5 Year-End Tax Moves For 2021 (And Save On Tax Payments)

There is a saying that in life the only thing that is certain is death and taxes and the month of December is undoubtedly reminiscent of the latter as it not only signals the end of another year, but with him the window of opportunity to save on Tax Payments.

For those struggling to make last-minute taxable income deductions (also known as taxable income – the amount on which tax is levied) before the end of 2021, here are some late-breaking tax measures. year to consider:

Retirement planning pays off

Each contributor to the Employee Provident Fund (EPF) has the right to claim tax relief of up to RM4,000. But with the end of the year, this may not be possible as EPF requires advance notice of your intention to make larger contributions.

Enter the Private Retirement Scheme (PRS), a voluntary retirement scheme launched in July 2012. In addition to the RM4,000 tax break you are entitled to for your EPF contributions, the PRS contribution allows you to claim up to RM 3000 in tax. relief. The icing on the cake ? This PRS tax break has been extended until 2025.

Hold this bonus

To understand the practicality of this approach, it is first necessary to understand that income tax is levied when it is paid; So if you arrange with your employer to have your bonus or any unpaid income carried over to the next year, you will end up reducing your taxable income for that year.

Benefit from a tax deduction for your donations

Donations to charities and aid funds can help you reduce your taxable income. Due to the pandemic, tax incentives are also being offered to donors who donate cash or goods as well as to help those affected by the Covid-19 epidemic.

In order to benefit from this tax exemption, verify that the organization to which you are donating is listed on the LHDN website. Make sure you get your tax exemption receipt as proof of donation.

Maximize your tax deductions

The easiest (and most commonly used) way to reduce taxable income is to make full use of the tax breaks you are eligible for. The key to this decision is knowing what qualifies for tax relief and how much you can claim, thus avoiding the mistake of unnecessarily spending more than you can deduct later.

While not exhaustive, here are some things you can consider that will be tax deductible for lifestyle expenses for 2021. Lifestyle expenses for yourself, your spouse, or your child are tax deductible up to ‘to RM2,500.

  • Books, journals, magazines and publications (no prohibited reading).
  • Personal computer, smartphone or tablet (not for professional use).
  • Sports equipment (for activities in the Sports Development Act 1997 and gym membership).
  • Monthly internet subscription bill (under his own name).

As part of the Permai government assistance program, there is also an additional tax break of RM 2,500 (in addition to the lifestyle relief) for the purchase of a personal computer, smartphone or of a tablet.

Apply for education tax relief

Planning for your children’s education can dramatically reduce your income. Therefore, it is important that you know the ins and outs of the tax break for parents who are saving for their children’s (or theirs) education so that you can use the relief before the end of the year.

The tax breaks available for education are as follows:

  • Skim Simpanan Pendidikan Nasional – Maximum RM8,000
  • Postgraduate Education (Autonomous) – Maximum RM7,000
  • Tuition fees for unmarried children (18 years and over)
    A-Level, certificate, registration or preparatory courses – Maximum RM2,000
    Higher education – Maximum RM 8,000

If your children are not yet of school age (6 and under), you can still claim child care expenses at a licensed daycare or kindergarten up to a maximum of 3000 RM.

The above education grants totaled 28,000 RM in total! As parents, you’ll likely qualify for at least one or more of the above categories, so be sure to claim the tax breaks you’re entitled to for the 2021 tax year.

While there is no way to avoid paying taxes, one can certainly make wise decisions that can lead to savings in paying taxes. The key is to have knowledge of the many savings options available.

IMoney Income Tax Calculator

Check here how much income tax you will pay with the latest tax rates.

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