When an employee departs mid-year, a year-end tax settlement must be performed at the time the employment income for the month of departure is paid. This is referred to as the mid-year departing employee year-end tax settlement = interim year-end tax settlement.
If payroll settlement has been processed through flex and all payroll data is available, you can easily perform the interim year-end tax settlement for the amounts paid during the current year😊
Interim Year-End Tax Settlement - Processed Together with Payroll Settlement
The interim year-end tax settlement can be processed together with payroll settlement. Please proceed together when finalizing the departing employee's last payroll settlement.
You can find instructions on how to process payroll settlement via Payroll Settlement.
You can configure and proceed together via [Payroll Settlement] -> [Start Settlement].
In the detailed settings, please also select the departing employee as a settlement target.
Under the interim year-end tax settlement option, select "Settle together with the departure month's payroll" and proceed to Start Settlement.
Once the departing employee has been loaded as a settlement target, click Confirm and proceed with payroll settlement, then proceed with the interim year-end tax settlement.
Social Insurance Interim Settlement - Settlement Results
Based on the calculated total remuneration, you can review the confirmed insurance premium payable and the final settlement insurance premium, taking previously paid insurance premiums into account. You can also edit the insurance premiums.
Income Tax Interim Settlement - Annual Income · Previously Paid Amount
You can review and examine the taxable and non-taxable income, previously paid tax amounts, and previously paid insurance premiums included in the income tax interim settlement.
Income Tax Interim Settlement - Settlement Results
You can review the determined tax amount, previously paid tax amount, and the net tax amount to be collected/refunded, which are the results of the income tax interim settlement.
Interim Year-End Tax Settlement - Processed During Payroll Settlement (Summary & Target Configuration)
You can view a summary of the social insurance interim settlement and income tax interim settlement results.
You can include or exclude interim year-end tax settlement targets and review the final settlement results.
If the retirement date falls within the payroll settlement's attribution period, the employee is automatically included as an interim year-end tax settlement target.
Include/Exclude Targets: You can add or remove interim year-end tax settlement targets.
If a target is excluded from the interim year-end tax settlement, the calculated settlement results will also be deleted.
If an excluded target cannot be re-included, check whether there is a history of an interim year-end tax settlement having been processed or completed, and delete it if necessary.
Interim Year-End Tax Settlement - Processed During Payroll Settlement (Social Insurance Interim Settlement - Total Remuneration)
During social insurance (health insurance, employment insurance) interim settlement, you can review the calculation basis and results of the total remuneration for health insurance and employment insurance.
Non-taxable items that are excluded from the total taxable amount but included when calculating total remuneration are listed separately to show the accurate basis for calculating total remuneration.
Interim Year-End Tax Settlement - Processed During Payroll Settlement (Social Insurance Interim Settlement - Settlement Results - Insurance Premium Settlement)
Based on the calculated total remuneration, you can review the confirmed insurance premium payable and the final settlement insurance premium, taking previously paid insurance premiums into account. You can also edit the insurance premiums.
National Pension: Interim settlement is not performed.
Employment Insurance: Upon retirement, the Korea Workers' Compensation & Welfare Service processes the departing employee's insurance premium settlement through the reporting of the total taxable wages for the current year.
Health Insurance and Long-term Care Insurance Premiums: Upon retirement, the National Health Insurance Service processes the departing employee's insurance premium settlement through the reporting of the total taxable wages for the current year. (Results are available within 1–2 days after reporting.)
Total Insurance Premium Payable: The health insurance, long-term care insurance, and employment insurance premiums, as well as the company contribution (employment stability & vocational skills development), confirmed based on the total taxable wages received during the current year.
Total taxable amount × Insurance premium rate
If the automatically calculated amount needs to be changed due to health insurance reductions, etc., it can be edited.
Total Insurance Premium Paid: The insurance premiums paid by the employee during the current year.
The total insurance premium paid cannot be edited as it reflects payroll settlement data. If you need to make changes, please edit the payroll.
You may also reflect adjusted amounts through difference entries in the deduction items, which is the step prior to interim year-end tax settlement.
Leave of absence settlement insurance premiums and prior year year-end tax settlement insurance amounts are not included.
When settling health insurance and long-term care insurance premiums for a departing employee, leave of absence settlement insurance premiums and prior year year-end tax settlement amounts are excluded; however, for income tax and local income tax interim settlement, all insurance premiums paid must be included.
Insurance Premium to Be Settled: The difference between the insurance premiums paid by the employee during the current year and the insurance premiums that should have been definitively paid based on the total taxable wages. You can check the refund or additional collection amounts through the insurance premium to be settled.
Insurance Premium to Be Settled = Total Insurance Premium Payable - Total Insurance Premium Paid
The insurance premium to be settled cannot be directly edited. To make changes, edit the total insurance premium payable to reflect the adjustment.
Interim Year-End Tax Settlement - Processed During Payroll Settlement (Income Tax Interim Settlement - Annual Income & Previously Paid Amount)
You can review the employee's annual income and previously paid amounts. You can also make changes to employee information if needed.
Clicking the [Edit] button next to the employee's name will take you to the detailed editing screen for that employee's income tax interim settlement, where you can make changes.
After freely editing on the detailed screen per employee, you can return to the Payroll Settlement > Interim Year-End Tax Settlement step.
Interim Year-End Tax Settlement - Processed During Payroll Settlement (Income Tax Interim Settlement - Settlement Results - Tax Settlement)
You can review all items including previously paid tax amount, determined tax amount, and net tax amount to be collected/refunded.
Previously Paid Tax Amount: The income tax and local income tax paid by the employee during the current year.
Determined Tax Amount: The income tax and local income tax confirmed based on the total salary received by the employee during the current year.
Net Tax Amount to Be Collected/Refunded: The difference between the tax paid by the employee during the current year and the tax that should have been definitively paid based on the total salary.
Determined Tax Amount - Previously Paid Tax Amount = Net Tax Amount to Be Collected/Refunded
Interim Year-End Tax Settlement - Year-End Tax Settlement Menu
The interim year-end tax settlement, as the year-end tax settlement for mid-year departing employees, can also be processed through the Year-End Tax Settlement menu.
You can check the progress for interim year-end tax settlement targets by year all at once.
In Year-End Tax Settlement - Interim Year-End Tax Settlement, if there are already completed interim year-end tax settlement records that were processed before flex was introduced, or through an Excel template upload, these can be reflected in flex.
Interim Year-End Tax Settlement - Year-End Tax Settlement Menu - Status by Target
If a departed or scheduled-to-depart employee does not appear in Year-End Tax Settlement - Interim Year-End Tax Settlement, you can add them as a target using [Top Right] - [+ Add Target].
If there are already completed interim year-end tax settlement records, you can reflect the data through the interim year-end tax settlement data migration.
This can be reflected via [Top Right] - [Three-dot button] - [Interim Year-End Tax Settlement Data Migration].
In the bottom left menu, click [Year-End Tax Settlement] -> [Interim Year-End Tax Settlement] -> confirm the target based on the year of departure, then click [Review].
If an interim year-end tax settlement has been processed or is in progress through Payroll Settlement, the interim year-end tax settlement cannot be processed from the Year-End Tax Settlement - Interim Year-End Tax Settlement menu.
Interim Year-End Tax Settlement - Year-End Tax Settlement Menu - Annual Income
You can view the annual income of interim year-end tax settlement targets at a glance.
If you are using the interim year-end tax settlement in flex for the first time, you can bulk-add interim year-end tax settlements that were processed before flex was introduced.
Downloading the Withholding Tax Receipt and Year-End Tax Settlement Files
After completing the interim year-end tax settlement, you can download the withholding tax receipt and other files in two ways.
Payroll Settlement - Document Management
You can download the withholding tax receipt from Document Management.
Year-End Tax Settlement - Interim Year-End Tax Settlement
For English withholding tax receipts, Excel files such as withholding tax statements, donation statements, and files uploaded during the interim year-end tax settlement process, please download them using the Year-End Tax Settlement - Interim Year-End Tax Settlement menu.
FAQ
What is the difference between the interim year-end tax settlement processed from the Payroll Settlement menu and the one processed from the Year-End Tax Settlement menu?
What is the difference between the interim year-end tax settlement processed from the Payroll Settlement menu and the one processed from the Year-End Tax Settlement menu?
When processed from the Payroll Settlement menu, social insurance (health insurance, employment insurance) interim settlement and income tax interim settlement are performed together, and the interim settlement amounts are also reflected in the payslip, payroll ledger, etc.
When the interim year-end tax settlement is processed separately from the Year-End Tax Settlement - Interim Year-End Tax Settlement menu, only the income tax interim settlement can be performed without the social insurance interim settlement. Since departing employees must also complete the social insurance interim settlement, unless the social insurance interim settlement has already been completed separately, it is recommended to process the interim year-end tax settlement through Payroll Settlement whenever possible.
[Income Tax Interim Settlement] I want to edit the annual income.
[Income Tax Interim Settlement] I want to edit the annual income.
Go to the interim year-end tax settlement detail screen and click the workplace name under 1. Basic Information Entry - Employment Income Information to make edits.
[Income Tax Interim Settlement] I want to edit the income tax reduction/exemption information.
[Income Tax Interim Settlement] I want to edit the income tax reduction/exemption information.
Go to the interim year-end tax settlement detail screen and edit the reduction/exemption information under 1. Basic Information Entry - Income Earner Information.
When additional settlement is needed for the interim year-end tax settlement (re-settlement), do I always need to unconfirm it first?
When additional settlement is needed for the interim year-end tax settlement (re-settlement), do I always need to unconfirm it first?
No. If the interim year-end tax settlement was processed together with payroll settlement, you can re-settle without unconfirming it.
For more details, please refer to the Interim Year-End Tax Settlement Re-settlement guide :)
How do I reflect the year-end tax settlement health insurance portion during the interim year-end tax settlement? (Departing employee's prior year health insurance settlement amount)
How do I reflect the year-end tax settlement health insurance portion during the interim year-end tax settlement? (Departing employee's prior year health insurance settlement amount)
If a health insurance year-end tax settlement amount has been confirmed by the insurance corporation, it must first be reflected in the deduction items for the employee's final payroll.
For health insurance, long-term care insurance, and employment insurance (if there is a year-end tax settlement portion),
create a deduction item -> select a deduction type with the name "Year-End Tax Settlement" to create the item and reflect the amount, then process it as the interim year-end tax settlement.
