In Febuary, It's the season for 'year-end tax settlement'. Every employees, or more precisely, every salary and wage incomers goes through the same process every year. even if you are foreigner, there's no exception.
1.What about the taxes I'm paying every month by dedcuting from my salary?
When employee's receive their salary from the company, they don't receive the full contracted amounts because the company deducts taxes from your salary and pays the remainder. so even if you don't want to, you are paying taxes every month through this process.
However the taxes deducted from your salary are not the confirmed taxes. they are simpley calculated based on the simplified tax table and the table calculated your monthly taxes only by your monthly salary.
*FYI, If you want to know more about your monthly paying taxes, Please refer to below post.
[Payroll] Demystifying Payroll: The way of Calculating Employee Income Tax on Payslips
If you are an employee working for a company, you will receive payment in the form of a salary from the company. (It's same even if you are a representative of a corporate!) And You can observe a few items that have been deducted from your contracted salar
www.g-tax.kr
So you should calculate the exact amounts of taxes you are owe to pay, and the process is called 'Year-end tax settlement'.
2.The deducted amounts aren't all taxes, you should seperate taxes from social insurance.
Employees sometimes think that goverment deduct a lot of taxes from your salary. However when you check your payslip, the deducted amounts includes not only taxes but also social insurance amounts like health insurance(3.545%) long term care insuracne(12.81% of health insurance) and employement insurance amounts(0.9%)
Amon these deducted amounts, the taxes that you need to settle in the year-end tax settlement are only the tax portion not the social insurance amounts(social insurance amounts can be you deduction when you calculate your real taxes)
3.How are my taxes calculated?
During the year-end tax settlement, total salary from January to December is aggregiated (1.cofirm your total whole year salary) and apply Income deduction and tax credit to calculated your exact taxes(2.apply deduction). The calculated taxes are then compared to the total taxes you have paid each month. and you either pay or receive the difference.(3.compare taxes)
There are basic deductions which apply to every employees, and optional deduction which can vary by each individuals situation.
This process are conducted by the company you are currently working. so you should prepare documents and submit them to your company.
you can contact me through the information in the name card.
Or Please fill in the below form
G-tax (Tax & Accounting service)
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Thank you for read my article! I hope it helps.
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And if you need help for your tax filing or accountung or looking for CPA in Korea, don't hesitate to contace us
G-tax / Certified Tax Accountant / Steven Yang
+82 10 9599 7152
steven@g-tax.kr
