National Tax Service to Pay 520.8 Billion KRW in Earned Income Tax Credits for Second Half of Last Year to 1.14 Million Households on the 15th

[Sejong=Asia Economy Reporter Kim Hyunjung] A total of 520.8 billion KRW in Earned Income Tax Credit (EITC) for the second half of last year will be paid to 1.14 million households on the 15th of this month. The National Tax Service (NTS) plans to complete the payment 15 days ahead of the legal deadline of June 30.

The NTS announced on the 13th that it has completed the review for 1.67 million households, combining those who applied for the second half of last year's EITC in March this year and those who applied for the first half of last year, and will pay EITC to 1.14 million eligible households on the 15th. The types of recipient households are single-person households (54.1%), single-income households (40.5%), and dual-income households (5.4%) in that order.

The average payment per household is 460,000 KRW, with single-person households receiving between 150,000 and 525,000 KRW, single-income households between 150,000 and 910,000 KRW, and dual-income households between 150,000 and 1,050,000 KRW.

The semi-annual payment system for the Earned Income Tax Credit was introduced in 2019 to reduce the time gap between the income occurrence and the credit payment (which is usually in September of the following year), thereby enhancing support and work incentive effects. Thirty-five percent of the annual EITC amount is paid in December (for the first half) and June of the following year (for the second half), with a final settlement in September three months later.

During the settlement, if the combined amount of the two semi-annual payments is less than the annual calculated amount, additional payment is made; if it is more, the excess is deducted from the Earned Income and Child Tax Credits to be received over the next five years.

To receive the 2020 EITC, one must have earned only earned income in 2020, have a combined spousal income in 2019 below the standard amount (20 million KRW for single-person households, 30 million KRW for single-income households, and 36 million KRW for dual-income households), and have total household assets below 200 million KRW as of June 1, 2019.