If you reside in Korea for 183 days or more in a year, you are subject to income tax under Korean tax law.
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Taxable Income Period: Previous year's income (e.g., Jan 1, 202X – Dec 31, 202X)
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Filing & Payment Period: May 1 – May 31
Comprehensive income refers to the total amount of interest, dividends, business income (including personal service income subject to 3.3% withholding), wages, pensions, and other income.
Flow of Tax Calculation
Step | Description | Details |
1 | Aggregate Total Comprehensive Income | Interest income, Dividend income, Business income (including rental), Employment income, Pension income, Other income |
2 | Apply Income Deductions | Basic deduction (self, spouse, dependents), Additional deduction (senior, disabled, etc.), Pension insurance premium deduction, Housing loan interest deduction for senior pensions, Other applicable deductions |
3 | Calculate Tax Base | Total income − Deductions = Tax Base |
4 | Apply Progressive Tax Rates | Apply 6%–45% rates based on tax brackets → Pre-credit Tax Amount |
5 | Apply Tax Credits / Reductions | Special tax credits (insurance, medical, education, donations), Bookkeeping tax credit, Foreign tax credit, Disaster loss credit, Other credits/reductions |
6 | Add Penalties (if applicable) | Failure-to-file penalty, Under/over-reporting penalty, Late payment penalty, Documentation or bookkeeping penalty |
7 | Subtract Prepaid Taxes | Interim prepayments, Taxes already assessed/paid, Withholding amounts |
8 | Final Tax Payable or Refundable | Final amount to be paid or refunded after all adjustments |
Important Note:
Even if income tax is withheld monthly, you may still be required to file a tax return.
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Only wage income and year-end settlement completed by your employer in February → No filing required
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Income from two or more employers → Filing required
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Both domestic and overseas income → Filing required
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Income from one company but only 3.3% withholding applied → Filing required
Consequences of Not Filing
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Failure-to-file penalty: Up to 20% of the unpaid tax amount
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Late payment penalty: 0.022% per day on the unpaid amount until paid
