If You Swiped Your Card Every Month, Switch to 'This Card'... Year-End Tax Adjustment Tips for a '13th-Month Bonus' [Finance Microscope]

'Year-End Tax Adjustment Preview' Service Available Starting November 5
New Deductions Introduced for Marriage and Childcare

Is it a "13th month salary" or a "13th month penalty"?

The year-end tax adjustment season has arrived-an event that no office worker can ignore. This year, with the introduction of new deduction categories related to children and other reforms, the amount of tax refunds is likely to increase. Even single-person households need not be disappointed. By strategically managing your card spending from now on, you can significantly increase your deductible amount. Here are some tips to help you turn your year-end tax adjustment into a "13th month salary."

You Can Estimate Your 13th Month Salary in Advance

The National Tax Service launched the "Year-End Tax Settlement Preview" service on November 5, allowing people to estimate next year's year-end tax adjustment amount in advance. The "Customized Guidance for Major Deductions and Tax Credits" service is also available from November 6 until January 31 of the following year.

The year-end tax settlement preview service can be accessed via Hometax. After logging in to Hometax, select "Incentives·Year-End Tax Settlement·Donations" and then choose "Convenient Year-End Tax Settlement" or "Year-End Tax Settlement Preview" to use the service.

Using your credit and debit card spending from January to September this year, as well as the deductible amounts reported in your previous year-end tax adjustment, you can calculate your estimated tax amount. You can also check in advance how changes in dependents due to marriage or childbirth, as well as fluctuations in total salary, education expenses, and medical expenses, will affect your year-end tax adjustment.

Graphs are provided to allow you to compare your total salary, deductible amounts, and changes in final tax amounts over the past three years at a glance.

To Maximize Your Refund, Start with Card Spending Deductions

The most basic and widely used way to increase your year-end tax refund is through card spending deductions. Since card payments are now a part of everyday life, this is the easiest way to boost your deductible amount.

First, deductions for credit card spending begin only for amounts that exceed 25% of your total annual salary. For example, if your annual salary is 40 million won, only the amount spent beyond 10 million won (which is 25% of your salary) will be eligible for the deduction.

Therefore, it is most effective to use a credit card for spending up to 25% of your total salary, and then switch to a debit card for spending beyond that, as debit cards offer a higher deduction rate. The deduction rate is 15% for credit cards and 30% for debit cards, which is about twice as much.

However, even if you exceed 25% of your annual salary in card spending, not all of it will be deductible. For those earning 70 million won or less per year, the deduction cap is 3 million won. For those earning over 70 million won, the cap is 2.5 million won.

It is also important to note that taxes, utility bills, telecom fees, new car purchases, lease payments, overseas transactions, and duty-free purchases are not eligible for deductions. However, deductions can be claimed for medical expenses, preschool tuition, and school uniform purchases, even if they overlap with other deductions.

What's Changing in This Year's Year-End Tax Adjustment?

In next year's year-end tax adjustment, the deduction per child will increase by 100,000 won. For example, if you have three children, the child tax credit will rise from 650,000 won to 950,000 won.

Along with the child tax credit, the deduction benefits for housing subscription savings will also expand. Previously, only heads of households without homes and with an annual salary of 70 million won or less were eligible for a deduction of up to 3 million won per year, covering up to 40% of the annual contribution. Going forward, both the head of the household and their spouse will be eligible for this deduction.

The deduction cap for the Hometown Love Donation program will also increase. This program allows you to receive a tax credit when you donate to a local government outside your place of residence. Previously, only donations up to 100,000 won were fully deductible, and only 15% of the amount exceeding 100,000 won was eligible for a tax credit. Now, this rate has been raised to 30%. In addition, you can receive a variety of gifts such as agricultural and specialty products. If you donate to a "special disaster area," the tax credit rate for the amount exceeding 100,000 won has been increased from 15% to 30%. The overall donation cap per person has also been raised from 5 million won to 20 million won.

This content was produced with the assistance of AI translation services.