2024 Donation Tax Credit Rules for Dependents

Donations made by a spouse or dependent can also be deducted through an employee's year-end tax settlement. However, the family member must meet the income and other requirements for basic deduction eligibility, and the donation must be an eligible type. Political contributions and employee stock ownership association donations can be deducted only by the person who made the donation.

The tax credit rates and limits in this article are based on donations made in 2024. For other tax years, check Article 59-4 of the Income Tax Act on the Korean Law Information Center and guidance from the National Tax Service.

Requirements for Deducting a Dependent's Donations

A donation is not deductible simply because it was made by a dependent. You must first confirm whether that family member qualifies for the employee's basic deduction. The income requirement applies, but the basic deduction's age limit does not apply to donation tax credits. The exclusion of the age limit applies to filings made on or after January 1, 2017.

In principle, the basic deduction income threshold is total annual income of at most 1 million won. If the person has only wage and salary income, check whether their total gross salary is at most 5 million won. Income and total gross salary are different amounts, so if the person has income other than salary, their annual income must be reviewed separately. A spouse, parents, and adult children should also be assessed based on their relationship to the employee and their respective income requirements.

Deductibility by Donation Type

Whether a donation made by a dependent can be deducted depends on the type of donation. As of 2024, donations made by dependents may be included under special donations and general donations. Statutory donations in previous guidance correspond to special donations, while designated donations correspond to general donations.

Employee stock ownership association donations are also subject to separate requirements for the person who made the donation. You must check whether the person is a member of the relevant association. Do not determine the type solely from the recipient's name. Check the classification shown on the receipt.

2024 Tax Credit Rates and Limits

For donations made in 2024, the general donation tax credit rate is 15% when the eligible amount is at most 10 million won. A rate of 30% applies to the portion more than 10 million won and at most 30 million won. In 2024, a special rate of 40% applies to the portion more than 30 million won. Political contributions are calculated under separate rules and should not simply be added to amounts subject to these rates.

The limits must also be checked by donation type. The limit for an employee's special donations is based on the employee's entire earned income amount. The limit for general donations is calculated differently depending on whether donations to religious organizations are included. Simply applying 10% of earned income to donations to religious organizations and 30% to other general donations, then adding the results, may produce a figure that differs from the actual limit.

Calculation Example

Assume that the full 2 million won in special donations made by a dependent is eligible for the tax credit. At the basic 2024 tax credit rate of 15%, the tax credit is 300,000 won. The calculation is 2 million won × 15% = 300,000 won. This example assumes that the limit and calculated tax are sufficient. The actual tax credit must be determined based on the total combined with other donations and the applicable limit.

Common Mistakes

The absence of an age limit does not mean that there is no income requirement. If a dependent exceeds the income threshold, that family member's donations cannot be included in the employee's deduction, regardless of age.

Simply changing the name on a donation receipt to the spouse's name does not make the donation deductible. Check the actual donor and the donor information on the receipt. It is also advisable to compare filing details to prevent two family members from each claiming the same donation.

Receipts and Items to Check Before Filing

Check the donor, donation type, and donation year in the year-end tax settlement documents. You should also review the dependent's income requirements and whether another family member is claiming the deduction. If the information on the receipt differs from the actual donation, you can ask the recipient to correct it. For donations that do not appear in the simplified tax filing data, check the issued receipt and the National Tax Service guidance for the relevant tax year.