Here it is! Petua pertama (First tip; I have encountered some young people using ‘kesatu’ instead of ‘pertama’ *slap hand on forehead and shake head in disbelief*)
1. BEAT THE SYSTEM
I have my mister to thank for pointing out this way of saving money to me. If I’m ‘pelokek’, then he’s a scrooge! Now what system am I talking about? It’s the other thing that is certain in life: TAXES. The first being death, of course.
I recently paid my income tax. I’ve been in the workforce for four years now. In my first year being employed, I didn’t have to pay any income tax. In my second year, I could no longer escape being taxed because I passed my probation and got officially promoted, and there’s also the yearly increment that pushed my annual income into the ‘earning enough to be taxed’ category. The amount I had to pay was not too big but not small either.
In my third year, my mister pointed out to me a way to ‘beat’ the system (it’s all legal of course), but I dilly-dallied in asking my siblings whether they had done it (because it would mean I can’t do the same, I think), and the income tax filing season came and went without me applying for it. That was a costly mistake, because the tax I had to pay increased. By almost double! Now you can imagine how wide my eyes widened when the letter came in the mail.
You can imagine how heart-wrenching it was to part with that much money. I could buy a D bag with that! (Not that I would, even
if when I have money. But I wouldn’t decline if someone wanted to gift me one hahah.)
I paid up in cold electronic cash, in full, rather than in instalments (my mister would say, why the rush to give the government your money? Give them bit by bit lah.) But I didn’t want my pay to be cut every month; I’d rather just pay everything up and forget about it (til the next tax season comes along, that is). I think I used my performance bonus I had received not too long before (yeah they make you happy with the bonus first and then they tax you – you can’t argue that you don’t have money to pay), or just dipped into whatever savings I had already accumulated.
So this year, I’ve learnt my lesson. My eyes can’t afford to go any wider or they may just pop out (hahah) so when income tax filing season came, I was ready to ‘beat’ the system. I went online to do my e-filing although for me the system had put me under automatic filing, meaning I did not have to do anything if I did not have any changes to make. (I swear, this somehow makes busy people like me forget about updates we can make that can actually save us from paying so much tax.)
And how did I beat the system? By applying for parental tax relief. You see, both my parents are over 65 and retired. We are also living in the same address. In truth, I don’t just live with them for free – I give them a monthly allowance which is about a third or a quarter of my income. That entitles me to parental tax relief (actually the system has no way of knowing if you’re a freeloader or if you support your parents financially; it only asks if you have elderly parents living in the same address as yours), which I could have applied for earlier but didn’t, because I thought maybe one of my siblings had already done so, thus I’m not sure if I could still apply.
Even now I’m not sure if they had applied for parental tax relief using either or both my parents’ names, but in any case they are all living at their own place now (except for my unmarried sister who doesn’t get taxed anyway) so if they did apply it would be for the ‘elderly parents living at a different address’ category, which is not the same as my case. I believe the tax relief granted would be less than what I got. (Ok I think I should really go and find out how it works – an interview post with an expert, perhaps?)
Two of my siblings already have kids, so they can apply tax relief for their children, while one is self-employed, so I’m not sure if she gets taxed in the first place. In fact, if you have four children, you can get away with not having to pay any income tax at all! My colleague applied for tax relief for all her four children, and she doesn’t have to pay a single cent! And she has been working for at least ten years, you can imagine how much she earns and how much tax relief she got.
You can also apply for tax relief if you have a life insurance policy. That’s what I applied for in my second year being employed. I’m not sure how much that saved me in terms of tax incurred, since I did not pay any tax in the previous year to make a comparison.
Now, all this is nothing new to the financially savvy people out there, but I’m sure I’m not the only young working adult who was previously unaware of how to beat the system. So I do hope that my experience would help others!
Some of you may be curious by now how much I saved by applying for parental tax relief. When I did the e-filing, I really had no idea how much I would save. I did so with a little prayer that it would work and then I waited for bated breath for the letter to come in the mail.
That’s almost an 80% drop!!! Even less than the amount I had to pay two years ago, when I was earning less! And if you take into consideration that the yearly increment meant that I earned more this season than the previous season, the amount of tax I would have to pay would surely be more (in absolute figures) had I not applied for tax relief, which means that I have actually saved more!
Syukur, alhamdulillah. I can’t express how grateful I am that I could save this much money. That amount saved can easily cover the cost of materials for my whole family’s outfits for my wedding (2 parents, 4 siblings, 3 siblings-in-law, 4 nieces and 2 nephews, a total of 9 adults and 6 children), which I had decided to cover, even before tax season came along, in appreciation for their support and as (advance) thanks for their help in my wedding. I wasn’t counting on saving money on my income tax; I was planning on using money from my performance bonus this year when I made that decision, but knowing what I know now, it just feels like I got a sweet, sweet deal. 🙂
Of course, I’m not telling you to go around looking for an elderly woman / man / couple to claim as your parents, just so you can apply for tax relief! That would be committing fraud, and I bear no responsibility if you choose to act without integrity. If your parents aren’t that old yet, tough luck! You can’t apply for tax relief yet. But at least you know this much now and can do the same in the future once they reach the age limit.
What about you? Do you know of any other way to beat the system in order to save money? Sharing is caring, so leave a comment!
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