How Year-End Settlement Works
What is it?
Each month your employer withholds income tax provisionally using the NTS simplified table. Year-end settlement recalculates the actual tax due using your real income and spending (cards, medical, education, dependents), then refunds or collects the difference.
The January–February timeline
| When | What |
|---|---|
| Mid-Jan | Hometax "simplified data" opens — check card, medical, donation records |
| Late Jan | Submit data and extra documents to your employer |
| Feb payroll | Refund or extra payment reflected in the Feb/Mar paycheck |
Deductions vs. credits
Income deductions (1.5M KRW per dependent, card spending, housing savings) reduce your tax base; tax credits (children, medical, education, rent, pension accounts) cut the computed tax itself — usually the stronger effect per won. Rates run 6–45% by bracket (table).
Practical ways to raise the refund
① Register all dependents ② contribute to pension savings/IRP within credit limits ③ keep rent, medical and education receipts ④ dual-income couples: simulate assigning deductions to the higher earner. Preview your refund with the calculator.
What one extra dependent is actually worth — a worked example
Using the same conditions as the take-home example above (3M KRW/mo), comparing the annual determined tax with 1 vs. 2 dependents eligible for the basic deduction gives 786,543 KRW and 583,535 KRW respectively. Registering one more dependent removes 1.5M KRW/yr from the tax base, cutting annual tax by roughly 203,008 KRW — about 16,917 KRW/month less withheld.
If a parent or spouse could qualify as a dependent but hasn’t been registered, checking the income/age requirements (e.g., annual income under 1M KRW) is one of the easiest ways to raise a refund.
Changed or left jobs mid-year — combining prior income
If you worked at more than one employer in the same year, year-end settlement should in principle combine income by submitting the prior employer’s withholding certificate at your final workplace. Omitting it understates total pay for the year, making it look like less tax was owed than it actually was — if the tax authority later catches this, it can mean back taxes plus penalties. When you leave mid-year, the employer must run a leaver’s year-end settlement when it pays your final month’s salary. That pass typically applies only the basic personal deduction and the standard tax credit, leaving out medical, education and housing deductions. So if you didn’t start a new job before year-end, you can pick those missing deductions up — and claim the refund — by filing your own comprehensive income tax return the following May. Both situations are easy to miss, so if you changed or left jobs that year, check Hometax in advance for how many withholding certificates are on file under your name. Some people withhold the prior employer’s data from a new workplace out of discomfort, but the tax authority’s records already show both employers regardless — hiding it doesn’t erase the record, it just makes a later correction more of a hassle.