Korean Job Discussion Forums

[Voyeur]

I've consulted informally with a Korean accountant (in training actually). I say informally because for a variety of reasons - some my fault, others bad luck - I am missing virtually all essential documentation for years gone by. Also, he isn't a real Korean accountant yet.

But apparently I owe Korean Taxation something like 4-5 Million Won for the past 3 years of taxes.

I work under an E-2, but my school classifies me as an independent contractor - so no pension, medical, vacation, or housing. But you make a lot of coin - taxable coin it appears.

Since the school does not have to file taxes for me, they simply withold the minimum 3.3%. But apparently that is not enough to cover incomes that exceed 5 million a month sometimes and have averaged in the ~4 million area. So now I owe. Question is, what to do. Opinions and advice are welcome.

According to the "accountant", the situation is complex:

* My independent contractor status may be illegal under an E-2. However, the school is big and clearly has some kind of legal opinion backing their procedures. It has likely not been challenged and confirmed by a victory in tax court - but do I really want to go there?

*Apparently, because my income is "business" income I am not fully eligible for some deductions that I would have if my income were the same, but salaried. Even the 30% foreigner deduction might not be allowable.

*I don't get a housing allowance or free housing. So I cannot deduct rent??? I'm wondering if I should pretend that part of my salary is a housing allowance. Apparently 3 million + 500k housing is more tex efficient as a salary than 3.5 million flat. That seems so unfair.

I am not sure how to proceed. Obviously, I should try to retrieve as much lost info. as I can and see a real korean accountant pronto. Does anyone know any who speak English?

I am staying another year - maybe more. Most teachers at my school NEVER file and then just go home - no problem. But what if I stay a lot longer? Could Iget busted and refused permission to leave until I pay up? Is expecting to make 4-5+ million a month going forward and pay just 3.3% TOTAL taxes just a wee bit greedy and ridiculous?

Say I visit the real accountant and he says that for sure I owe about $4,000 going back, and that going forward at my newer salary, 3.3% will not cover it, not even close, what would you do? Pay the tax man, up my witholding to the 8-10% it should be and be done with it. After all, that is still a good tax level? Or ignore it and never file like 90% of the teachers in my situation apparently do?

[wylies99]

[ttompatz]

[mrsquirrel]

What tax allowances are available here?

[ontheway]

It may be possible to be an independent contractor for tax purposes and an employee under immigration law. This sort of dicotomy exists frequently under US tax laws, especially concerning independent contractors. It is unlikely that anyone here on Dave's has the answer. However, I handled the taxes for dozens of individuals in the US for many years who qualified as independent contractors under the tax code without regard to immigration or citizenship status. This was often an advantage for both the worker and the employer. I would not be surprised to see the same situation here.

[wylies99]

Logic cannot be used to figure out what's legal in Korea.

[ontheway]

wylies99: You are correct that logic cannot be used to figure out what is legal in Korea or the US. This is especially true when it comes to tax laws. That is why it is foolish to assume that a person who is an employee under immigration law is also an employee under tax law. Under tax law, any stupid thing is possible. A truck may be deemed not to be a truck under specific circumstances (one case I delt with).

The OP needs a good Korean tax accountant or lawyer.

[wylies99]

Even the law in Korea changes depending upon the amount of the bribes.

[polonius]

Voyeur,

I feel for you. I just had to pay close to 2.5 million in back taxes for '04-05. Much like you, I had paid the 3.3% but it wasn't enough to cover the salary that I was making. Also, we cannot receive the 30% tax break for foreigners. I didn't mind paying the taxes, what I did mind however, was that I had to pay a late fee. I wasn't even aware that I owed money. My own fault though, for not looking into it. I tried making all the phone calls to many people. I had people call and talked in Korean, but at the end of the day, I still had to pay.

[Voyeur]

Are you saying that if you make 4 million with no housing stipend as an independent contractor you actually pay MORE tax than somebody who makes say 3.5 million as a wage earner and gets free housing OR a 500k housing allowance???

seems unfair.