it is the tax filing season again….
Unlike usual mail from IRAS, what was received today contained a brightly designed handbook “Tax tips all parents should know” and not their usual letter filled with payment instructions.
You may be receiving yours soon. It seems every government department knows about my Baby Isaac’s existence and this handbook was aptly sent before I call their hotline for assistance.
Before going into the “IRAS technical terms”, let’s recap on how taxes are calculated
Less: Personal relief (CPF,SRS, etc..)
= CHARGEABLE INCOME
(@ tax rates)
= TAX AMOUNT
Less: Parenthood tax rebates
= TAX PAYABLE
5 tax benefits highlighted in the tax handbook that you should definitely take advantage of:
1) Working Mother Child Relief (WMCR)*
This is powerful! If you are also a working mummy, like my wife, WMCR gives you a 15% relief off your earned income. If you earn $100,000, a $15,000 relief applies. For the 2nd child it’s 20%, and 25% for 3rd and subsequent child, This relief can be claimed together with the Qualifying Child Relief (QCR), capped at $50,000 per child!
2) Qualifying Child Relief (QCR)
The QCR is a $4,000 relief that CAN BE SHARED. Between you and your spouse, it will be to your benefit to calculate who has the higher “Chargeable income” and tag the QCR to that person.
3) Foreign Maid Levy Relief (FMLR)*
If you have kids less than 16 years old, you would be paying only $60 per month in levy for hiring a maid. For mummies, this FMLR gives you a $1,920 relief off your total income. For normal rate of levy at $265/m, the FMLR will be $6,360 accordingly.
4) Grandparent Caregiver Relief (GCR)*
For working mummies, if any of your parent or parent-in-law is not working, you may explore claiming the GCR. Unfortunately for my case, they are all working and we do not qualify for this. GCR is a $3,000 relief to you.
5) Parenthood tax rebate (PTR)
Unlike reliefs, the parenthood tax rebate come in after the tax amount has been determined. This means a direct discount on the total payable amount to IRAS. If you are a new parent, you will be entitled to $5,000 parenthood tax rebate for your first kid! This rebate can be shared between parents and utilised slowly over the next few years. The parenthood tax rebate increases to $10,000 for your second child and $20,000 for your subsequent children.
You will manually input how much you want to rebate from you and spouse when you log in to file.
*Summary of reliefs applicable for females only.
After completing the iras filing online, I appreciate the savings on taxes that government has implemented to reward couples with children. Do file your taxes soon!