Hello everyone! 😊 As the year-end tax season approaches, many of you might have questions about dependent deductions. Specifically, you might wonder what the income criteria are for parents and spouses when it comes to receiving these deductions. In this post, I’ll walk you through the income guidelines for parents and spouses so you can fully take advantage of the deductions available to you.
💡 What is a Dependent Deduction?
First, let's briefly explain what a dependent deduction is. It’s a system that allows taxpayers to receive deductions for financially supporting family members. By claiming dependent deductions, you can reduce your income tax liability. The primary family members that qualify for these deductions are children, parents, and spouses. To make sure you get the most out of this deduction, it’s important to understand the specific income criteria for each.
👨👩👧👦 Parents' Income Criteria
1️⃣ Income Requirements for Parents
To claim your parents as dependents on your year-end tax adjustment, their income must be below a certain threshold. Specifically, if your parents’ annual income exceeds 1 million KRW, they are no longer eligible for a dependent deduction.
Therefore, if your parents' total income, including pension income or earned income, is less than 1 million KRW, you can claim them as dependents for the tax deduction.
2️⃣ Age and Dependency Status of Parents
If your parents are 65 years or older, you may qualify for additional deductions. In this case, they may be eligible for the elderly dependent deduction in addition to the regular dependent deduction. So, the age of your parents is another important factor when it comes to maximizing your deductions.
👫 Spouse's Income Criteria
1️⃣ Income Requirements for Spouses
Your spouse can also be claimed as a dependent, but their income must be below a certain threshold as well. If your spouse’s annual income is below 1 million KRW, you can claim them as a dependent for the deduction.
It’s important to note that non-taxable income (such as tax-exempt income) received by your spouse is not included when calculating their total income, so you don’t need to worry about non-taxable sources of income.
2️⃣ Spouse Deduction Criteria
Even if your spouse has some income, as long as it is below 1 million KRW, they are eligible for the dependent deduction. If your spouse is unemployed, they automatically qualify for the basic dependent deduction, regardless of income.
🏆 Tips for Making the Most of Year-End Tax Adjustment
By understanding the income guidelines for your parents and spouse, you can maximize your tax savings through dependent deductions. This is a key strategy for reducing your tax liability, so make sure you check whether their annual income is below 1 million KRW.
When preparing your year-end tax adjustment, be sure to verify the income amounts for both your parents and spouse to ensure you're not missing out on any deductions. This way, you can make the most of the tax-saving opportunities available to you. 😊
