Income tax child relief

Continuing on the topic of government incentives for having children, IRAS also has certain incentives in the form of child reliefs.

The Qualifying Child Relief (QCR) is at $2,000 per child, up to your 4th child. The way a tax relief works is that it is used to offset your assessable income. That is, the $2,000 per child is deducted from your declared income. After deducting all other reliefs that you can claim, the final assessable income is then taxed. (In contrast, a tax rebate is like a voucher you can use for paying taxes. See this post for an illustration.)

A point to note is the QCR can be shared between the husband and the wife. Due to the progressive tax structure of our tax system, I recommend that the full QCR relief be used by the spouse with the higher assessable income (after other reliefs). In short, if you have a higher income, convince your spouse to let you use the QCR. Don’t share.

The other relief is the Working Mother’s Child Relief (WMCR). The WMCR is set at 5%, 15%, 20% or 25% of the mother’s income if she has 1, 2, 3 or 4 children respectively. For example, if a working mum earns $80k and has 4 children to support, her WMCR is $20k.

Note that the total of QCR and WMCR cannot exceed $25k.

For more details, please refer to the IRAS website.