National Tax Service Corrects Misinformation on Inheritance and Gift Taxes

The National Tax Service (NTS) has released a "Inheritance and Gift Tax: Misconceptions and Truths" document to correct misinformation spreading online, including on YouTube, regarding inheritance and gift taxes.

Recently, some YouTubers claimed that sending money to children under the guise of living expenses would exempt them from gift tax, but the NTS clarified that this is not the case. The NTS explained that taxes are only waived on funds sent as living expenses for children who are unable to support themselves, and simply labeling the remittance as 'living expenses' does not grant tax exemption. The service emphasized that the recipient's financial situation and actual use of the funds are more important than the stated purpose (label) of the money transfer.

Regarding misconceptions about the use of 'mom's card' (parental credit card), the NTS stated that even young adults entering the workforce may be subject to an investigation into the source of funds if they engage in excessive spending relative to their income or repay significant debts. If parental financial support is confirmed, gift tax and penalties may be imposed.

Addressing misinformation such as 'no reporting required for inherited assets under 1 billion won,' the NTS explained that assets gifted by the deceased within 10 years before their death can be aggregated into the taxable inheritance amount, even if within the inheritance tax exemption limit. Large withdrawals with unclear purposes made shortly before death (1-2 years) may be presumed as part of the inherited estate and become subject to taxation. Therefore, the NTS advised against determining reporting obligations solely based on current asset holdings.

The NTS urged the public not to blindly trust simplified internet information or social media content, as the actual application of tax laws varies based on individual circumstances. They recommended consulting official resources or seeking advice from tax professionals, especially for complex inheritance and gift tax matters.