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Year-end Settlement of Salaried Income

15mio. class A income tax payers are preparing their year-end tax settlement for 2012FY according to the NTS bulletin. We call it the 13th month Bonus but it may not that much for FY2012 compare to the previous year since there was 10% tax cut in the last September. Actually it’s not a bonus but your accountant withheld your tax more than necessary from your income, they return to you based on your deductible items. When I was working in the accounting department at a foreign company, a lot of my colleague asked me to return his or her surplus tax into his “slush fund” bank account while hiding it from his or her spouse, of course I did it for them with pleasure. I’d like to explain how to save your class A income tax if you’re an employee as an resident in Korea otherwise you may not apply for the following.

The following items are major is changes from 2012FY;

  1. Monthly rental charge for your home or interest expenses for the key money bank loan-jeonse jageum- but total income is less than 50mio.won, only for a householder(head of home), less than 85sq.meter net space, max. deductible amount is 3mio.won.

  2. Income deductable rate for Check card is 30% but credit card and cash card’s rate is 20%, but maximum deductable amount is 3mio.won

  3. Overseas education expenses are income deductible for high school and university student, max.deductible amount is 3mio.won and 9mio.won respectively.

  4. If you enrolled at a university or graduate classes, the whole amount is income deductible.

  5. You bought an eye glasses or hearing aid, max.deductible amount is 0.5mio.won.

I brought a chart for those deductible items you might missed as below, so get back your tax as much as you prepared. And also please make it easy while checking in NTS website to get all of your deductible items as much as possible. (credit card, check card, insurance, medical and NP etc.)

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