Year-End Tax Settlement Personal Deductions Guide: Dependent Requirements & Deduction Limits for Foreign Workers in Korea
What Are Personal Deductions in Korea's Year-End Tax Settlement?
Personal deductions (인적공제) in the year-end tax settlement (연말정산) are a system that reduces a worker's tax burden by subtracting a set amount from taxable income based on the worker themselves and their dependents. They are grounded in Articles 50 and 51 of the Income Tax Act (소득세법 제50조·제51조) and are divided into two types: basic deductions (기본공제) and additional deductions (추가공제).
Note for foreign workers: The statutory thresholds below apply to all workers in Korea. Your employment contract cannot reduce these rights, but your actual deductible amount depends on your individual circumstances.
Basic Deduction: 1,500,000 Won Per Person Per Year
The basic deduction subtracts 1,500,000 won per eligible person per year from your aggregate income amount. Eligible persons are as follows:
- The worker themselves: Always deductible, no conditions required.
- Spouse: Annual income amount of 1,000,000 won or less (or total wages of 5,000,000 won or less if only employment income).
- Lineal ascendants (parents, grandparents, etc.): Aged 60 or over + income amount of 1,000,000 won or less.
- Lineal descendants (children, grandchildren, etc.): Aged 20 or under + income amount of 1,000,000 won or less.
- Siblings: Aged 20 or under or aged 60 or over + income amount of 1,000,000 won or less.
- Foster children / benefit recipients: When the conditions under each subparagraph of Article 50 of the Income Tax Act (소득세법 제50조) are met.
The "income amount of 1,000,000 won" refers to the income amount (total revenue minus necessary expenses), not total revenue. For employment income, because the employment income deduction brings the income amount to 1,000,000 won or less for total wages up to 5,000,000 won, this must be verified separately.
Additional Deductions: Extra Deductions If You Qualify
Among those eligible for the basic deduction, persons who meet certain additional conditions may receive further deductions under Article 51 of the Income Tax Act (소득세법 제51조).
| Category | Deduction Amount |
|---|---|
| Senior citizen (aged 70 or over) | 1,000,000 won per person per year |
| Person with a disability | 2,000,000 won per person per year |
| Female worker (married woman, or female head of household with dependents) | 500,000 won per year |
| Single parent (raising lineal descendants or adopted children without a spouse) | 1,000,000 won per year |
The additional deduction for persons with disabilities has no age requirement. As long as the income amount threshold is met, you can claim this deduction even for a child over age 20 or a parent under age 60 — an item that is easy to overlook.
Dual-Income Couples: Key Points to Watch
If both spouses simultaneously register the same dependent for the basic deduction, it is treated as a duplicate deduction (중복 공제). The National Tax Service (국세청) automatically verifies duplicate applications through the year-end tax settlement simplified service, and if a duplicate is found, the underpaid tax amount plus a penalty surcharge may be collected.
A common tax-saving strategy is to assign dependents to the spouse in the higher tax bracket. However, for the medical expense deduction (의료비 공제), only amounts actually paid by the person claiming the dependent are recognized — so if a family member has incurred large medical expenses, it may be more advantageous to register that family member under the person who made the payments.
Commonly Overlooked Checkpoints
- A dependent who died during the year: The deduction is available through the year in which the date of death falls.
- A spouse divorced during the year: The deduction is not available for that year.
- Parents residing abroad: Documents proving actual financial support (e.g., remittance records) are required.
- A child who earned income: If a child's total wages exceed 5,000,000 won (e.g., from a part-time job), they are excluded from the deduction from that year onward.
Check It Instantly at Workbear
If you want to see how accurately applying personal deductions changes your actual take-home pay, try the salary take-home pay calculator at Workbear (workbear.kr). You can easily check your estimated tax amount reflecting your deduction items. You can also quickly resolve questions about year-end tax settlement using the AI labor law search feature.
This article is for informational purposes only and does not constitute legal advice. For specific cases, consult a certified labor attorney (노무사) or lawyer.
Frequently Asked Questions
Can I claim a personal deduction for my parents even if they have some income?
Yes, if a dependent's annual income amount is 1,000,000 won or less or total wages of 5,000,000 won or less if they have only employment income , they qualify for the basic deduction. The income amount of 1,000,000 won refers to total revenue minus necessary expenses, so even if your parents have a small amount of rental or business income, the deduction is still possible as long as the income amount threshold is met.
Can a dual-income couple both claim a deduction for the same child?
No. If both spouses simultaneously claim the same child as a basic deduction dependent, it is treated as a duplicate deduction and a penalty surcharge may be imposed. Only one worker may claim the deduction per child, so it is generally more tax-efficient to assign the child to the spouse in the higher tax bracket.
Can siblings also qualify for a personal deduction?
Yes. Siblings who meet the income amount threshold of 1,000,000 won or less and are either aged 20 or under or aged 60 or over qualify for the basic deduction. However, you must also verify actual cohabitation on the resident registration and actual financial support. If a sibling is already registered as a dependent of another worker, a duplicate deduction is not permitted.
Is there no age limit for the additional deduction for persons with disabilities?
That is correct. Under Article 51 of the Income Tax Act 소득세법 제51조 , the additional deduction for persons with disabilities does not apply an age requirement. As long as the income amount of 1,000,000 won or less threshold is met, you can claim the disability deduction 2,000,000 won per person per year even for a child over age 20 or a parent under age 60.