Pay your taxes in installments, you don't have to pay them all at once

what is tax installment?

in principle, taxes must be paid in a lump sum within the due date. However, paying millions or tens of millions of won in taxes at once can be overwhelming for anyone. To help ease the burden on taxpayers, the government offers a tax installment program.

tax installment is a system that allows you to pay taxes over a certain amount in two or more installments. typical national taxes that can be paid in installments include comprehensive income tax, comprehensive real estate tax, inheritance tax, and gift tax. Each tax has different amounts and payment deadlines, so be sure to check carefully.

conditions for installment taxes

comprehensive income tax installment terms

you can pay the comprehensive income tax in installments when the amount of tax due exceeds KRW 10 million. you can pay the remaining amount within two months of the regular due date.

if your tax liability is KRW 20 million or less, you can only pay the amount that exceeds KRW 10 million in installments. For example, if your tax liability is KRW 15 million, you can pay KRW 10 million first and the remaining KRW 5 million in two months.

if your tax bill exceeds KRW 20 million, then you can pay no more than 50% of the total tax bill. if your tax bill is KRW 30 million, you can pay up to KRW 15 million.

comprehensive real estate tax payment conditions

you are allowed to pay the comprehensive real estate tax in installments if the amount of tax due exceeds KRW 2.5 million. however, the installment period is 6 months, which is longer than the comprehensive income tax.

if the tax amount is KRW 5 million or less, you can pay the amount over KRW 2.5 million, and if it exceeds KRW 5 million, you can split up to 50 percent of the tax amount.

deferred payment system for inheritance and gift taxes

inheritance and gift taxes are subject to the same installment standards as comprehensive income tax. you can pay the first KRW 10 million of tax due in installments and pay the rest within two months of the due date.

however, if the amount of inheritance or gift tax exceeds KRW 20 million, there is another way to pay it over a longer period of time: the annual deferred payment system.

you can make one annual installment for up to 10 years for inheritance tax and up to 5 years for gift tax. this is a great option if you have a large lump sum to pay.

however, you'll need to provide security for your taxes and pay interest for the duration of the installment period. Also, keep in mind that once you're approved for deferred payment, you're not eligible for regular installments.

pay your taxes with an interest-free credit card

if you don't have an installment plan, there's still a way to pay your taxes. that's by using a tax card payment plan.

some credit card companies offer up to 12 months of interest-free financing on national and local tax payments. you can also use a tax card installment plan to pay your property taxes in installments, which are not supported by installment plans.

however, you may incur a fee of 0.8 percent of your payment amount when you pay your national taxes with a card. Local taxes can also be paid with a card, but the length of the installment period and terms of the interest-free offer vary by card company. Be sure to check your card's tax payment options and benefits before you pay.

it's smart to consider both payment plans and card installments when planning your strategy for paying large tax bills.

frequently asked questions

Q1. Can I pay all my taxes in installments?

No, you can only pay some national taxes, such as comprehensive income tax, comprehensive real estate tax, inheritance tax, and gift tax. local taxes such as acquisition tax and property tax do not have a payment plan, but you can take advantage of the card's interest-free installment plan.

Q2. What is the difference between installment and deferred payment?

A2. Installment payment is a system that divides taxes into two installments, while deferred payment is a system that allows you to pay taxes over a long period of time, up to 5 to 10 years, for inheritance and gift taxes only. deferred payment requires the provision of tax collateral and interest charges.

Q3. How much is the fee for tax card payment?

A3. There is a fee of approximately 0.8 percent of the payment amount when paying by tax card. most local taxes can be paid by card without a fee, but conditions vary by card company, so check in advance.

Q4. How do I apply for installment payments?

A4. If you want to make an installment payment, you can pay the amount due before the due date, minus the amount you owe. you don't need to apply for an installment plan, just pay the difference and the payment will be processed automatically.

key takeaways and wrap-up

tax installment plans can significantly reduce the burden of paying a lump sum. you can pay your comprehensive income tax and comprehensive real estate tax in installments if you meet certain conditions, and you can also pay your inheritance and gift taxes in deferred installments over time. For taxes that aren't eligible for installments, take advantage of interest-free credit card financing.

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