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Konglishman
Joined: 14 Sep 2007
Location: Nanjing
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 Posted: Sat Apr 10, 2010 1:07 am Post subject: |
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Hey Naturegirl,
If memory serves correctly, you can be considered a U.S. resident based on the strength of your ties to the U.S. such as having a bank account, house, or even just having an habitual abode. And if you filed the 2555, another important factor can be whether or not you have the intent to return to the U.S. So, I guess in the case of having filed the 2555, whether or not you can be considered a U.S. resident is a bit of a grey area. However, as my own memory is a little fuzzy on this now, I will go ahead and call the IRS on Monday night.
Also, tax treaties never have an effect on your U.S. taxation. So, this means if you do have the benefit of the Korean tax exemption, it will not prevent you from filing the 2555. I very clearly recall having conversations with several IRS people just to confirm this.
Anyways, sorry for taking so long to get back to you. I have been really busy and have had a lot on my mind. |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Sat Apr 10, 2010 1:35 am Post subject: |
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| Konglishman wrote: |
Hey Naturegirl,
If memory serves correctly, you can be considered a U.S. resident based on the strength of your ties to the U.S. such as having a bank account, house, or even just having an habitual abode. And if you filed the 2555, another important factor can be whether or not you have the intent to return to the U.S. So, I guess in the case of having filed the 2555, whether or not you can be considered a U.S. resident is a bit of a grey area. However, as my own memory is a little fuzzy on this now, I will go ahead and call the IRS on Monday night.
Also, tax treaties never have an effect on your U.S. taxation. So, this means if you do have the benefit of the Korean tax exemption, it will not prevent you from filing the 2555. I very clearly recall having conversations with several IRS people just to confirm this. |
I don't know. I'm supposed to sign something saying that for taxation purposes, I'm a US resident, which I'm not.
Last edited by naturegirl321 on Mon Apr 12, 2010 3:02 am; edited 1 time in total |
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pkang0202
Joined: 09 Mar 2007
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| Posted: Sat Apr 10, 2010 9:12 pm Post subject: |
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| naturegirl321 wrote: |
My big quesiton is WHY did they deny my first application? ? I already wrote a statement to the same effect as the one they're requiring now. Along with proof that someone in my life I MAY go back to the US.
Sigh, my father thinks I'm going to be audited, fined and jailed for getting out of taxes in any country for both years.
Thanks, I'll send that statement on Monday. |
To answer your big question, maybe you should ask the IRS and not Dave's ESL cafe. The IRS isn't out to get YOU. The person who processed your application probably saw thousands already. Obviously, something stood on yours and warranted being denied.
I'm confused as to what you want. What is it you want? Is it to be exempt from Korean taxes, or to get your US taxes straightened out?
Being exempt from Korean taxes required a certificate of residency from the IRS. If you got denied that, then the IRS doesn't consider you a "TAX RESIDENT" of the USA.
If you want your US taxes straightened out, you'd best get all your paperwork together and go see a tax accountant. |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Sat Apr 10, 2010 9:21 pm Post subject: |
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| What do I want? To get out of taxes for two years, legally. As for calling the IRS, have you tried? I spent 45 minutes on the phone trying to get info for the ITIN dept only to find out that that dept didn't HAVE a phone and that I shoudl write a letter. |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Mon Apr 12, 2010 2:59 am Post subject: |
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Ok, found the answer, according to the US embassy
http://seoul.usembassy.gov/t_contract.html
(my info)
| Quote: |
KOREAN TAXES
Article 20 of the Korean tax code: An individual who is a resident of a contracting State, (for example the US) and who at the invitation of any university, college, or other recognized educational institution, visits the other contracting State (Korea) for a period not exceeding two years solely for the purpose of teaching, or research or both at such educational institution shall be taxable only in the first mentioned State (so you only pay taxes in the US if you do the Korean exemption) on his remuneration for such teaching or research. |
This means that if you file the Korean tax extemption, you have to pay US taxes. Can't get out of both. Legally. It's just to prevent double taxation, which I don't really understand why. Korean taxes are less than US ones. And you can get out of US ones if you make 91K or less and file the 2555 and fulfil thre requirements. But maybe if you earn a lot of money in Korea, then it's cheaper to pay US taxes? |
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Konglishman
Joined: 14 Sep 2007
Location: Nanjing
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| Posted: Mon Apr 12, 2010 4:29 am Post subject: |
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| naturegirl321 wrote: |
Ok, found the answer, according to the US embassy
http://seoul.usembassy.gov/t_contract.html
(my info)
| Quote: |
KOREAN TAXES
Article 20 of the Korean tax code: An individual who is a resident of a contracting State, (for example the US) and who at the invitation of any university, college, or other recognized educational institution, visits the other contracting State (Korea) for a period not exceeding two years solely for the purpose of teaching, or research or both at such educational institution shall be taxable only in the first mentioned State (so you only pay taxes in the US if you do the Korean exemption) on his remuneration for such teaching or research. |
This means that if you file the Korean tax extemption, you have to pay US taxes. Can't get out of both. Legally. It's just to prevent double taxation, which I don't really understand why. Korean taxes are less than US ones. And you can get out of US ones if you make 91K or less and file the 2555 and fulfil thre requirements. But maybe if you earn a lot of money in Korea, then it's cheaper to pay US taxes? |
The tax treaty was never meant to do anything other than prevent double taxation. The Korean tax exemption is after all not an American tax exemption. However, like you have pointed out, it does not prevent you from using the Foreign Income Exclusion.
P.S.: You can find that same quote in the Korea Income Tax Treaty in the original thread that I made. |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Mon Apr 12, 2010 2:38 pm Post subject: |
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Konglishman,
Have you gotten your US cert for Residency?
See, the way I interpret this:
" . . must provide a statement signed under penalty of perjury, that for the purpose of taxation, they are US residents, and will remain so throughout the current taxable year."
is that since I filed the 2555, I am NOT a US resident for purposes of taxation. That's exactly the purpose of the 2555, is to show that you're a non US resident for taxes. It doesn't state anything about domicile or wanting to go back to the US. It takes the past year and this year into account only.
LIke I said, that's my interpretation. NExt week is midterm week, so I-m a bit busy, I will try to contact the IRS and get this sorted. |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Mon Apr 12, 2010 5:25 pm Post subject: |
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Although I suppose that if you did the 2555 and did the physical presence test, then maybe it would be possible.
I , however, did the bona fide residency test. |
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Konglishman
Joined: 14 Sep 2007
Location: Nanjing
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| Posted: Tue Apr 13, 2010 12:12 am Post subject: |
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| naturegirl321 wrote: |
Konglishman,
Have you gotten your US cert for Residency?
See, the way I interpret this:
" . . must provide a statement signed under penalty of perjury, that for the purpose of taxation, they are US residents, and will remain so throughout the current taxable year."
is that since I filed the 2555, I am NOT a US resident for purposes of taxation. That's exactly the purpose of the 2555, is to show that you're a non US resident for taxes. It doesn't state anything about domicile or wanting to go back to the US. It takes the past year and this year into account only.
LIke I said, that's my interpretation. NExt week is midterm week, so I-m a bit busy, I will try to contact the IRS and get this sorted. |
I have not heard the final word from IRS. I was told in a letter that they would send a final response by around April 24th.
If the IRS considered you a nonresident of the U.S., then you would not pay taxes, period.
After all, there are certainly going to be cases of people being legal residents, but noncitizens nonetheless, who will be taxed according to the 2555 during extended periods of time when they are outside of the U.S. Such people might own property in the U.S., businesses, etc. which is why they would want to be classified as U.S. residents while living outside the U.S. But even though they are U.S. residents, they can still qualify for the 2555.
So, I do not think it is any different for U.S. citizens. In fact, I recall a specific conversation with a very rude IRS person saying that he did not know what a nonresident U.S. citizen was. Basically, I am saying that no such category is defined. So, in order to be a nonresident of the U.S., you would have to be a noncitizen who is not a legal resident of the U.S.
But of course, like I said earlier, if you are living overseas and file the 2555, then the IRS gets to decide whether or not you have close enough ties to the U.S. in order to qualify for the privilege.
And obviously, someone who lives in the U.S. and filed the 8802, automatically gets the Certificate of Residency.
Anyways, I will give the IRS a call tonight as I was having a problem with the internet last night. |
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air76
Joined: 13 Nov 2007
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| Posted: Tue Apr 13, 2010 12:27 am Post subject: |
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| naturegirl321 wrote: |
Ok, found the answer, according to the US embassy
http://seoul.usembassy.gov/t_contract.html
(my info)
| Quote: |
KOREAN TAXES
Article 20 of the Korean tax code: An individual who is a resident of a contracting State, (for example the US) and who at the invitation of any university, college, or other recognized educational institution, visits the other contracting State (Korea) for a period not exceeding two years solely for the purpose of teaching, or research or both at such educational institution shall be taxable only in the first mentioned State (so you only pay taxes in the US if you do the Korean exemption) on his remuneration for such teaching or research. |
This means that if you file the Korean tax extemption, you have to pay US taxes. Can't get out of both. Legally. It's just to prevent double taxation, which I don't really understand why. Korean taxes are less than US ones. And you can get out of US ones if you make 91K or less and file the 2555 and fulfil thre requirements. But maybe if you earn a lot of money in Korea, then it's cheaper to pay US taxes? |
There are a lot of reasons that someone would rather pay taxes in the US...if they own property and have other income coming in in the US from rentals or a business that they own or other investments, then it could be worth their while to keep their residency in the US rather than filing the 2555. By filing the 2555 you could end up turning your primary residence into investment property, which might cost you tens of thousands of dollars in capital gains taxes if you were to sell before reestablishing residency.
For someone with no property and a relatively small income from investments, it is a no-brainer to just pay Korean taxes...but for someone who has a full-on life in the US with 1/2 million dollars of assets and all sorts of other things going on outside their work, who just happens to go to Korea for a year or two as a visiting professor, they'd have plenty of reasons to not want to claim Korea as their residence. |
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Konglishman
Joined: 14 Sep 2007
Location: Nanjing
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| Posted: Tue Apr 13, 2010 1:20 am Post subject: |
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| air76 wrote: |
| naturegirl321 wrote: |
Ok, found the answer, according to the US embassy
http://seoul.usembassy.gov/t_contract.html
(my info)
| Quote: |
KOREAN TAXES
Article 20 of the Korean tax code: An individual who is a resident of a contracting State, (for example the US) and who at the invitation of any university, college, or other recognized educational institution, visits the other contracting State (Korea) for a period not exceeding two years solely for the purpose of teaching, or research or both at such educational institution shall be taxable only in the first mentioned State (so you only pay taxes in the US if you do the Korean exemption) on his remuneration for such teaching or research. |
This means that if you file the Korean tax extemption, you have to pay US taxes. Can't get out of both. Legally. It's just to prevent double taxation, which I don't really understand why. Korean taxes are less than US ones. And you can get out of US ones if you make 91K or less and file the 2555 and fulfil thre requirements. But maybe if you earn a lot of money in Korea, then it's cheaper to pay US taxes? |
There are a lot of reasons that someone would rather pay taxes in the US...if they own property and have other income coming in in the US from rentals or a business that they own or other investments, then it could be worth their while to keep their residency in the US rather than filing the 2555. By filing the 2555 you could end up turning your primary residence into investment property, which might cost you tens of thousands of dollars in capital gains taxes if you were to sell before reestablishing residency.
For someone with no property and a relatively small income from investments, it is a no-brainer to just pay Korean taxes...but for someone who has a full-on life in the US with 1/2 million dollars of assets and all sorts of other things going on outside their work, who just happens to go to Korea for a year or two as a visiting professor, they'd have plenty of reasons to not want to claim Korea as their residence. |
Just to be clear, based on my understanding, filing the 2555 does not mean that you are not a U.S. resident.
Further, in almost every tax treaty, there is a clause that says that citizens and legal residents of the U.S. enjoying the benefits of the tax treaty, do not have their U.S. taxation affected in any way. And of course, that includes the ability to qualify for the 2555. Like Naturegirl said earlier, the only point of these tax treaties is to prevent double taxation.
Now, it is possible that you could be considered a dual resident. However, in order for that to have happened, you probably would have had to have established bona fide residency. So, in the case of Korea, this means that you might have a F visa, or at the very least, you have lived in Korea for many years and have demonstrated no intent to return to the U.S.
So, now, that I am thinking about it, it was probably the fact that Naturegirl has previously filed the 2555 under bona fide residency which is causing problems. However, since she is applying for the Certificate of Residency for purposes of tax exemption in Korea and not in Peru, she might still qualify. |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Tue Apr 13, 2010 2:00 am Post subject: |
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| Konglishman wrote: |
If the IRS considered you a nonresident of the U.S., then you would not pay taxes, period.
And obviously, someone who lives in the U.S. and filed the 8802, automatically gets the Certificate of Residency. |
No, that's not true. ALL AMerican citizens have to file takes, and those who earn money in the US.
I'm having my dad call the IRS, since he's an accountant and should understand them.
ABout the 8802, I was in the US when I filed, mailed from a US address. But didn't get it.
What scares me, really scares me , is that statement of perjury . I'll let you know what the IRS tells my dad. |
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Konglishman
Joined: 14 Sep 2007
Location: Nanjing
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| Posted: Tue Apr 13, 2010 2:02 am Post subject: |
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| naturegirl321 wrote: |
| Konglishman wrote: |
If the IRS considered you a nonresident of the U.S., then you would not pay taxes, period.
And obviously, someone who lives in the U.S. and filed the 8802, automatically gets the Certificate of Residency. |
No, that's not true. ALL AMerican citizens have to file takes, and those who earn money in the US.
I'm having my dad call the IRS, since he's an accountant and should understand them.
ABout the 8802, I was in the US when I filed, mailed from a US address. But didn't get it.
What scares me, really scares me , is that statement of perjury . I'll let you know what the IRS tells my dad. |
Further down, I said that in order to be considered a nonresident of the U.S., you would have to be a noncitizen who is not a legal resident of the U.S.
In short, I am saying that for tax purposes, any U.S. citizen and legal resident is a U.S. resident. Otherwise, if you are a nonresident, U.S. taxes simply do not apply to you because you are not a citizen or a legal resident.
In fact, there are some legal nonresidents who are legally working in the U.S. that do not have to pay U.S. taxes due to the reciprocal nature of the tax treaties.
Last edited by Konglishman on Tue Apr 13, 2010 2:12 am; edited 1 time in total |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Tue Apr 13, 2010 2:07 am Post subject: |
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| Konglishman wrote: |
| After all, there are certainly going to be cases of people being legal residents, but noncitizens nonetheless, who will be taxed according to the 2555 during extended periods of time when they are outside of the U.S. Such people might own property in the U.S., businesses, etc. which is why they would want to be classified as U.S. residents while living outside the U.S. But even though they are U.S. residents, they can still qualify for the 2555.. |
Oh my goodness, my head is spinning with all this stuff.
| Konglishman wrote: |
Further, in almost every tax treaty, there is a clause that says that citizens and legal residents of the U.S. enjoying the benefits of the tax treaty, do not have their U.S. taxation affected in any way. And of course, that includes the ability to qualify for the 2555. Like Naturegirl said earlier, the only point of these tax treaties is to prevent double taxation.
So, now, that I am thinking about it, it was probably the fact that Naturegirl has previously filed the 2555 under bona fide residency which is causing problems. However, since she is applying for the Certificate of Residency for purposes of tax exemption in Korea and not in Peru, she might still qualify. |
I think that you're right, the problem is that I've ALWAYS filed as a bona fide resident.
I think another problem is that while the IRS thinks that they write things clearly, they don't. Just look how many interpretations there are. Peru is out of the picture, they don' t have a tax treaty with Korea.
Konglishman, do you konw where that statement is "Further, in almost every tax treaty, there is a clause that says that citizens and legal residents of the U.S. enjoying the benefits of the tax treaty, do not have their U.S. taxation affected in any way. "? I've looked through the tax treaty that Jimmy Carter signed with Korea, but haven't found that. Then again, I could have passed over since my eye glaze over when I have to look at atax stuff  |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Tue Apr 13, 2010 2:12 am Post subject: |
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| Konglishman wrote: |
| Further down, I said that in order to be considered a nonresident of the U.S., you would have to be a noncitizen who is not a legal resident of the U.S. |
Ok see, ? that's what I mean with IRS speak. To me, a non resident in the US is someone who doesn't live there. But to you it's a non US citizen.
What gives? Why does the IRS do that? Why can't they just say non US citizen who doesn't live in the US? Wouldn't that make things HEAPS easier.
Are you sure it's a non US citizen, not living in the US? |
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