- How To Claim Expenses On Taxes
- School Supplies Are Tax Deductible
- How To Claim The Standard Mileage Deduction
- Can I Take The Home Office Deduction? [free Quiz]
- Types Of Tax Deductions Small Businesses Can Take (2023)
How To Claim Expenses On Taxes – When I had my first job, my annual income tax was only about $200. This was based on an annual income of $30,000, of which I saved $20,000 – read how I did that here. (No, no bonuses either.)
I don’t mind paying taxes as I understand and appreciate the fact that the money is used for the government to help lower income groups and pay for other public goods like our roads, education, etc.
How To Claim Expenses On Taxes
But since I was headhunted for my second and now third job, where I got a raise each time, my income taxes have increased significantly, and I’ve gotten to the point where I’ve been looking for (legal) ways to reduce so much pay. For comparison, my income tax has increased more than 10 times, but my salary has not increased 10 times at all!
School Supplies Are Tax Deductible
I talked about how to achieve financial freedom you need to reduce your expenses while looking for ways to increase your income. Income tax is definitely an area you’ll want to reduce, as Singapore’s tiered income tax system means that the more you earn, the higher the percentage of taxes you have to pay.
If you make $3,500 a month and receive a 13-month bonus, you’ll face an annual tax of $935. If you are luckier and get more (e.g. 3-month bonus), you can expect to pay $1,425.
If you make $100,000 a year, you’re paying over $5,000… which could otherwise cover a vacation in Europe!
Although tax evasion is a crime, there are completely legal ways to reduce your income taxes. Here are some:
How To Claim The Standard Mileage Deduction
I used to pay my parents their monthly pocket money in cash. However, since learning about this hack, I have changed this to deposit the money as voluntary contributions into their CPF accounts instead. Given that my father is already retired and my mother will soon be eligible to withdraw her money, this approach makes a lot of sense to me as my parents will continue to get their money and at the same time I can enjoy a tax refund on it.
As the maximum tax relief we can claim is $7,000, you can also make voluntary top-ups to your CPF Special Account (SA), where it can earn attractive interest rates, further increasing your tax relief amount to a maximum of $14,000.
Do it before the end of the year to benefit from the tax relief! I’ve blogged about it here before.
If you have already exhausted your CPF tax relief, you can also use the SRS relief program to enjoy up to $15,300 in tax relief when you and/or your employer contribute to your SRS account!
Can I Take The Home Office Deduction? [free Quiz]
I have always believed in giving to charity to help those less fortunate than us. After all, I come from a family whose parents couldn’t even afford to send me to university, and I benefited from the university scholarship (generously funded by alumni) that enabled me to continue my studies, so I’m in the best place familiar with the difficulties of not having enough money.
Because of my background, I have a penchant for donating to scholarships and other funds for students in need.
Aside from helping those who need it, the other good news is that you can claim a 250% tax deduction based on the amount you donate!
If you have parents who are over 55 and earn no more than $4,000 a year, you can also claim a tax break of up to $9,000 for their parental support (or up to $14,000, if you are disabled). , in this case the income requirement does not fully apply). But if you have siblings who claim the same thing, you have to share it equally with them. There are also tax breaks if your grandparents live with you.
Singapore Tax System: Types & Rates
Unfortunately, this rule does not apply to me as my mother is still working and my father recently retired, so his annual income this year is still over $4,000, but I will be able to claim this soon next time !
Additionally, if you support a disabled spouse or sibling, you can claim a tax break of up to $5,500.
Husbands can claim up to $5,000 if they hold an essential post (or up to $3,000 if they are not a reservist), while their wives can claim a tax break of $750.
6. For parents, you can apply for parental tax relief, qualifying child tax relief, working mother tax relief or foreign maid tax relief
Types Of Tax Deductions Small Businesses Can Take (2023)
It seems like the government really encourages us to have kids as they give lots of tax subsidies to those who have kids!
You can claim a $5,000 parental tax refund for your first child. If you have two children, you’ll pay an additional $10,000 for your second child. Or, if you’re like my cousin with 3 kids (or more), you can add $20,000 more for each additional child! If you have three children and claim the maximum for them, that amounts to a significant tax refund totaling $35,000!
I gave birth last year and received my IRAS letter informing me that our $4,000 child allowance would be automatically pre-filled for us and split equally between my husband and I. For those of you who want to change your allocation basis, remember to indicate this when you file your taxes online.
You can also claim up to $4,000 per child under Qualifying Child Relief if your offspring is under 16 or studying full-time.
How To Reduce Your Income Tax In Singapore (make Use Of These Tax Reliefs And Deductions!)
Tip: The spouse with the higher income should make this claim, as this would probably allow them to reduce their taxes more!
Mothers who work and perform dual roles (mad respect for you women) can claim 15% of their earned income as tax relief for their first child, 20% for their second, and 25% for each child if they have three children or more! Note that the total cap for QCR and WMCR is $50,000 per child, but that’s already a lot of tax deductions (and makes me think twice about whether we should aim for two or three children!)
If you hire a domestic helper at home, you can also claim from your earned income twice the amount of the foreign maid tax paid last year for a maximum of one foreign maid payment.
If you attended recognized courses, seminars or conferences that are relevant to your profession as part of your skills development last year, remember to take advantage of discounts for those too! There is a maximum discount of $5,500, including but not limited to exam fees, registration fees, tuition fees, etc.
A Beginner’s Guide To Filing A Tax Return
Did you know? If your CPF contributions last year were less than $5,000, you can claim discounts on the premiums you paid for your spouse’s life insurance policy. You can claim the difference between $5,000 and your CPF contribution up to 7% of the value of your policy or even the amount of insurance premiums paid (whichever is lower).
Every business incurs operational costs, whether it’s a small start-up running its online store on Instagram or a larger company hiring or being part of a full-time workforce. As long as you incurred business expenses that were not reimbursed, you can claim deductions from them. However, make sure you keep supporting documents as IRAS may routinely check whether your deductions are valid. Do not cheat! It’s not worth it if you get caught.
Savings of up to 15% of your gross rent or the actual rental costs incurred can be significant and at the same time protect your (somewhat) passive rental income!
So, using the above (applicable) methods, a working mother (under 55) who earns $6,000 per month with a 13 month bonus but has two children and lives with her retired parent can helps take care of their children, you can get away with paying NO income tax instead of the original $3,210!
Rules For Deducting Business Expenses On Federal Taxes
That’s a whopping $3,210 in tax savings (which you can then use to fund a vacation abroad or other expenses), as long as you take full advantage of the relief available!
(I haven’t even taken into account the parental tax refund – which should be $25,000 in this example – and already this mom doesn’t have to pay a dime in taxes, lol!)
As your income increases (the moment you receive a raise, commissions or bonuses), you will quickly find that your income taxes increase disproportionately and you may find yourself paying a large portion if you are not familiar with the various relief schemes available to you to tap. Considering how much you would otherwise have to pay, it becomes increasingly important to save on taxes!
However, also keep in mind that the amount of tax relief you can claim is capped at $80,000. You can also calculate your income taxes and relief using the IRAS income tax calculator here.
Everything You Need To Know About Claiming Travel Expenses
If you look at the systems available, this is not the case
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