what is the Gifu Companion Card
you may have heard of the Seoul Metropolitan Government's flat-rate transportation card, which gives you unlimited rides on buses and subways in Seoul by charging a set amount of money once a month. it's a popular way to save money on transportation costs among people who often use public transportation to commute to work, but many people don't know that it's not just a way to save money on transportation costs, but also a way to get a tax deduction on their year-end tax return.
the basics of the transit deduction
the cost of public transportation, such as buses, subways, and trains, is included in the credit card deduction on your year-end tax return. the deduction starts from the amount that exceeds 25 percent of your gross salary, with a basic deduction limit of 3 million won for those earning up to 70 million won and 2.5 million won for those earning more than 70 million won.
this is where public transportation expenses come into play. even if you meet the basic deduction limit, you can still deduct up to 3 million won for public transportation. moreover, the deduction rate is 40 percent, which is more than twice as high as the 15 percent credit card deduction rate. This means that even if you spend the same amount of money, you get much more money back for public transportation.
tax deductions for different recharge methods
the recharges you make to your Climate Alliance Card are tax deductible. however, the process differs depending on the method of reloading.
if you use a credit or debit card, you don't need to do anything - your credit card company will automatically aggregate your purchases and apply them to your year-end tax return. it's convenient because you can pay with your card as usual and the deduction is taken care of for you.
however, if you pay with cash or direct deposit, you won't automatically receive a cash receipt. You'll need to register your mobile phone number to receive a cash receipt in order to take advantage of the deduction. Once registered, future cash or direct deposit purchases will automatically receive a cash receipt and count towards your deduction.
how to register for cash receipts
there are several ways to register your phone number for cash receipts. in the TOSS app, you can easily register through the My Cash Receipts menu. you can also register your cash receipt method on IRS HomeTax, so choose the method that's easiest for you.
the important thing to remember is that if you don't register, you won't get any deductions at all, no matter how much you top up. It's a good idea to check in and register before the tax season rolls around - you only have to do it once, and it'll work for you.
things you may have missed
there are a few things you may have missed about the Climate Alliance Card tax credit. first, recharges made before the time of cash receipt registration will not be retroactively applied. It is advantageous to register as soon as possible, as recharges made by bank transfer before registration will not be deductible.
second, the Gifu Companion Card is for public transportation in Seoul, so you'll need to check your transactions outside of Seoul separately. check the benefits according to your usage pattern.
you may also find these articles helpful: How to calculate credit card deductions for year-end taxes, tips for saving money on public transportation, and a guide to Seoul's transportation welfare policies.
frequently asked questions
Q. is the entire amount of the recharge on the Climate Alliance Card tax deductible?
A. Yes, the entire amount charged is classified as public transportation expenses and is eligible for tax deduction. however, in the case of cash or bank transfer recharges, a cash receipt must be registered first.
Q. if I charge with a credit card, will the credit card deduction rate apply?
A. No. The amount recharged to the Climate Alliance Card qualifies as a public transportation expense and is deductible at the 40 percent rate. this is much more favorable than the 15 percent credit card deduction.
Q. where do I register my cash receipts?
A. You can register in the My Cash Receipts menu in the Toss app or at the IRS Home Office. once you register your mobile number, it will be automatically issued to you.
Q. Can I deduct the amount I recharged before registering?
A. No. Top-ups made prior to registration are not retroactive. You must complete registration and top-up in advance to receive the deduction.
Q. can I receive both the Climate Alliance Card benefits and the tax deduction?
A. Yes, of course. you can take advantage of the unlimited use of the subscription and the tax deduction at the end of the year for double savings.
wrapping up
the GIFT Card is a smart way to save money on transportation and get a tax deduction at the same time. just make sure you enroll your cash receipts when you top up your card, and you won't miss out on any deductions at the end of the year. check your enrollment status today.
if you found this article helpful, please let us know in the comments and subscribe to our blog.