[Korea Tax Common Sense Series 1-A] When foreign income is included, one-time filing and refund differ.

Narrowing the scope of reporting leads to additional penalties and delayed refunds.

A resident must combine all income, domestic and foreign; a non-resident focuses on Korean source income.
Comprehensive income tax is reported once a year (May); local income tax is 10% of the national tax calculated.
Gathering proof now reduces issues with exchange rates and documentation, and increases the possibility of refunds.

Foreign Income: All money received from overseas, such as salary, freelance income, interest, and dividends.
Combined Taxation: A method where residents combine domestic and foreign income for a single calculation.
Withholding Tax: Tax deducted at the time of payment (may be excessive or insufficient).
Foreign Tax Credit: A system that deducts taxes paid overseas from Korean taxes within certain limits.
Conversion (to KRW): Converting foreign currency income into Korean Won at the recognized exchange rate near the deposit date.

Did you receive at least one instance of foreign salary, freelance income, interest, or dividends this year?
Does your classification apply as a resident (staying 183 days or center of life in Korea)?
Do you have records or certificates of withholding tax from abroad?
Can you determine the exchange rate as of the deposit date?
👉 If you answer yes to 3 or more items, you are likely a resident subject to combined reporting.

As residents combine foreign income, refunds/additional payments will vary (due to the impact of the foreign tax credit).
Since non-residents only report Korean source income, foreign income is generally not subject to Korean tax reporting.
Reporting is done once a year (in May), and local income tax, which is 10% of the national tax, is paid concurrently.

Applicable Scope: Resident (including foreign dividends/interest) vs Non-Resident (Korean salary only)
Key Difference: Whether income is combined and whether the foreign tax credit applies (possible/not applicable)
Actual Impact: Resident → Possible to reduce or eliminate Korean tax via foreign tax credit; Non-Resident → Refund scope limited as only Korean source income is reported.

Gather deposit details and statements (PDF/CSV) for foreign income (from banks, securities firms, platforms).
Obtain proof of foreign withholding tax (showing tax amount, country, and income type).
Create a summary table converting to KRW using the exchange rate on the deposit date.
Confirm your classification (resident/non-resident) and note the reporting scope (domestic only / domestic + foreign).
When calculating estimated taxes, consider the accompanying 10% local income tax.

A: Resident, received 1,000 USD in foreign dividends, with 15% local withholding tax → Through foreign tax credit during Korean tax calculation, the Korean tax payable is reduced or becomes zero.
B: Non-resident, worked in Korea for 4 months, also has freelance income from abroad → In Korea, only Korean salary source income is reported and settled (foreign freelance income is typically not subject to Korean tax reporting).

“If I receive payment in foreign currency, there’s no tax” → For residents, it must be converted and reported as part of combined income.
“If foreign income is small, I don’t need to report it” → Regardless of the amount, it should be consolidated during the annual filing.
“It’s already deducted in Korea, so I’m done” → The May filing reconciles overpayments/underpayments.

Tax Info