When you leave a job, year-end tax settlement doesn’t wait for February: the employer does it when paying your final month’s wages. Article 137(1) of the Korean Income Tax Act says the withholder settles “when paying the wage income for the month in which a retiring person retires”, and the tax period runs to the date you leave. The catch is that many leavers don’t hand in deduction forms. Then only your own basic deduction and the standard tax credit apply (Article 137(3)). What happens next depends on whether you start another job in the same year. This sets out Articles 70, 73, 137, 137-2 and 138 of the Income Tax Act.
1. Settlement happens with your final month’s pay. If you didn’t file deduction forms, only your own basic deduction and the standard tax credit apply.
2. Start a new job in the same year and the new employer re-settles, adding your old job’s income (Article 138).
3. No new job? The global income tax return runs from 1 May to 31 May of the next year (Article 70).
Settlement in the month you leave — Article 137
| Para. | What the Act says | Worth noting (ours) |
|---|---|---|
| (1) When | When paying February wages of the next year, or for a leaver, the wages for the month they leave | A leaver’s tax period ends on the leaving date |
| (1) Steps | Wage income amount → deductions → basic rates → subtract tax already withheld and credits | Deductions follow what you declared under Article 140 |
| (2) Refund | If withheld tax and credits exceed the computed tax, the excess is refunded | — |
| (3) No declaration | Only your own basic deduction and the standard tax credit | Dependants, insurance, medical costs and so on drop out |
| (4) Instalments | If additional tax exceeds 100,000 won, it can be split over February to April wages | Written for the February settlement |
Article 137(1) applies deductions “according to what the wage earner declared under Article 140”. Our reading is that if you hand in no declaration before leaving, paragraph 3 applies. Getting ready for settlement is in year-end settlement prep.
Three paths afterwards — Articles 138, 137-2 and 73
| If | What the Act says | Worth noting (ours) |
|---|---|---|
| New job in the same year | File a declaration including the old job’s income (January to the leaving month) and the new employer settles both together (Art. 138(1)) | The new employer needs your old job’s figures |
| New job, then leave again | Article 138(1) applies mutatis mutandis (Art. 138(2)) | — |
| Paid by two employers at once | Give the main workplace the secondary one’s withholding receipt before February wages and they settle the total (Art. 137-2(1)) | Main and secondary are set by Presidential Decree |
| No new job | With wage income only, you “may not file” a final return (Art. 73(1)1) | An option, not a duty; we read it as allowing you to add missed deductions in May |
Article 73(2) says the filing exemption doesn’t apply to people paid wage income by two or more payers — except those with no further tax to pay after settlement under Articles 137-2 or 138. So if you worked for two employers in a year and the income wasn’t combined, you’d need to file in May (our reading). Paragraph 4 also removes the exemption where the withholder didn’t settle.
The May return — Article 70
| Para. | What the Act says | Worth noting (ours) |
|---|---|---|
| (1) Period | Residents with global income file from 1 May to 31 May of the next year | Includes people with a loss |
| (4)1 Documents | Proof of eligibility for personal deductions, pension contribution deduction, special income deductions, child credit, pension account credit and special tax credits | We read this as how missed deductions get added |
When you can skip filing and when you can’t is in final return exemption; the filing itself is in global income tax.
Checklist
- ☐ Did you hand in the deduction declaration before leaving?
- ☐ If not, only your basic deduction and the standard credit applied
- ☐ New job in the same year? Tell the new employer your old income
- ☐ Two employers not combined? You file in May
- ☐ No new job? You can add missed deductions on a 1–31 May return
Questions that remain
If I overpaid when I left, when do I get it back?
Article 137(2) says the employer refunds the excess. The refund procedure is left to Presidential Decree, which we didn’t read this time.
What if I leave on 31 December?
The articles we read don’t single out a leaving date. Reading “when paying the wages for the month they leave” literally, it’s with December pay (our reading). Check with the employer.
Sources
- Korean law database (law.go.kr) — Income Tax Act Arts. 70, 73, 137, 137-2, 138 — source (current text, effective 1 July 2026, Act No. 21221; checked 19 October 2026). Timing, steps, refund, scope without a declaration and instalments of leaver settlement; combined settlement for re-employment and two workplaces; return period and documents; filing exemption and its exceptions.
- Not read. Article 140 (the declaration) itself, the Decree on refunds and main/secondary workplaces, and NTS Hometax guidance.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- Your former employer’s payroll — which deductions the leaving settlement used, and your withholding receipt.
- NTS Hometax — the May global income tax return.
Written on 19 October 2026. The content is from the source; the glosses are ours.
