'Missing out from ignorance, paying back from mistakes' — what dual-income couples, parents and salaried workers need to know about deductions, child subsidies and credit card spending rules
[Editor's note] Taxes touch every citizen's life, yet the complexity of tax law and its unfamiliar terminology make the subject daunting for many. Understanding income tax, property tax, the comprehensive real estate tax, inheritance tax and gift tax — all of which are closely tied to everyday life — is the starting point for sound financial decision-making. The Herald Business is launching "Tax Talk with Yun Yu-jin," a special series produced with Seoul Metropolitan Council member and accounting and taxation doctoral degree holder Yun Yu-jin. The series will cover everyday tax knowledge, major tax reform issues, tax-saving strategies and policy debates, explained clearly and accessibly for the general public. The goal is to serve as a practical, citizen-friendly tax guide that promotes a correct understanding of taxation and strengthens taxpayers' rights. Yun holds a master's degree in tax law from Yonsei University and a doctorate in accounting and taxation from Gachon University. Yun serves as a 12th-term Seoul Metropolitan Council member on the Education Committee, heads her own tax accounting firm, works as an adjunct professor in the accounting and taxation department at Gachon University, and previously worked at the National Tax Service from March 2017 to July 2021.
'Missing out from ignorance, paying back from mistakes' — what you need to know about year-end tax settlements and tax benefits
Why do so many workers miss out on refunds they are entitled to during year-end tax settlements? The answer often comes down to failing to claim eligible deductions — or, conversely, incorrectly applying deductions that do not qualify. For dual-income couples in particular, tax benefits tied to child subsidies, dependent parent deductions and children's education expenses all vary depending on household income and spending, making an accurate understanding of the rules essential.
The fourth episode of "Tax Talk with Yun Yu-jin," a lifestyle-focused tax information program, takes a close look at the tax issues salaried workers and dual-income households encounter in daily life. Rather than simply explaining complex tax law, the episode walks through real-life scenarios to highlight easily overlooked deductions and common pitfalls.
The first system dual-income couples should understand is the child subsidy. The child subsidy is designed to ease the burden of child-rearing for households that meet certain income and asset thresholds. However, the fact that both spouses earn income does not mean each can receive the subsidy separately.
Because the child subsidy is assessed on a household basis, the combined income, assets and dependent-child status of both spouses must all be considered together. Even if both spouses apply separately, a single household cannot receive the subsidy twice. This is why verifying household composition and income criteria before applying is important.
The dependent family member deduction is another area prone to confusion during year-end settlements. Simply supporting a parent does not automatically qualify a taxpayer for the deduction. The law requires that specific conditions be met regarding the dependent's income, age and financial relationship with the taxpayer.
Particular caution is needed when siblings each try to claim the deduction for the same parent. Even if multiple children jointly support one parent, the basic deduction for the same dependent cannot be applied by more than one person at the same time. Failing to coordinate among family members in advance can result in having to correct deduction errors after the settlement is complete.
Education expenses for children also deserve careful attention. Spending on a high school student's education is eligible for a tax credit within the limits set by law. In general, education expenses for children in elementary, middle or high school qualify for a tax credit of 15 percent of eligible expenditures, up to 3 million won ($2,240) per child per year.
However, not every expense incurred for a child qualifies for the education expense tax credit. Whether a cost is deductible depends on whether it was paid directly to a school and whether it falls within the categories recognized by law. It is therefore important to review education payment records and identify which expenses qualify.
Even after completing a year-end settlement, there is a way to correct missed deductions. The primary mechanism is an amended return request. This is the procedure by which a taxpayer seeks a correction when taxes were overpaid or eligible deductions and exemptions were left out.
In general, an amended return request can be filed within five years of the statutory filing deadline. For year-end settlement-related requests, however, the procedure and deadline may vary depending on whether a return was filed and the individual's circumstances. Anyone who failed to claim a deduction they were entitled to should gather the relevant supporting documents and check whether an amended return request is an option.
The income deduction for credit card spending does not simply grow in proportion to how much a person spends. The deduction applies only to the portion of spending that exceeds 25 percent of total annual salary, and the deduction rate differs depending on the payment method — credit card, debit card or cash receipt.
As the year-end settlement period approaches, it is therefore advisable to look beyond total card spending and also review the ratio of spending to total salary, the breakdown by payment method, and any categories excluded from the deduction.
This episode of "Tax Talk with Yun Yu-jin" emphasizes that understanding exactly which rules apply to one's own situation matters more than simply trying to maximize deductions. Even identical spending can produce different deduction outcomes depending on family relationships, income conditions and the purpose of the expenditure.
Dual-income couples and salaried workers raising children in particular need to review the income levels and deduction eligibility of all household members together. For items such as the dependent parent deduction, where overlapping claims among family members are a real risk, a simple check in advance can prevent unnecessary tax correction issues later.
Tax benefits are there for those who know how to claim them — but incomplete knowledge can just as easily lead to penalties. Before filing a year-end settlement or applying for various subsidies, carefully reviewing one's income, family situation and spending records, and checking eligibility requirements through the National Tax Service, is the smartest starting point for sound tax planning.
7toy7@heraldcorp.com
