Year-End Tax Settlement Calculator: How to Check Your Refund in Advance — Complete Guide for Foreign Workers in Korea

Why Should You Calculate Your Year-End Tax Settlement in Advance?

Every January and February, year-end tax settlement (연말정산) becomes the biggest concern for salaried workers in Korea. Often called the "13th month's paycheck," it raises hopes of a refund — but without preparation, you may instead receive a notice of additional tax due. By using a year-end tax settlement calculator to estimate your expected amount before year-end, you can strategically fill in deduction items during the remaining months.

Basic Structure of Year-End Tax Settlement

Year-end tax settlement is the procedure under Article 137 of the Income Tax Act (소득세법 제137조) by which the withholding agent (the employer) finalizes and settles an employee's annual employment income tax. The calculation flows as follows:

1. Total Salary = Sum of annual wages − Non-taxable income
2. Employment Income Amount = Total salary − Employment income deduction (근로소득공제)
3. Taxable Income (과세표준) = Employment income amount − Various income deductions (personal deductions, credit card deductions, etc.)
4. Calculated Tax = Taxable income × Basic tax rate (6–45%, Article 55 of the Income Tax Act (소득세법 제55조))
5. Determined Tax = Calculated tax − Tax credits (medical expenses, education expenses, donations, monthly rent, etc.)
6. Refund or Additional Payment = Pre-paid tax (withheld amount) − Determined tax

If the determined tax is less than the pre-paid tax, you receive the difference as a refund; if it is greater, you must pay the difference.

Note for foreign workers: Your employment contract may specify different salary components or non-taxable allowances — always verify which items are taxable against your actual contract.

Key Deduction Items to Check Before Using the Calculator

Income Deductions (소득공제)

• Credit card and debit card spending: Only the amount exceeding 25% of your total salary qualifies for deduction. The deduction rate is 30% for debit cards and cash receipts, and 15% for credit cards (Article 126-2 of the Restriction of Special Taxation Act (조세특례제한법 제126조의2)).
• Personal deductions (인적공제): Basic deduction of KRW 1,500,000 for yourself, plus an additional KRW 1,500,000 per dependent.

Tax Credits (세액공제)

• Medical expenses (의료비): 15% of medical expenses exceeding 3% of your total salary (30% for infertility treatment expenses), under Article 59-4 of the Income Tax Act (소득세법 제59조의4).
• Education expenses (교육비): 15% tax credit — full amount for yourself, and up to the applicable limit per child.
• Pension savings (연금저축) and IRP: Annual limit of KRW 9,000,000; tax credit rate of 12–15% (15% if total salary is KRW 55,000,000 or below).
• Monthly rent tax credit (월세 세액공제): Available to non-homeowning household heads with a total salary of KRW 80,000,000 or below. The credit is 15–17% of monthly rent paid.

How to Use a Year-End Tax Settlement Calculator

The NTS Hometax 'Year-End Settlement Preview' (연말정산 미리보기) service loads your previous year's deduction data and automatically calculates your estimated tax for the current year. Note that because this is pre-filing data, some discrepancy may exist.

For a quick simulation, try the Workbear (workbear.kr) net salary calculator. It lets you see at a glance the four major social insurance premiums and income tax deducted from your monthly pay, and helps you understand your total annual withholding amount. The calculator reflects 2026 four major insurance rates (National Pension: 4.75% employee share; Health Insurance: 3.595% employee share; Employment Insurance unemployment benefit portion: 0.9% employee share), making net salary calculations highly accurate.

Easy-to-Miss Tax-Saving Points

• Glasses and contact lens purchases: Deductible as medical expenses up to KRW 500,000 per person per year.
• Dependents' credit card spending: Spending by dependents who meet the income requirement (annual income of KRW 1,000,000 or below) can be combined with your own.
• Donation tax credits (기부금 세액공제): Statutory and designated donations receive a 15–30% tax credit (Article 59-4 of the Income Tax Act (소득세법 제59조의4)).
• Re-employment after mid-year resignation: Employment income from both workplaces must be reported together; omitting either may result in a penalty surcharge.

Year-end tax settlement rewards those who know what to claim. Check your estimated net salary now with the Workbear calculator and plan your deduction strategy for the remaining months.

This article is for informational purposes only and does not constitute legal advice. For specific cases, consult a certified labor attorney (노무사) or lawyer.