You resigned mid-year, but are you confused about when and how to make the year-end tax settlement after resigning? We have summarized the year-end tax settlement for those who quit mid-term, mid-term company turnover, freelancer, two-job (double worker), and part-time job year-end settlement by situation, so it will be useful information if you read it thoroughly.
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2 ways to set year-end settlement for those who leave Hometax mid-term
Year-end settlement method by other circumstances (leave of absence, freelancer, part-time job, etc.) 중도퇴사자 연말정산
Year-end settlement refund period for mid-term retirees
Notes on year-end tax settlement for mid-term retirees
Some people say it’s 13th month’s salary, but year-end settlement can be a tax bomb if done wrong! If you don’t know where, what, how, or why, let’s start with the concept of year-end tax settlement. 좋은뉴스
What is year-end tax settlement? When you have income, not all of that income comes in, but the rest comes in after deducting taxes.
Depending on the individual, the income received after withholding tax may be more or less taxed depending on the individual.
You can think of this as year-end settlement, which is the process of accurately measuring this at the end of the year, getting what you need to pay back, and paying extra for what you have to pay.
👉 Year-end tax refund? extra payment? How to find out
👉 Using the year-end settlement calculator
👉 Using the tax saving calculator for dual-income couples
2 ways to set year-end settlement for those who leave Hometax mid-term
There are various cases such as unemployed mid-term retirees (retirement, leave of absence) / re-employment, mid-term employment after resignation / freelancer who became a sole proprietor.
1. Year-end settlement of unemployed or mid-term retirees after leaving the company
If you do not change your job (re-employment) to another company after leaving the company, you must report it in person during the global income tax return period in May.
◑ Year-end tax settlement for those who leave mid-term: May method: Hometax -> Tax return -> Global income tax -> Fill out regular returns
Year-end settlement of those who resign mid-term in May
Year-end tax settlement for those who retire mid-term
2. Year-end settlement of re-employment after leaving the company
If you left the company between January and December of last year and joined another company, you must receive a withholding tax receipt from the company you left and submit it to the company you are currently working for, and complete the year-end tax settlement.
At the time of resignation, only the basic deduction is applied at the previous workplace because the year-end tax settlement data have not been submitted.
The tax calculation is inaccurate because various income deductions such as dependent family deductions, medical expenses, and credit cards that are not covered by the basic deduction are not reflected.
Therefore, you must submit year-end tax settlement data + earned income withholding tax receipt to the company you currently work for.
◑ What should I do if I did not receive the withholding receipt for wage and salary income while leaving the company?
① Contact your previous employer O => Contact your previous employer to request a receipt for wage and salary withholding tax and submit it together with the current company.
② Contact your previous employer X => If it is inconvenient to contact you, an individual can directly inquire and receive a withholding tax receipt through the Hometax Year-end Settlement Simplification Service after March 10 of the year following the resignation.
In this case, only the income from the current company is received at the end of the year, and for the year-end tax settlement at the place of employment, the retiree can proceed with the year-end tax settlement during the global income tax return period in May.
◑ How to issue a withholding tax receipt for early retirement
How to issue a withholding tax receipt for early retirement
When issuing the withholding tax receipt online, you can access the withholding tax receipt as a pdf file by accessing Hometax-> My Hometax-> ‘Submission details such as payment statement’.
Tip. If you leave the company, it is recommended that you leave the company after receiving the withholding tax receipt, regardless of whether you have a job change plan.
👉 How to receive additional year-end settlement income/tax credits that you missed
👉 Go to Year-end Settlement Monthly Rent Tax Credit Method
👉 View the most common year-end settlement personal deduction items
Year-end settlement method by other circumstances (leave of absence, freelancer, part-time job, etc.)
1. Year-end tax settlement for employees on leave of absence throughout the year
Since a person on leave is not a person who has left the company, he or she can proceed with year-end tax settlement through the company to which he/she is currently affiliated in the same way as a continuous worker.
You can receive all year-end tax settlements such as medical expenses, education expenses, and monthly rent notarization during the leave period.
If the leave period is long and the total annual salary of the person on leave is 5 million won or less, the spouse can enter the basic deduction.
2. Year-end tax settlement Freelancer, sole proprietor
There may be cases where you were a wage earner and then become a freelancer or a sole proprietor after quitting mid-term.
For example, if you are a wage earner until March, and if you are a freelancer or business operator from April, you do not have to do the year-end tax settlement in January or February, but file the report during the global income tax return period in May.
January-March earned income => Year-end settlement reflected
From April to December, you must classify income as freelancer income and business income, calculate each income, add up all income, and file a global income tax return.
Please note that if you do not report together, it will be considered as non-reporting and penalty tax will be charged.
Freelancers are not entitled to deductions for donation income, special income deductions excluding tax deductions, special tax deductions, credit cards, etc.
As there are only deduction benefits for dependents as a personal deduction, deduction benefits can be obtained only for card consumption from January to March during the working period.
In the case of freelancers, please note that if your annual income exceeds 5 million won or you have 4 major insurances, you cannot participate in the personal deduction for your spouse’s dependents.
3. Year-end settlement part-time job, two-job, double-worker
① Year-end settlement of part-time jobs
The method of year-end settlement differs depending on whether it is general earned income or daily earned income.
General earned income: subject to year-end settlement O
wage income received by full-time workers;
If you are a registered part-time worker who has worked for 3 months or more after paying the 4 major insurances, you can do the year-end settlement at the company you belong to.
Daily wage and salary income: subject to year-end tax settlement X
Calculation of wages according to the day or time of temporary employment and provision of work;
Short-term part-timers/ Temporarily employed daily workers/ Business income with 3.3% withholding tax are subject to global income tax return, not year-end settlement.
② Year-end tax settlement office worker two-job
If you are doing a simple part-time job after work and your part-time income is paid as a daily worker’s income, it is not subject to the total income tax.
As it is not subject to the total income tax, year-end tax settlement can be carried out in January and February only with earned income.
③ Year-end settlement double workers
In the case of a double worker who has earned multiple wage and salary income, based on the current job location where year-end tax settlement is to be carried out, the wage and salary income withholding tax receipt from another job location must be submitted to the current job location to report the total.
However, if you do not want to reveal the fact that you are currently working double or two jobs, you can file a consolidated return during the global income tax return period in May instead of filing a year-end tax return in January.
👉 Go to How to File Global Income Tax in May
Year-end settlement refund period for mid-term retirees
If there is a refund, the year-end tax refund for those who retire mid-year will be received in about July after filing the global income tax in May.
👉 Click here to apply for year-end settlement refund for those who resign mid-term
Notes on year-end tax settlement for mid-term retirees
1. What if the determined tax amount on the wage and salary income withholding receipt is ‘0’?
At the end of the year, if you received the withholding tax receipt while retiring, check the ‘Determined Tax Amount’ section -> If the determined tax amount is ‘0’, there is no additional tax refund, so you do not need to file a final tax return.
In this case, you do not need to file a final tax return because it is considered that you have already received a refund of all taxes from your previous job.
2. Year-end settlement is deducted only during the period of work provided!
If you resigned in April and re-employed in November, the year-end tax deduction is not deducted for expenses used during the six-month period of leave (unworked) from resignation to re-employment.
You must select only the working period to view deduction data. During the year-end tax settlement of those who resign mid-year, be careful not to deduct too much by selecting the wrong working period.
👉 What if I over-deducted while trying to get more year-end tax settlement?
👉 See case of application for deduction refund for missing year-end settlement
👉 Go to the method of requesting year-end tax adjustment
① Items that can be deducted regardless of the working period
Donation deduction, national pension insurance premium income deduction, personal pension savings tax deduction, pension account tax deduction, income deduction from investment association, small business/small business deduction income deduction
② Items that can be deducted only during the working period
●Special Income Deduction: -Insurance premiums (health insurance, employment insurance, long-term care insurance for the elderly)-Housing fund deduction (principal and principal repayment of housing rental, interest repayment of long-term home mortgage loan)
●Other income deductions – Income deduction for the amount used, such as credit cards – Savings for housing purchase (comprehensive savings for housing subscription, savings by subscription, savings for workers’ housing purchase) – Investment in our employee stock ownership association – Gold holders of employment retention SMEs – Savings in long-term collective investment securities
●Special tax credit – insurance premium tax credit – education expense tax credit – medical expense tax credit
●Other tax credits – monthly rent tax credit
👉 Penalty tax bomb if deducted incorrectly! Check what is subject to surcharge
Useful information to read together
☞ 2022 year-end tax settlement service method NEW
2022 year-end tax settlement simplification application for collective provision of data
☞ Year-end tax settlement method (3 types of home tax service)
3 year-end tax settlement methods (hometax simplified service)
So far, we have looked at the year-end tax settlement method for mid-term retirees. Depending on whether you are unemployed, re-employed, freelancer, part-timer, individual entrepreneur, etc.
Please check that there are no income deduction/tax deduction items that are not reflected in the year-end tax settlement simplification service, and be careful not to impose excessive deductions or penalties for year-end tax settlement.