Korea’s Year-End Tax Settlement: What Office Workers Need to Know
Often called the “13th-month salary,” Korea’s year-end tax settlement determines whether office workers receive a refund or owe additional tax. Understanding the process can make a significant financial difference.
What Is Year-End Tax Settlement?
Year-end tax settlement, known in Korea as yeonmal jeongsan, is a system where employers recalculate the income tax an employee paid throughout the year. Monthly withholding is adjusted based on actual income and eligible deductions.
If too much tax was withheld, the employee receives a refund. If too little was paid, additional tax must be paid. For most salaried workers, this process is handled through their employer.
When and How It Happens
The year-end tax settlement process usually takes place between January and February. Employees submit required documents, and companies complete calculations shortly after.
Any refund or additional tax is reflected in the February or March paycheck. Missing the submission deadline often means losing potential deductions.
Key Deductions Office Workers Focus On
Korean workers pay close attention to deductions that can significantly affect refunds. Credit and debit card spending is one of the most important factors, especially when spending exceeds a certain percentage of income.
Housing-related deductions, medical expenses, education costs, insurance premiums, and pension contributions also play a major role. Families with children and workers paying monthly rent often see the largest benefits.
Common Mistakes and Practical Tips
A common mistake is assuming the company will automatically apply all deductions. In reality, employees must submit documentation correctly and on time.
Experienced workers prepare in advance by monitoring spending patterns, keeping receipts, and reviewing their expected settlement using the national tax platform. Small expenses can add up to meaningful refunds.
Dr. Beau’s Note
Year-end tax settlement reflects how you lived and spent throughout the year. Understanding the system early allows you to plan smarter, reduce stress, and make better financial decisions over time.
