Complete Comprehensive Income Tax Filing Guide: From Tax Saving to Refunds
2025-01-03
1. What is Comprehensive Income Tax?
Comprehensive income tax is imposed on all income earned during the year (previous year Jan 1-Dec 31). Subject income: Interest, dividends, business, employment, pension, other income. File and pay May 1-31 annually. Progressive tax rate of 6-45% applies based on tax base.
2. Who Must File
โ Self-employed individuals with business income (including freelancers). โก Employees receiving salary from 2+ places. โข Those with income other than salary (rental, interest, etc.). โฃ Employees who did not do year-end tax settlement. โค Those with retirement/pension income. Regular employees who only did year-end settlement need not file separately.
3. Income Deduction vs Tax Credit
Income deduction: Reduces tax base. Examples: Personal deduction (1.5M KRW for self, spouse, dependents each), pension insurance, housing funds, credit card usage. Tax credit: Directly deducted from calculated tax. Examples: Employment income tax credit, child tax credit, pension account tax credit, donation tax credit. Tax credits have greater tax-saving effect.
4. Filing Method
โ Access Hometax and login. โก Select "Comprehensive Income Tax Filing" menu. โข Create regular filing (choose simple expense rate/standard expense rate/simple books/double-entry bookkeeping). โฃ Enter income and expenses. โค Enter income deduction and tax credit items. โฅ Confirm tax amount and submit filing. โฆ Confirm payment or refund. Tax agent (accountant) use also possible.
5. Tax-Saving Strategies
โ Thoroughly collect expense receipts (tax invoices, card receipts). โก Reflect all income deduction items (pension savings, IRP, donations, etc.). โข Actively use business credit cards. โฃ Maximize family personal deductions. โค Check SME employee income tax reduction. โฅ Join Yellow Umbrella Insurance. โฆ Medical/education expense tax credits.
6. Penalties and Refunds
Non-filing: Non-filing penalty (20%), late payment penalty (0.025%/day). Underreporting: Underreporting penalty (10-40%). Refund: Refunded if prepaid tax (withholding) exceeds determined tax. Refund paid within ~30 days after filing. Additional refund possible through amended return (within 5 years).