"Using Mom and Dad's Card for Living Expenses"... Following Tax-Saving Tips May Land You with the National Tax Service

National Tax Service Releases Correction Materials on Inheritance and Gift Taxes
Covers Taxation Standards from Living Expenses to Wedding Gifts

The National Tax Service released materials titled 'Misconceptions and Truths about Inheritance and Gift Taxes' on the 31st in an effort to correct misinformation about taxes spreading through YouTube and social media platforms. The agency explained that confusion among taxpayers has increased recently due to the spread of information on some YouTube channels and short-form content claiming to be tax experts, but which actually differs from real tax law.

One of the most common examples of misinformation cited by the National Tax Service is the claim that if parents transfer 1 million to 2 million won per month to a child who is employed and write 'living expenses' in the account memo, gift tax does not apply. However, under the law, non-taxable living expenses are only recognized if the child is unable to support themselves. If regular living expenses are provided to an adult child who is financially independent, it may be considered a gift.

The National Tax Service released the data "Misunderstandings and Truths about Inheritance and Gift Tax" on the 31st. Screenshot from the National Tax Service website

Using a parent's credit card is also not automatically tax-free. If an economically active child purchases luxury goods or pays for overseas trips with a parent's card, this can be considered the same as a cash gift. If spending is excessive compared to income, or if large debts are repaid, the source of funds may be investigated. If it is found during this process that the parent's card was used, gift tax and additional taxes may be imposed.

The agency also addressed misconceptions regarding wedding congratulatory money. While wedding gifts received by the bride and groom from their acquaintances are considered the property of the couple, gifts from the parents' acquaintances are, in principle, considered the property of the parents. Therefore, if a house is purchased in the child's name or a loan is repaid using the portion of congratulatory money belonging to the parents, this may be subject to gift tax.

The National Tax Service also refuted claims that inheritance tax declarations are unnecessary if inherited assets are less than 1 billion won. In typical cases involving a spouse and children, the standard deduction of 500 million won and the minimum spousal deduction of 500 million won may result in no tax liability, but whether a declaration must be filed is a separate issue.

'Inheritance and Gift Tax Misunderstandings and Truths' data released by the National Tax Service on the 31st. Screenshot from the National Tax Service website

In particular, assets gifted by the deceased to an heir within 10 years prior to death may be added to the inherited property. Furthermore, if more than 200 million won is withdrawn or assets are disposed of within one year before death, or more than 500 million won within two years before death, and the use of the funds is not clearly documented, it may be presumed that the heir received the assets and thus become subject to taxation. The National Tax Service classifies this as 'presumed inherited property' and explained that the responsibility to prove the use of funds lies with the taxpayer.

Based on these materials, the National Tax Service also plans to produce short-form videos and release them sequentially through its official YouTube channel.

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