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Reducing Your Income Tax – Parents Edition: Tax Reliefs & Rebate for Parents

As a follow up to our previous article talking about legit ways of reducing your income tax, here are more ways for you to reduce your income tax… if you have kids.  

Next time before you submit your income tax declaration form, here are some pro-family tax savings you can apply for:

Qualifying Child Relief (QCR)

Qualifying Child relief is usually given to parents to help support their children. However, to be able to claim the QCR for the 2019 Year of Assessment (YA), being a parent who has an unmarried child is one among the many criteria to meet. You can claim up to a maximum of $4,000 per child which can be shared between you and your spouse. Here are some of the conditions that can qualify you for QCR:

  • If the child was born to you and your spouse (or ex-spouse) or the child is a step child or is legally adopted.
  • If the child is below 16 years old or studying a full-time degree at any university, college or educational institution at any time in 2018.
  • Another condition that exists is if the child did not have an annual income that exceeded $4000 in the year 2018. The annual income calculated includes national service allowances alongside income from internships and attachments. This income, however, does not include scholarships, bursaries and other similar allowances.

In the event if the child is mentally or physically handicapped, you do not qualify you for the QCR. Instead, you qualify for a different program known as the Handicapped Child Relief (HCR).

Parenthood Tax Rebate (PTR)

The parenthood tax rebate is given to tax residents in order to encourage them to have more children. It is a one-off claim you can only make the year after your kid is born. Usually, the tax deduction ranges from $5,000 to $20,000 depending on the child’s birth order. It can also be split between parents. If you have any unused rebate balance remaining, you can use them to offset your future tax liabilities

To qualify for the PT, you have to be a Singapore resident and either be married, divorced or widowed in that particular year.

If the child is born to you and your spouse (or ex-spouse) on or after January 1, 2008, then you will be eligible for the PTR.

If on the other hand, you give a child up for adoption, you will no longer be eligible to receive PTR on that child. To know if you are eligible, you can make use of the parenthood tax rebate eligibility tool which is available for download online.

Working Mother’s Child Relief 

The Working Mother’s Child Relief is given to either r0eward families with children who are citizens of Singapore as a means to encourage parents to get a Singaporean citizenship for their children. It is also given to encourage married women to remain in the workforce after having children.

To qualify for a WMCR in the YA 2019, some certain conditions must have been satisfied in 2018.

  • Firstly, you must be a working mother who is either married, divorced or widowed.
  • Secondly, you should have a taxable income earned (total earned income with less allowable expenses) from employment or through pensions. This income could be from trade, business, your profession or vocation.
  • Also, if you have taken care of a child as at December 31, 2018 who is a citizen of Singapore and has satisfied the conditions under the QCR or HCR, you can have access to this relief.

This relief ranges from 15 to 25 per cent of your earned income and depends on how many kids you have. You can claim up to a maximum of $50,000 per child if you claim both the Working Mother’s Child Relief and Qualifying Child Relief.

Grandparent Caregiver Relief 

The GCR is a relief claim that can be made when parents are not the ones taking care of their children but rather the grandparents are. It is usually given to working mothers who seek assistance from their parents, grandparents, parent-in-laws or grandparent-in-law (including those from their ex-spouses).

If your parents or grandparents (in-laws included) don’t work and take care of your kids, you can claim $3,000 on only one caregiver. This relief is only available for working mums. Single or male taxpayers are not eligible for the GCR.

In order to claim this relief, the following conditions must be met.

  • You have to be a working mother who is either married, divorced or widowed.
  • Parents, grandparents or in-laws including those of ex-spouses must either be staying in Singapore or have stayed for up to 8 months in 2018.
  • They must also be the ones taking care of your children who should be Singaporeans and be 12 years or below in 2018.

We hope these tips will help you additionally to reduce your Income Tax in the coming years.

Take Care.

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