Year-End Tax Settlement (연말정산) for Foreign Employees

1. ·Under Income Tax Act Article 137, when your employer pays your February salary (or your final salary if you leave), it must settle your income tax for the year: apply your declared deductions, compute the tax at the basic rates, then subtract the tax already withheld and your tax credits.
2. ·If the tax already withheld plus your credits exceed the tax due, the employer must refund the difference to you (Article 137(2)). If you underpaid, the shortfall is collected — and can be spread over the February–April payrolls if it exceeds 100,000 KRW.
3. ·If you do not submit any deduction report, the employer applies only your own basic personal deduction and the standard tax credit — usually the worst outcome. Filing your data is how you claim dependants, insurance, medical, education, rent and card-spending deductions.
4. ·Foreign employees are settled like everyone else, but may instead elect the 19% flat rate (see the separate Income Tax guide); the flat rate forgoes most deductions, so year-end settlement matters most for those on the ordinary progressive rates.
5. ·Residents (183+ days) can claim the full range of deductions; non-residents have a narrower set. Missing the settlement (e.g. you left the job with no February employer) means filing the annual return (종합소득세) yourself in May.

1. ·You earned employment income (근로소득) in Korea during the tax year.
2. ·You still have an employer paying you in February (otherwise you file the May return yourself).
3. ·You gather and submit your deduction documents for the year.

1. 1In mid-January, log in to Hometax (hometax.go.kr) and open the 연말정산간소화 service — it auto-collects most deduction data (insurance, medical, education, card spending, pension).
2. 2Download the consolidated PDF and any extra receipts the service does not hold (e.g. some rent, donations, dependants living abroad).
3. 3Register your dependants/deductions in your company’s year-end forms (소득·세액 공제신고서) and submit them with the PDF by your employer’s deadline (usually early–mid February).
4. 4Check your February payslip: a refund appears as extra pay; a shortfall as a deduction. Keep the 근로소득 원천징수영수증 (tax receipt) as proof of income.
5. 5If you changed jobs during the year, give your current employer the previous employer’s tax receipt so both incomes are combined. If you have no February employer, file 종합소득세 on Hometax in May.

Handled by your employer; data comes from Hometax (hometax.go.kr, National Tax Service). NTS foreign taxpayer helpline: 1588-0560 (English available). If you file yourself, use the May 종합소득세 filing on Hometax.

1. ·Submitting nothing, so only the basic personal deduction applies — and losing a refund you were entitled to.
2. ·Forgetting dependants who live in Vietnam; they can qualify if you support them and provide family-relationship proof.
3. ·Choosing the 19% flat rate without comparing — it helps high earners but hurts most mid/low earners who would gain more from deductions.
4. ·Changing jobs and not combining incomes, causing an under-payment and a tax bill later.
5. ·Assuming the local income tax is separate — remember a 10% local surtax rides on top of your income tax.