Korean Job Discussion Forums

[charlieDD]

Asking for an American friend of mine who wants to know: Does he get tax refunded. He's an American, here doing his first one-year contract. His school collected and paid taxes (he is certain they did it all legit) even though he is an American and supposedly has been told that Americans don't have to pay the income tax in the first two years of employment in Korea ( or something like that ). His school said they had to collect still and that he would have to file for a refund at the end of the year.

Is this the way it works? Does he have to file for a refund? If so, where does he do this? Does his school do it or initiate it; or, is it something he has to take the initiative on? If the latter, where does he start?

Thanks

[Fresh Prince]

For your friend: Is he talking about American income taxes or Korean?

If your friend worked at all in the U.S. in 2006 then he will receive a W-2 form in the mail from his former employers. He can use those forms along with the Foreign Income Exclusion Form (available online at irs.gov), to file for a tax refund at the irs.gov website after January 16. There will be hundreds of free online tax compilation programs that he can choose from in order to file his taxes online available at that time. Your friend will need to allocate several hours him in order to complete this task however.

He can simply use one of the online programs to answer the questions and send the forms that the program tells him to send (using the postal service) to the appropriate address.

Your friend can also wait and file several years in the future (3 year statute of limitations). Your friend should be aware that each state has different regulations and that even if he is in another country, he/she still needs to check his/her own state's regulations (using the internet) since one cannot file state taxes in the U.S. without filing U.S. government taxes for the same year.

Or your friend can shell out the $200 and hire an accountant.

[jmbran11]

If your friend is talking about Korean taxes, he does have to pay them (paycheck deductions) and then his file his annual form. He may have to pay more or get a refund, depending on his deductions. Our employer helped us fill out the forms last week.

Americans aren't exempted from paying income tax here. We are exempted from paying double taxes again on our wages to the U.S. government (assuming you meet certain requirements). That's the exclusion that the previous poster mentioned.

If you don't "exclude" your korean-earned income from your U.S. taxes, you can file for certain credits based on the amount of taxes you pay here to the Korean government. There is quite a bit of info on the irs website. I suggest having your friend check it out.

[J.B. Clamence]

Americans are exempted from Korean income tax? That's the first I've heard of that. Where did you (or your friend) get this information?

[charlieDD]

Yeah, not sure about the issue of exemption either.

Typed this original post on an internet-browsing computer at the bar where the guy asked me and others the question about his taxes. Was just being helpful.

I can say, however, that I myself have never paid income taxes. Don't know why, but the organization I work for, - and it's a very legit, large place - has never taken income tax out of my salary. I don't ask, they don't tell ! I deal with the American side of things ( IRS ) myself, of course filing and taking full advantage of the 2555.

I do know of a couple of Americans working for a uni somewhere south of Seoul who told me their uni does not take taxes out of their salaries.

Anyone got the complete scoop on it?

As for the dude who asked me to ask, . . I'll tell him to start with his school's admin on the matter.