Dear readers, it is personal income tax filing season once again, specifically for Year of Assessment 2024.
Individuals have until 18 Apr 24 to file their tax returns on IRAS’ tax portal.
Alternatively, some of us may be on the No-Filing service. The onus for individuals on the NFS will be to ensure that the pre-filled information is correct.
If you are interested in how personal income tax is computed, be sure to check out the details on IRAS webpage here.
I am on NFS and went into the tax portal recently to confirm the prefilled tax information for myself.
While the pre-filled information is accurate, I noted that the personal income tax that I have to pay this year has increased!
Personal income tax is essentially an expenditure for many of us and to me, it is a significant expenditure by the fact of the quantum. And that means the annual personal income tax that I pay goes to my income and expenditure spreadsheets and is assigned the percentage that it contributes to my expenditure.
I believe it is not enough just to document one’s personal income tax expenditure: one would have to rationalise it in order for the personal tax income numbers to be meaningful.
As a back of the envelope method, I simply divide the annual personal income tax numbers among 12 (number of months in a year) to obtain the average monthly amount of my income that I am spending on personal income tax. This is how I rationalise the personal tax income numbers.
Another way which is more graphical is that the moment I input my personal income tax figures into my income and expenditure spreadsheet, the chart of my total cumulative savings goes down and in a graphical manner.
And this is similar to what I have been encouraging everyone to track: savings rather than earnings. I cannot underscore the importance of savings enough, especially in these current times of higher costs of living and a more uncertain macro environment.