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Tax Exemption (US Citizen)
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eljuero



Joined: 11 Aug 2009

PostPosted: Tue Jun 29, 2010 3:30 am    Post subject: IRS Reply with quote

naturegirl321 wrote:
YOu can receive stuff here, no probs


Yeah, I've heard of people receiving stuff here but I'm not sure if the IRS would send the forms overseas? Any idea?
Thanks again -
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naturegirl321



Joined: 18 Jul 2006
Location: Suwon

PostPosted: Tue Jun 29, 2010 7:41 am    Post subject: Reply with quote

I meant that the IRS will, it's even on the form that you have to fill out.
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eljuero



Joined: 11 Aug 2009

PostPosted: Tue Jun 29, 2010 3:33 pm    Post subject: thanks Reply with quote

naturegirl321 wrote:
I meant that the IRS will, it's even on the form that you have to fill out.


Thanks.
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manimal



Joined: 02 May 2010

PostPosted: Tue Jul 06, 2010 8:40 am    Post subject: Re: Tax Exemption (US Citizen) Reply with quote

eoneinna wrote:


Oh and for those who need instructions:


INSTRUCTIONS FOR ESL TEACHERS FOR COMPLETING FORM 8802
(TAX EXEMPTION FORM -USA)


vii. Line 7: List year you will be in Korea
1. You cannot list a future year, only the current year or previous years.
viii. Line 8: List previous tax season which this form will base its information


For Someone who has successfully completed the 8802 and received their certification of residency:

Is that correct about line seven? Can I list the current year (that I will be teaching)? From the instructions I had thought you couldn't. I called the IRS, the guy was no wiser than I and was reading the same instructions, but he thought no. But I suspect he was wrong. If I just list 2010 in line 7 (for which certification is requested) and 2009 in line 8 (on which certification is based), will that work?
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naturegirl321



Joined: 18 Jul 2006
Location: Suwon

PostPosted: Tue Jul 06, 2010 2:55 pm    Post subject: Re: Tax Exemption (US Citizen) Reply with quote

manimal wrote:
eoneinna wrote:


Oh and for those who need instructions:


INSTRUCTIONS FOR ESL TEACHERS FOR COMPLETING FORM 8802
(TAX EXEMPTION FORM -USA)


vii. Line 7: List year you will be in Korea
1. You cannot list a future year, only the current year or previous years.
viii. Line 8: List previous tax season which this form will base its information


For Someone who has successfully completed the 8802 and received their certification of residency:

Is that correct about line seven? Can I list the current year (that I will be teaching)? From the instructions I had thought you couldn't. I called the IRS, the guy was no wiser than I and was reading the same instructions, but he thought no. But I suspect he was wrong. If I just list 2010 in line 7 (for which certification is requested) and 2009 in line 8 (on which certification is based), will that work?


I didn't fill that out. Whoops. I just based the 8802 on the past tax year, 2009.
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naturegirl321



Joined: 18 Jul 2006
Location: Suwon

PostPosted: Tue Jul 06, 2010 3:00 pm    Post subject: Reply with quote

Line 7. Calendar Year of Request. See exception, I put down 2010
The certification period is generally 1 year. You can request certification for both the current year and any number of prior years.

If you entered the most recent prior year on this line, see Form 8802 Filed Before Return Posted by the IRS on page 3.

Enter the four-digit (YYYY) calendar year(s) for which you are requesting certification. However, see the Exception below.

Exception. If you were a dual-status alien during any year for which you are requesting certification, enter instead the eight-digit dates (YYYYMMDD) that correspond to the beginning and ending of the period you were a resident of the United States. You must show the specific period of residence for each year for which you are requesting certification. For information on determining your period of residency, see Pub. 519.

Current year certification. If certification is requested for purposes of claiming benefits under an income tax treaty or VAT exemption for any period during the current calendar year or a year for which a tax return is not yet required to be filed with the IRS, penalties of perjury statement(s) will be required from all U.S. residents stating that such resident is a U.S. resident and will continue to be so throughout the current tax year. See Table 2 for the current year penalties of perjury statement you must enter under line 10 of Form 8802 or attach to the form.

Note.
For VAT certification, a statement that the business activity has not changed is also required. For more information, see the instructions for line 10 below.

Line 8. Tax Period, I put down 2009
Enter the four-digit year and two-digit month (YYYYMM) for the end of the tax period(s) for which you were required to file your return that correspond(s) to the year(s) for which you are requesting certification (the certification year).
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daveweave2



Joined: 08 Dec 2008

PostPosted: Tue Jul 27, 2010 6:10 pm    Post subject: Residency Certification Reply with quote

[quote="hypnotoad777"][quote="perkxplosion"]My dad is a CPA and I had ran into this same problem during tax season earlier this year. He told me he needed records of my pay stubs. I asked my boss and he said he couldn't provide them and that he had never run into the situation before. It turned out it didn't matter any way. During your first year (possibly more, I'm not sure) you aren't required to show records of your pay. In fact, there are two tax refunds for working below poverty and in a foreign country. My tax return was a little over a thousand dollars thanks to those refunds. Hope this helps a little. I wish I could be more specific but I didn't do the tax work myself.[/quote]

Thanks for the info. But what did you do about the residency certificate? Did you get one of those before you headed over? When you got there? My coordinator through EPIK said that I would need one to avoid double taxation (taxation by the U.S. and Korea). I'm wondering how you got tax refunds without applying for this document....[/quote]

Why do I bother?


Last edited by daveweave2 on Tue Aug 03, 2010 5:44 pm; edited 1 time in total
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JFuller317



Joined: 10 Oct 2008

PostPosted: Tue Jul 27, 2010 10:55 pm    Post subject: Reply with quote

I don't teach privates or do anything outside the contract, not just because I'm afraid of getting caught, but because 8 hours of work is enough for me. BUT, if I did work privates or evening hours at a hagwon, I sure as hell wouldn't report that income. From what I've hard, those places always pay in white envelopes anyway. Nothing to trace, nothing to report.
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naturegirl321



Joined: 18 Jul 2006
Location: Suwon

PostPosted: Wed Jul 28, 2010 3:30 am    Post subject: Re: Residency Certification Reply with quote

daveweave2 wrote:
I have some information for all of you, I obtained it from the Residency Certification division of the IRS (I called them) you have to pay taxes in America or Korea, no choice. If you are a newbie here and filed a tax return in America last year you can get a certification. If you have worked in Korea over two years you are not going to get one, if with your last US tax return you filed the form for exemption of foreign income you will not be able to get the certification.


I beg to differ. I've filed the 2555 since 2003 and I got the tax residency cert. It is NOT a residency cert. It's a tax residency cert. And I sent them a copy of my 2009 2555.

Since my TAX home was the US last year, not Peru, I was given the cert. Thus I don't have to pay Korean taxes. Beucase I can file the 2555 long form, based on the physical presence test, I can get out of MOST American taxes as well. I'll still have to pay for the money I make from my self-employment income since it will be over $400.

BUT all the money I make in Korea is extempt from US and Korean taxes. Read the fine print on the 2555 long form. It's all there in black and white.
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naturegirl321



Joined: 18 Jul 2006
Location: Suwon

PostPosted: Wed Jul 28, 2010 3:32 am    Post subject: Reply with quote

JFuller317 wrote:
I don't teach privates or do anything outside the contract, not just because I'm afraid of getting caught, but because 8 hours of work is enough for me. BUT, if I did work privates or evening hours at a hagwon, I sure as hell wouldn't report that income. From what I've hard, those places always pay in white envelopes anyway. Nothing to trace, nothing to report.


Just a word of warning. I doubt it would happen in Korea, but in the US. There are cases of people getting audited for exactly that. It's because the person paying for the lessons, or whatever, writes it off on their taxes. Then they look and see who received the money and whether or not they reported it on their income.

But, acorrding to statistics I've read somewhere, a good percentage of Americans cheat on their taxes, like a quarter or something like that.
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isitts



Joined: 25 Dec 2008
Location: Korea

PostPosted: Tue Aug 03, 2010 5:13 am    Post subject: Reply with quote

naturegirl321 wrote:
kcweaver wrote:
According to US law, ALL Americans, no matter where they live in the world MUST report their world-wide income to IRS, unless it does not meet a threshold.

If you pass the bona fide residence test or the physical presence test, you are allowed to exempt @ $94,000 from your income. Anything above that you may have to pay taxes.

True, you should file taxes every year, the limit was 91,400 for the past year though, not 94K : And while it is meant to prevent double taxation, there is a loophole to get out of both taxes for two years, and it's legal.


I can see getting out of the first year, but how do you manage the second? Can you state that the US is your tax home even if you weren't residing there at all that year? Or is the IRS well aware of the two year thing and you just say you're still within the two year limit?

The thing is, if you file a 2555 and your tax home was not the US (as would be the case for someone's second year), how do you make a statement on your 8802 saying why you should get a residence cert?

(If some of these questions need to be left as rhetorical, I understand. But I am curious either way how to get the certificate the second year.)
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naturegirl321



Joined: 18 Jul 2006
Location: Suwon

PostPosted: Tue Aug 03, 2010 3:50 pm    Post subject: Reply with quote

isitts wrote:
I can see getting out of the first year, but how do you manage the second? Can you state that the US is your tax home even if you weren't residing there at all that year? Or is the IRS well aware of the two year thing and you just say you're still within the two year limit?

The thing is, if you file a 2555 and your tax home was not the US (as would be the case for someone's second year), how do you make a statement on your 8802 saying why you should get a residence cert?

(If some of these questions need to be left as rhetorical, I understand. But I am curious either way how to get the certificate the second year.)


I haven't yet. I just started working in Korea in late feb 2010. I was told I would get out of taxes for two years, in korea. And by fulfilling the physcial presence test, I can also LEGALLY, get out of US taxes. If I don't, no skin off my back. There's no way that I can state the US was my tax home the second year. I could claim Peru as a tax home while living in Korea since I have an income from there, but that wouldn't help me. I'd be better off paying Korean taxes.

My tax cert was based on 2009, I was in Peru the entire year, as a Peruvian citizen, and I paid US taxes. next year, I'm sure I'll have to pay taxes unless my employer simply doesn't take them out based on my cert from the year before. I have no idea what will happen in 2011.

If it makes you feel any better, for the first two years in Peru, my taxes were 30 percent, then they dropped down to 15.
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isitts



Joined: 25 Dec 2008
Location: Korea

PostPosted: Tue Aug 03, 2010 10:48 pm    Post subject: Reply with quote

I see. But you did get the certificate your first year? Is that because you paid taxes to the US the year before?

For me, I was in the US for two years before coming to Korea, but was unemployed most of that time and did not establish a permanent residence until the second year after my return. But at any rate I did work some in 2007 and 2008 and filed as a US resident.

Although I lived in the US for the first half of 2009, I didn't work until I came to Korea in July.

If I can legally get the certificate, then that'd be cool. My school here hasn't been witholding taxes, so even a low tax rate, I'd be paying it all at once.

Although, is it really 3%? I thought my co-teacher said 10%.

The other thing is, I can get a huge deuction here in Korea as I had some major medical expenses.

So, just not sure it's worth the trouble of finding this loophole.

Thanks for your quick response Smile
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isitts



Joined: 25 Dec 2008
Location: Korea

PostPosted: Thu Aug 05, 2010 1:32 am    Post subject: Reply with quote

naturegirl321 wrote:
isitts wrote:
I can see getting out of the first year, but how do you manage the second? Can you state that the US is your tax home even if you weren't residing there at all that year? Or is the IRS well aware of the two year thing and you just say you're still within the two year limit?

The thing is, if you file a 2555 and your tax home was not the US (as would be the case for someone's second year), how do you make a statement on your 8802 saying why you should get a residence cert?

(If some of these questions need to be left as rhetorical, I understand. But I am curious either way how to get the certificate the second year.)


I haven't yet. I just started working in Korea in late feb 2010. I was told I would get out of taxes for two years, in korea. And by fulfilling the physcial presence test, I can also LEGALLY, get out of US taxes.


If the tax treaty is for two years, then you should get the residency certificate the second year, too. Then you just use the physical presence test again. Same as the first year, right? Shouldn't that work?
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nstick13



Joined: 02 Aug 2009

PostPosted: Fri Jan 14, 2011 3:25 am    Post subject: Reply with quote

This seems worthy of a bump.

So, it's possible that one did the 8802 and received the Residency form AND fills out a 2555ez exempting them from foreign income? And that's legal?
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