3 Ways to Reduce Your Income Tax In 2018 | TheFinLens
If you realise that your income tax is rather high, it’s not too late to take action. So here are the 3 ways you can reduce your income tax.
Donate to Charity (Approved Institution)
Take note! You can’t just donate to anybody and claim your tax relief. Your donation has to be made to a registered tax-deductible charity, an approved institution, which would allow you, the donor, to claim tax relief of 250% of the amount donated. It may not seem much if you are donating in hundreds of dollars but if you are donating in thousands, tens or hundreds of thousands or even millions of dollars, making tax deductible donations to approved-charitable institutions will really help you bring down your chargeable income.
If you’re earning $50,000 a year, and you donated 10% of your income which is $5000, then your taxable income will be $50000 – $12,500 = $37,500. Of course, when it comes to the higher income earners, their tax deductable amount will be more but understand that the percentage of tax they need to pay will be much more as well.
All donations must be made before the end of 2018 for you to claim your tax relief for 2018.
Use CPF Supplementary Retirement Scheme
The Supplementary Retirement Scheme (SRS) is a voluntary scheme to encourage individuals to save for retirement, above their CPF savings. Contributions to SRS are eligible for tax relief and the annual SRS contribution cap is currently set at $15,300 for Singaporeans and PRs, and $35,700 for foreigners.
Contibutions to the SRS account is usable for investments. The great thing is that the returns are tax-free before withdrawal and only 50% of the withdrawals from SRS are taxable at retirement. For SRS relief, you do not need to make a claim in your tax returns as it will be allowed automatically based on information provided by the SRS operator.
Top-Up Your CPF Voluntarily
As we all know, there are pros and cons to having your money locked away in your CPF but it is created for your retirement. So if you are planning to use just save your money in a savings account or use it to invest, it may be a lot more beneficial for you to top-up your, and/or your family member’s CPF Special Account (SA).
The benefit here is that every dollar contributed through voluntary CPF top-ups makes you eligible for a dollar-for-dollar tax relief for your income tax. So what this is that you will enjoy tax reliefs of up to $7,000 for yourself and up to $7,000 for your family member’s SA account. By lowering your chargeable income by up to $14,000, you may fall into a lower tax bracket and enjoy greater tax savings! On top of that, your money is now technically in a risk-free investment instrument that give you 4% interest annually!
So Why Wait?
http://thefinlens.com/our-outstanding-service/stay-in-touch/
http://thefinlens.com/3-ways-to-reduce-your-income-tax-in-2018/
Donate to Charity (Approved Institution)
Take note! You can’t just donate to anybody and claim your tax relief. Your donation has to be made to a registered tax-deductible charity, an approved institution, which would allow you, the donor, to claim tax relief of 250% of the amount donated. It may not seem much if you are donating in hundreds of dollars but if you are donating in thousands, tens or hundreds of thousands or even millions of dollars, making tax deductible donations to approved-charitable institutions will really help you bring down your chargeable income.
If you’re earning $50,000 a year, and you donated 10% of your income which is $5000, then your taxable income will be $50000 – $12,500 = $37,500. Of course, when it comes to the higher income earners, their tax deductable amount will be more but understand that the percentage of tax they need to pay will be much more as well.
All donations must be made before the end of 2018 for you to claim your tax relief for 2018.
Use CPF Supplementary Retirement Scheme
The Supplementary Retirement Scheme (SRS) is a voluntary scheme to encourage individuals to save for retirement, above their CPF savings. Contributions to SRS are eligible for tax relief and the annual SRS contribution cap is currently set at $15,300 for Singaporeans and PRs, and $35,700 for foreigners.
Contibutions to the SRS account is usable for investments. The great thing is that the returns are tax-free before withdrawal and only 50% of the withdrawals from SRS are taxable at retirement. For SRS relief, you do not need to make a claim in your tax returns as it will be allowed automatically based on information provided by the SRS operator.
Top-Up Your CPF Voluntarily
As we all know, there are pros and cons to having your money locked away in your CPF but it is created for your retirement. So if you are planning to use just save your money in a savings account or use it to invest, it may be a lot more beneficial for you to top-up your, and/or your family member’s CPF Special Account (SA).
The benefit here is that every dollar contributed through voluntary CPF top-ups makes you eligible for a dollar-for-dollar tax relief for your income tax. So what this is that you will enjoy tax reliefs of up to $7,000 for yourself and up to $7,000 for your family member’s SA account. By lowering your chargeable income by up to $14,000, you may fall into a lower tax bracket and enjoy greater tax savings! On top of that, your money is now technically in a risk-free investment instrument that give you 4% interest annually!
So Why Wait?
http://thefinlens.com/our-outstanding-service/stay-in-touch/
http://thefinlens.com/3-ways-to-reduce-your-income-tax-in-2018/
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