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Income Tax

Tips & Tricks for Tax Relief

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How does taxes work when buying we options using td ameritrade or tiger brokers?
Tiger broker user here. Only taxes there is is the 30% withholding tax on dividends. When you sell your stocks, there’s no tax. Only commissions.

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With the coming of year-end, it’s time to think about taxes. If today you’re self-employed and has $20k set aside for tax reduction purposes, which method would you do (more details in description)?
Hi anon, As a self employed, I did 2) first. The reason is because I want CPF to be a safety net for my retirement. And since I am self employed and no one is going to contribute to my CPF other than me, I had better do something for myself. Of course, the tax relief helps as well. Once that was done, then I did 1) up to the annual limit, for reasons similar to the above, just that I now take into account the fact that I would need money for a house downpayment, as well as to ensure that my MA has money for medical insurance and long term care insurance premiums. Lastly, I would do 3), but I didn't do it this year. As I am still more than 20 years from 62, I'd prefer to leave SRS as another layer of tax relief when I no longer have the ability to do 1) due to reaching the FRS. Thus, in your example, I'd just do $7K to 1) and then $13K to 2).

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I have top up 6k for CPF medisave voluntary contribution in Jan 2020 but it does not reflect tax relief in my income tax year of assessment 2020?
Hi anon, For Year of Assessment 2020, the assessment is for income earned from 1 Jan 2019 to 31 Dec 2019. Thus if you topped up in Jan 2020, you will have to wait till around Mar 2021 to see it reflected when you are filing your taxes/reliefs. CPF board will automatically send the information to IRAS.

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What would you say is the fastest way to reduce income tax?
Donations? Amount deductible is 2.5 times the amount you donate. While saving money, you also doing good deed👍🏽

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How is CPF tax relief calculated for people with contributions starting mid-year?
Basically, any amounts that your employer had taken out of your salary to put into your CPF. Take note that it is only the amounts taken out of your salary, not the additional portion that your employer pays for your CPF.

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Should I top up CPF SA or MA for tax relief?
R

Ryan

Level 5. Genius

Answered 3w ago

You can top up to reduce taxes. However, do note that the cut off time for contribution is tomorrow 7 pm. So if you want to contribute, your money need to reach their system before the cut off time and different contribution methods take different amount of time. Fastest maybe is to use FAST but do not setup the transfer just before 7 pm since it depends on the system to reflect. If you miss it, your contribution is for next year.

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Must the business be making money, in order to qualify you to be "self employed"?
No need to make $$$. Just pay a fee to ACRA to register your company, and you will be self-employed. If you not dealing with big corporate or govt entity is good to stay unregistered. But then you will be "unemployed" even you making profit but bank wont lend you $$$.

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For a young adult in mid 20s, is it better to use spare cash of $7K to TOP up CPF SA account or do SRS contribution?
If you do not do investment yourself and you know you never will, CPF SA. SRS you must use the $$$ in account to invest else same as bank interest rate. SRS you need to know (in case you dont know) -you can only withdraw at 62 else 5% penalty charge - 50% of withdrawal will be taxed (meaning can only withdraw $40k per year) - you must withdraw everything within 10years You got other relief? NS, living with parent....?

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