Korean Donation Tax Credit Calculator

This calculator works out how much your donations reduce your tax at year-end settlement or in the May income tax return. Enter your global income and your donations by category, and it shows how much qualifies, how much is blocked by the ceiling this year, and the final tax credit. If you know your computed tax, enter it too and the calculator checks that the credit does not exceed it.

The donation relief is a tax credit, not an income deduction. It comes straight off the tax that has been computed rather than off your income, so the credit is the amount you get back or do not have to pay. But not every won you gave qualifies. The ceiling depends on the type of recipient, and once any of the money went to a religious body, the ceiling formula itself changes. This calculator applies that difference exactly.

Employees gathering their donation receipts ahead of year-end settlement. Anyone who gave to different kinds of recipients, such as a church or temple, a welfare charity and a school development fund, needs to enter each category separately to get the right answer. If you are deciding whether to give more before the year ends, enter the current figure and the higher figure in turn to see how much the credit grows.

It is also useful for anyone checking whether part of their giving has been carried forward. A large donation in a low-income year can hit the ceiling and push part of it into the following year, and people often assume the credit was simply small. Sole proprietors and others filing the May income tax return use the same provision, so the calculator applies there too.

The basis is 소득세법 제59조의4제4항. The calculation runs in three steps. First, donations are split into special donations and ordinary donations. Special donations are gifts to the state or a local government, national defence contributions, disaster relief and the like; they have no ceiling and are credited before ordinary donations. Ordinary donations, to welfare corporations, schools, public-interest bodies and religious bodies, are subject to a ceiling.

Second, the ceiling for ordinary donations is worked out. The income used for this is global income less any special donations. With no religious donations, the ceiling is 30% of that income. If any donation went to a religious body, the ceiling becomes 10% of income plus the lesser of 20% of income and the ordinary donations that did not go to a religious body. If everything went to a religious body, the second term is zero and 10% is effectively the ceiling. Ordinary donations above the ceiling are not credited this year but can be carried forward for ten years.

Third, the rates are applied. Special donations plus the ordinary donations within the ceiling make up the qualifying amount; the first ₩10,000,000 of that is credited at 15% and anything above ₩10,000,000 at 30%. If you entered your computed tax, the credit is capped at that figure, because a tax credit can only be used against tax that is actually due. Political donations and hometown love donations are governed by separate provisions with a different structure and are not included here.

Suppose someone with global income of ₩50 million gives ₩5 million to a welfare charity. With no religious donations the ceiling is 30% of ₩50 million, or ₩15 million, so the whole ₩5 million qualifies. It is under ₩10,000,000, so the credit is 15% of it, ₩750,000. If the same ₩5 million had gone to a church instead, the ceiling drops to 10% of ₩50 million, or ₩5 million, but the gift sits exactly at the ceiling and the credit is still ₩750,000. Give ₩8 million to the church, though, and ₩3 million above the ceiling is carried forward while the credit remains ₩750,000.

Split the giving as ₩5 million to a church and ₩2 million to a welfare charity and the ceiling is ₩5 million plus the lesser of 20% of income (₩10 million) and the ₩2 million of non-religious giving, so ₩7 million; all of it qualifies and the credit is ₩1,050,000. Give ₩15 million to ordinary non-religious bodies and it all fits within the ₩15 million ceiling, with 15% on the first ₩10,000,000 (₩1.5 million) and 30% on the remaining ₩5 million (₩1.5 million) for a credit of ₩3 million.

The most common one is treating donations to a religious body as if they had the same ceiling as other giving. As soon as any money goes to a religious body the formula changes, and if all of it did, 10% of income is effectively the cap. On ₩50 million of income and ₩10 million of offerings, half is not credited this year.

The second is discarding the amount above the ceiling. Excess ordinary donations carry forward for ten years, so they should be entered again in next year's return. The third is including gifts without a proper receipt. The credit requires proof of a donation to a body recognised by law; money given to an overseas organisation or an unregistered group does not qualify.

The fourth is expecting a credit when there is no tax. If the computed tax is zero there is nothing to credit against, and the donation credit is zero too. Finally, people with only business income sometimes use this calculator; for them donations are treated as a business expense rather than a tax credit, which works differently. Foreign residents get the same credit as Koreans if they are tax residents, but anyone who elects the flat-rate regime gives up this and every other credit.