Personal reliefs (2): two incomes, and the years when the children are still small

Hook

The years when the children are still small are the years with the most reliefs. They are also your busiest and most forgetful years. Formula, nappies, childcare, vaccinations, kindergarten extras — money keeps going out. And quite a few of those payments can in fact be claimed. The question was never whether you qualify. It is that in March, when you sit down to file, you cannot find the receipts. This episode: two incomes, small children, which boxes are actually yours — and one decision you have to rework every single year.

Childcare and kindergarten: wider than you think

Start with the most direct box: childcare and kindergarten fees. Most parents know it exists. But most assume it stops once the child starts primary school. Not any more. This box has been widened — it now also covers day care centres and after-school care centres, for children up to twelve years old. Twelve. In other words: that after-school care centre your child goes to once school ends — if it qualifies, that money can be claimed. And most parents have never once asked the centre for a receipt. The move is simple: ask the centre for a proper receipt, carrying the centre's name and the child's name.

Breastfeeding equipment: the box most people miss

The next box is the one missed most of all. Breastfeeding equipment. The conditions are unusual, so let me be precise: it is for mothers with a child under two years old. And it can only be claimed once every two years. Once in two years. So this happens: the mother buys a breast pump and does not know that year that it can be claimed; by the time she finds out, that child's eligibility window has passed. It is not a large box, but it is the classic case of "you have it if you know about it, and not if you do not". And one line for the fathers: this box belongs to the mother. Be clear about who in the house claims it.

Three of the children's boxes were widened recently

The children's reliefs are where most of the movement has been this past year. Three were widened. First, life insurance. It used to cover only yourself and your spouse — children are now covered too. Second, education and medical insurance. Same again — extended to children. Plenty of families bought a medical card for the child, pay for it every year, and have never claimed it. Third, vaccination. This box now covers all vaccines approved by the national pharmaceutical regulatory authority. The jabs the children get — most parents do not know they can be claimed. And there is one more that has been the most generously adjusted in recent years: assessment, diagnosis and early intervention for a child's learning disability. Autism, hyperactivity, developmental delay — the cost of assessment and early intervention has a box of its own, and the amount has been raised twice. ⚠️ Note this: that box sits inside the medical box, and it shares the same cap with check-ups and dental — a point we took apart in the episode on medical reliefs. And then of course there is the box for the child itself — the band for children under eighteen.

SSPN: while the children are small is when it pays best

SSPN — education savings. Starting while the children are small is when it pays best. The reason is simple: this box looks at the net deposit. Net deposit means what you put in during the year less what you took out. While the children are small you only deposit and never withdraw — the whole amount counts. Once they go to university and you start withdrawing, in a year where you take out more than you put in the net deposit is negative — and that year gives you nothing. So this box has a clock on it: it rewards saving early, not saving a lot.

The decision to recompute every year: joint or separate

Now the question every double-income household faces each year: should a married couple file jointly or separately? The principle first. When both of you have income, separate assessment is usually better. Why? Because filing separately gives each of you your own personal relief, and each of you runs up your own tax brackets — the income is split into two and each half starts from the low brackets. A joint assessment stacks the two incomes on top of each other, and it is very easy to be pushed into a higher bracket. But — there is a but. Some reliefs can only be claimed by one of you for the same item. The children's boxes are the classic case. The children's reliefs go either on you or on your wife; you cannot both claim them once each. So which side? Putting them on the higher earner is usually the better move — because the same relief deducted against someone in a higher bracket saves more tax. But it has to be worked out, because it also depends on whether each of you has enough other reliefs to use.

Others you may also qualify for

That was what you use most at this stage. There is another batch on the list — a quick run through. EPF, SOCSO and EIS — already coming out every month. The Private Retirement Scheme. Your own lifestyle box — books, computer, phone, internet. The sport box — equipment, activities, the gym. Full medical check-up and dental — for yourself and your spouse. Your parents' medical costs — if you are also supporting the generation above, that is a separate box of its own. Tickets to local tourist attractions. First-home housing loan interest, if you meet the conditions. It does not matter if you cannot remember them. The full checklist is on the episode page — print it and tick your way down it.

To close

One line to close: want to know how your household should file this year, and which side the children's boxes should sit on? Grab a coffee first and talk about your tax. For the accounting, come to LTT. I am LTT, helping SME bosses get their accounts straight. Follow us, and see you next time.