End of year season is back. Recently, the National Tax Service Home Tax opened a service to simplify annual accounting. If workers don’t complete the paperwork in January, they get paid in February. It is a fact that every employee of a company gets confused every year, even though they do it every year.
Why do you do annual accounts? The government pays taxes for “about” a year to office workers who work and earn money. It means letting go of “tax withholding”. However, different people have different spending patterns over the course of a year. Therefore, after comparing and calculating the tax amount and deduction for the year, the basic concept of annual accounting is to pay back when more taxes are paid and spit them out when less taxes are paid.
Year-end billing details change slightly each year. increase or decrease the deduction rate. Grant occasional deduction benefits for new expense items. In 2021, the benefits of consumption deductions increased slightly given the ongoing impact of Covid-19. To lift depressed consumer sentiment, they expanded the benefits of credit card deductions.
In January we should complete the year-end accounts for 2021. This year’s year-end statement is characterized by the fact that the deductions have increased taking Corona 19 into account.
(Rengo News)
▶ Increased deduction benefits
▷Benefit donation “mugwort”…credit card must be used
If the combined amount of credit card and cash receipts used in 2021 exceeds 5% as of 2020, an additional 10% deduction will be applied to the increase. However, credit card usage must exceed 25% of gross salary. For example, an office worker with an annual salary of 50 million won will receive additional deductions if he spends no more than 12.5 million won on credit cards by 2021. It should be noted that the deduction limit varies depending on the annual salary. Those with annual salaries of 70 million won or less will be capped at 3 million won, those with annual salaries of 120 million won or less will be capped at 2.5 million won, and those with annual salaries over 120 million won will be capped at 2 million won. 기부금 세액공제
The donation tax credit has been temporarily increased. The tax credit has been adjusted upwards by 5 percentage points for donations through the end of 2021. Donations under 10 million won will be deducted from 15% to 20%, and donations over 10 million won will be deducted from 30% to 35%.
Places that allow statutory donations, such as the Red Cross and NGOs, are automatically processed for home tax. On the other hand, some religious institutions and other institutions that are not subject to investigation need to obtain documents that can prove the payment and apply for the deduction directly.
It’s a story two years later, but the establishment of the hometown donation system is worth noting. The hometown donation system is a system whereby people who donate up to 5 million won a year to local governments outside of their place of residence can receive tax deductions and gifts in return. It will be implemented in 2023 as a policy that will be introduced with reference to Japan’s “homeland tax system”. All donations up to 100,000 won are tax deductible and 16.5% of the difference will be deducted. If you donate 1 million won, 248,500 won will be exempt from year-end income tax processing. Considering that 30% of the donation amount (maximum 1 million won) will be provided in return, e.g. such as local specialties, will be refunded 548,500 won for every million won donated. nicetomeetya
Confirmation of entitlement to housing benefit deduction
▷If you are buying a used car, be sure to check with Home Tax
Also causing a stir is that the scope of deductions for housing funds has expanded. In particular, the standard for the tax deduction of monthly taxes has been raised. The monthly tax credit benefited employees with gross salaries of KRW 70 million or less or companies with total incomes of KRW 60 million or less. In the past, 12% of the monthly tax was deducted when total income was 40 million won or less, but in 2021, the total income standard will be raised to 45 million won or less. In summary, 12% applies when total salary is 55 million won and total income is less than 45 million won, and 10% is applied when total salary exceeds 55 million won or total income exceeds 45 million won. The housing requirement is less than 85 square meters (25.7 balance), or less than 300 million won in standard time.
In 2022, the services will be temporarily better. As the number of tax reversers and monthly tax residents has increased, the monthly tax credit rate will be temporarily increased to a maximum of 15 percent. However, the limit will be applied unchanged at 7.5 million won based on the annual tax amount, not upwards. It should also be noted that there will only be a temporary upward trend for the next year. This means that regardless of the amount of monthly tax, the maximum monthly tax deduction amount is 7.5 million won (625,000 won per month).
In addition, if you borrow money with purchase or right of occupancy as collateral, you can deduct the interest on long-term loans with a term of 10 years or more. What has changed with the 2021 financial year is that the housing standard has expanded from the existing 400 million won or less to 500 million won or less. If you borrowed money with the right to sell 450 million won worth of land as collateral, you wouldn’t be able to deduct the interest in 2020, but you can deduct the interest on the loan at the end of this year.
We need to find out if there are any items that are tax deductible from the amount spent in 2021. If you buy a used car in a used car showroom, you can get an income deduction of up to 10% of the value of the used car in the name of “amount used by credit cards, etc.” When used car dealers submit used car sales details to the National Revenue Service, these are automatically included in the year-end statement details. If you haven’t submitted it, you can confirm the purchase of the used car and submit it to the company where you work. School costs for children before they start primary school are also deductible. You must receive a receipt and apply directly. From this year, the postpartum costs in the home will also be deducted. For office workers whose total salary is less than 70 million won, postpartum clinic expenses are deducted up to 2 million won per session.
▶ Easier document submission
▷ Pre-confirmation is also possible with the wealth management app
The hardest thing for office workers was submitting materials. Every day I had to download this material from the National Tax Agency HomeTax. However, with the launch of a service starting this year that will provide simplified year-end billing materials in one package, such annoyances should disappear. If you request the service from the company, connect to HomeTax and consent to the provision of the data, the National Tax Service will send the simplified data directly to the company. Workers do not have to directly issue and submit separate materials every day.
By January 14, 2022, all you need to do is submit an application to the company for bulk delivery of simplified materials. If you have dependents, remember that they need their prior consent by January 19th before submitting the bulk documents to get the deduction.
If you couldn’t handle the 2021 year-end statement, let’s work on it ahead of time in 2022. Recently, various wealth management apps have set up a “golden ratio consumption plan” that even covers a full tax amount. Via fintech companies and existing financial company apps that have launched My Data pilot services.
The wealth management app “Bank Salad” has provided a service that notifies users of the amount of credit card deduction refunds in real time.
Lots of deduction benefits for venture investments
Amount equal to 10% of the investment amount Income deduction
Recently, investments in unlisted companies have increased. If the investee company is a “venture company” as defined by the government, it can benefit from some pretty notable income deductions.
If an individual invests in a venture investment association etc. an amount equal to 10% of the amount invested is tax deductible. It is deductible up to the tax year in which the individual joins two years after the investment. When you invest in a venture company, 100% up to 30 million won, 70% up to 50 million won of over 30 million won, 30% over 50 million won, up to 50% of the total income will be deducted from your income. If you discover and invest in private venture companies that show promise for evangelism, you can receive income deductions and expect future investment results.
For example, if an employee with a gross salary of 45 million won invests 10 million won in a venture company, he or she will receive a tax benefit of 1.65 million won (15% tax rate, including local income tax) through income deductions. The higher the gross salary, the higher the tax rate and the greater the tax benefits of the investment. The capital gains deduction for angels must be filed upon receipt of the investment confirmation from the invested venture company. Please note that if you transfer or withdraw your equity before 3 years from the date of investment, additional taxes may be charged on the amount withdrawn.