One way to defend against inflation is to invest in assets. It is necessary to minimize cash holdings by putting them in real estate stock coins, etc. Recently, it is quite common to invest in stocks after giving cash to children.
You cannot open a bank account in your child’s name face-to-face. (Adults can open a non-face-to-face account.) Some posts say that you must visit a bank with your child to open an account, but this is not the case.
You can open an account without visiting the bank with your children, and only one of the parents is required to open an account.
How to open a stock account for minors (bank account and domestic/overseas stocks)
How to open a stock account for minors (bank account and domestic/overseas stocks) It is fashionable to open a bank account and stock account for your children (minors) these days. Since the interest rate is low, it is much easier to buy stocks than to save money.
After depositing cash into your child’s account, there are a few things you must do before buying stocks. It’s just a tax return
If you purchase stocks before filing a gift tax return, it is recommended that you file a gift declaration before purchasing stocks, if possible, because the gains from stock appreciation can also be considered a gift.
The first thing to look at is the tax-free gift deduction amount. 현금 증여 신고
It’s easy if you think about it in terms of 10 years. 좋은뉴스
Up to 10 years old: 20 million won
Until the age of 20: 20 million won
Until the age of 30: 50 million won
After age 31: 50 million won
How to report a gift Documents to prepare for a gift report
① Joint certificate in the name of the child
② Family Relations Certificate PDF file
There is an opinion that a basic certificate should also be attached. When I inquired directly at the National Tax Service call center, they said that a basic certificate is not required, only a family relationship certificate is attached.
You can apply for the Family Relations Certificate to show the entire resident number. Please save the issuance as a pdf, not a printer printout.
Korean Court Electronic Family Relations Registration System ED[2/6]
Full search within the site
efamily.scourt.go.kr
③ Transfer confirmation (printed out from the bank account of the sender) PDF file
When transferring money to a child’s bank account or securities account, only attach a ‘transfer confirmation’ from the parent’s account.
However, if the parents donate stocks (stock transfer), the certificate of balance in the securities account and the statement of transaction in the securities account must be attached.
When uploading attachments to the National Tax Service, you can only upload them as PDF files. When you upload a JPG PNG file to the National Tax Service, it is automatically converted to a PDF file.
How to file a gift tax return
After accessing Hometax, sign up as a member in your child’s name. Parents should not log in because gift tax returns must be reported by the donor (the recipient of the gift). You must log in with your child’s name before proceeding.
And Hometax is possible with non-member login. It is convenient to register as a member to continue the donation report.
① Select gift tax return
After accessing Hometax, select ‘Report/Payment’ from the top menu and select ‘Gift Tax’ in the ‘Tax Report’ section.
Report/Payment -> Select gift tax
② Select regular report
Select ‘Tax return’ in the gift tax return section and then select ‘Regular return’.
Select regular report
After transferring the gift to the child, the regular reporting period is 3 months. If you want to report after 3 months, select ‘Report after deadline’ and proceed with the report.
③ Enter basic information
Enter the names and resident numbers of the donor and beneficiary, and for the date of donation, enter the date shown on the transfer confirmation.
Enter basic information
④ Select donor relationship
You just need to select the relationship between the donor and the beneficiary.
Choosing a donor relationship
⑤ Enter the details of the gifted property
To classify the gifted property, select ‘Gifted property – General’.
Gifted Property – General Selection
Select ‘cash’ as the type of gifted property.
cash selection
For the evaluation method, select ‘Market price such as cash (except above)’.
Select cash, etc. market price (except above)
⑥ Enter the evaluation value
The appraised value must be entered in the amount transferred in cash.
Enter cash gift
After checking the value of the gifted property in the total gifted property statement, select ‘Go to next after saving’.
Next after confirmation
⑦ Tax calculation input
Looking at the items, I know that up to 20 million won is tax-exempt, but the amount of gift tax has occurred. The reason is that you did not enter the ‘donated property deduction’.
The reason for the reported payment amount
If the beneficiary is a child, enter 20 million won in the ‘lineal ascendants’ section of the donated property deduction in item 26.
Deduction of gifted property
When you enter the deduction amount, you can see that the declared payment amount is ‘0’.
0 check
inheritance tax gift tax rate
10% of 100 million won or less (no progressive deduction)
Less than 500 million won 20% (10 million)
Less than KRW 1 billion 30% (60 million)
3 billion won or less 40% (160 million won)
50% over KRW 3 billion (460 million)
report receipt
If the gift amount is 20 million won, tax is 0 won.
Check the receipt of the gift tax return.
The following is how to attach a gift declaration document.
Attaching documents on how to report a gift
You must attach the required documents after submitting the application.
Go to the initial screen and select ‘Gift tax return’ -> ‘Submit supporting documents for reporting’.
Submit attachments
As for the documents attached to the report, as described above, you only need to submit a family relationship certificate (showing the entire resident number) and a transfer confirmation certificate. The transfer confirmation must be printed from the parent account (donor).
Submission of family relationship certificate and transfer confirmation
When the attached documents are uploaded, the gift tax return is complete.
report receipt
Once the gift tax return is completed, it takes about 3 to 6 months for the gift tax to be finalized.
Notes on how to report a gift
Now that you know how to open a stock account for your child and file a gift tax return, you can start managing your money.
But there are a few things to watch out for.
Successfully investing in stocks can yield several to tens of times returns. At this time, the National Tax Service may suspect that the trust was made in the name of the child.
After purchasing investment products, you should avoid withdrawals as much as possible!
You should buy investment products such as stocks, funds, and IRPs after a cash transfer gift, and avoid withdrawals after selling to realize profits. This is because it may appear that the parent’s trust is in the child’s name.
You must be careful when transferring funds to your parent’s account, withdrawing funds, stocking stocks, or issuing stocks. If the National Tax Service asks you to explain later, the donation money may be mixed, making it difficult to explain
In particular, title trusts often use family accounts when investing in public offering stocks.
Recommended way
– Transfer to the child’s stock account is for gift purposes only.
– After donating cash to your child, report it, and if possible, do not sell, and even if you do, do not withdraw money.
– When dividends are deposited into the child’s account, do not transfer it to the parent’s account, but reinvest it.
– No matter how many deposits and withdrawals are made between the bank account and the securities account in the child’s name.
Taxation due to stock valuation
If I bought stocks in my child’s name, would it be taxable if it became billions?
If the property is normally reported after the gift, the increased property is not taxed as gift tax.
However, you should be careful as you may be subject to tax if you acquire unlisted stocks and go public and increase in value.