Year-end settlement reconciles the tax withheld from your pay each month against the tax you actually owe for the year. The calculation runs: (1) gross earnings (annual wage income minus tax-free income) → (2) adjusted wage income (gross earnings minus the wage income deduction) → (3) taxable base (adjusted wage income minus personal deductions, special deductions, and other allowances) → (4) computed tax (taxable base × tax rate) → (5) final tax (computed tax minus tax credits).
If the total already withheld exceeds your final tax, you get a refund; if it falls short, you pay the difference.
What you need for year-end settlement
What foreign employees should check first
Non-residents can only claim the basic and additional personal deduction for themselves — not for dependents — and cannot claim most special deductions (aside from health insurance) or the credit-card deduction. Once you become a resident, the same deduction system as Korean employees applies, so confirming your residency status is the real starting point of your year-end settlement.
Frequently Asked Questions
Related Topics
How Wage Income Taxation Differs for Residents and Non-residents
Even for the same wage income, residents and non-residents face very different deduction rules. A side-by-side comparison.
Understanding Your Year-end Refund and Withholding Receipt
Why year-end refunds happen and how to read every line of your Wage & Salary Income Tax Withholding Receipt.