Year-end settlement of late retirees
The COVID-19 pandemic in 2020 has brought a particularly cold wave to the job market. In the unprecedented attack of uncertainty, companies stopped hiring, and the self-employed and small business owners who had to shut down their business had to let go of their family-like employees with tears in their eyes.
In 2020, there were more turnover + retirees than any other year!
Let’s find out how to make year-end tax settlement if you change company or quit and take a break.
What if you changed your company in 2020?
First of all, if you change your company during 2020, you can add up the earned income of the previous company in the new company you belonged to at the end of December and make year-end settlement. 중도퇴사자 연말정산
You can obtain a receipt for withholding income tax from your old company and pay it to the new company. Year-end settlement is the simplest because it is the responsibility of the new company to report the sum of the salaries received by the employee from the previous company. 좋은뉴스
1. Issue the ‘Wage and Earned Income Withholding Collection Receipt (Payment Statement)’ from the former employer → Submit it to the current employer.
2. Year-end settlement is carried out according to the guidelines presented by the current employer.
What if it passed the year and moved to 2021?
Moving over the years makes the process a bit more complicated.
The related regulations stipulate that ‘if an employee quits midway, (year-end settlement) is made when the wage and salary income of the month of retirement is paid’. You can pay the repayment amount of the monthly rent (income deduction) and education expenses (tax deduction) receipts to the company you used during the period you worked at the previous company.
The year-end tax settlement for the remaining period until the end of the year must be done by yourself. For example, if you left your previous company at the end of June, 2020, and started working for a new company on January 10 of this year, it means that you must file your income for July and December of last year.
To do this, visit the competent tax office during the global income tax filing period in May of this year and submit the data provided by the Year-end Settlement Simplification Service and income and tax credit receipts directly.
When income is generated simultaneously as a freelancer
What if you start working as a freelancer and your income comes from multiple places at the same time?
In this case, it is necessary to separate the main place of work (the company that generates the most income) and the place where it does not, and proceed with year-end tax settlement. You can get a receipt for withholding income from earned income from the rest of the company and a copy of the withholding book for each income earner and give it to your main place of employment.
If you leave the company and start another business
If you have been unemployed for a long time after leaving the company, or if you have started a business, you can report it the same as if you moved over the year.
The company reports until retirement, and after that, it is reported directly to the competent tax office during the global income tax return period in May of the following year.
Those that were not deducted are reported directly during the ‘May comprehensive income tax return period’.
When filing a global income tax return, the withholding receipt (slip of payment) of the previous employer’s wage and salary income is required. You can file an income tax return after checking the details of the wage and salary income withholding receipt and year-end tax settlement simplification service reported at your previous workplace.
For other questions, you can use the year-end settlement chatbot or the National Tax Consultation Center (126).