The end of the year brings about several questions regarding year-end tax settlement, and this article will help you answer some of those. Namely, let’s go through various cases and see how deductions and subsidies apply. Tax-saving tips are not to be missed!
Marriage Tax Deduction for Newlyweds
One of the most common questions is, “We got married this year. Does the marriage tax deduction apply to us?”
The answer is yes. The Marriage Tax Deduction applies from 2024 to 2026. A fixed amount of tax deduction of 500,000 KRW is allowed per person. Keep in mind that you can only apply this deduction once in a lifetime, for the year of the marriage registration.
Please note that this marriage tax deduction is not yet confirmed and therefore not reflected in the ‘Year-End Tax Adjustment Preview Service’. (연말정산 미리보기)
Elderly Care Deduction
Another frequently asked question is, “My mother, who is in my care, turns 65 this year. Can I receive the Elderly Care Deduction?”
Unfortunately, the answer is no. The Elderly Care Deduction only starts to apply when the person turns 70. Hence, if the age criterion is not fulfilled, the elderly care deduction cannot be granted.
Should the person be 70 years or older (born on or before December 31, 1954), they would be eligible for an additional deduction for elderly dependents under the Personal Deduction category.
For those who are aged 65 and above, they could get the Elderly Deduction in Medical Expenses, so please keep this in mind.
Personal Deductions for Spouse who has closed business during the year.
“My spouse closed her business in November. Can I still claim her as basic deductions?”
The answer depends on the combined annual comprehensive income, retirement income, and transfer income of the spouse, which should be less than 1 million KRW.
It is important to note that those who have business income must declare comprehensive income tax in May. The comprehensive income tax declared will depend on the income type, the amount of income, necessary expenses, and declaration methods.
If you’re unsure about your spouse’s business earnings, it’s best to wait until May when they complete their personal comprehensive tax filing. This will allow you to verify their final income and determine if they qualify as your dependent for deduction purposes. Keep in mind that you can refile your year-end salary tax settlement in May if you become eligible for a larger tax refund.
Education Expenses Deduction
Another question frequently raised by parents is, “My child is in elementary school, and I pay for extracurricular activities like academies and taekwondo. Can these be deducted?”
The answer, once again, depends on a number of specifics. If your child has not yet started school (including January – February of the Elementary school entrance year), these academies and taekwondo expenses would be deductible. Once a child is in Elementary school, fees directed towards academies or physical education are not deductible.
Insurance Premium Deduction
“I have paid for an insurance premium for my spouse, who is a basic deduction subject. Can I deduct this?”
Employees with salary income can deduct private insurance premiums paid for themselves or their eligible family dependents. If your spouse qualifies as a family dependent for personal deduction, any private insurance premiums paid for their coverage are also deductible.
Be sure to verify that both you (as the policyholder) and the insured person meet all deduction requirements by reviewing your insurance contract details.
Disclaimer : This content is a translation of material originally published in Korean by the National Tax Service of the Republic of Korea. While efforts have been made to ensure accuracy, this translation is provided for informational purposes only and does not carry legal weight. In the event of any discrepancy, the original Korean version shall prevail. Users should consult the official Korean documents for precise interpretation. This translation does not constitute legal advice. The translators and publishers shall not be held liable for any loss arising from reliance on this translation.