A dual-income couple with two children. Is it more advantageous for tax savings to claim both children as dependents under the husband, or is it more efficient to claim one child each? This is the dilemma dual-income couples face during the year-end tax settlement season. Such concerns can be addressed on the National Tax Service's Hometax “Convenient Year-end Settlement.”

The National Tax Service announced on the 21st that on the Hometax “Convenient Year-end Settlement,” it is possible to simulate the optimal deduction combination when dual-income couples or siblings include their parents or children as dependents.

To use the dual-income earners' tax-saving guidance, you must first select the year-end tax settlement simplification, fill out the deduction report, and calculate the estimated tax amount. Once the spouse agrees to “provide information,” you can view the simulation results through the tax-saving guidance.

The dual-income earners' tax-saving guidance compares the changes in the final tax amount, reflecting deduction items that vary depending on the choice of dependents. Dual-income couples can easily find a combination that minimizes their tax burden.

Let's look at an example. Worker A is an employee with an annual salary of 100 million won, and A's spouse, B, is an employee receiving an annual salary of 80 million won. The dependents include each of their parents and three children, totaling seven people.

The National Tax Service Hometax provides a personal exemption simulation in the convenient year-end tax settlement. Depending on the dependent family settings, the tax difference ranged from a refund of 870,000 won to a payment of 1,500,000 won. /Courtesy of National Tax Service

If you apply for “View Tax-saving Guidance,” it compares the changes in the final tax amount for 128 possible scenarios of choosing dependents. The comparison showed a difference ranging from a minimum refund of 870,000 won to a maximum payment of 1.5 million won. By properly allocating dependents, a “tax-saving technique” of 2.37 million won was achieved.

A National Tax Service official noted, “It is generally advantageous for a high-income earner subject to a higher tax rate to receive more deductions to reduce the tax burden.” However, “In the case of deductions like medical expenses and credit card deductions, it may be beneficial for workers with lower salaries to apply them.” This official explained that “only expenditures exceeding a certain percentage of the total salary are eligible for deduction in the case of medical expenses and credit card deductions.”