Korean Job Discussion Forums

juliebaas · Joined: 19 Aug 2006 Location: Somewhere near Seoul

Hey there I really need some help from all the experts here at Dave's. My husband just got his bonus for being here a year, we are staying another six months, so are still at the Hagwon.

First our director said that it would cost us less tax if we split the bonus into two payments, getting about 1,000 the first month and 1,0000 the next month. So we did that.

When he got his pay his total was 3, 400,000 won with the bonus. Out of that a total of 600,000won went to taxes. His resident tax went from 5,000won to 33,000won. Income tax from 58,000 won to 269,000won. His pension and medical deductions went up quite a bit as well, the total deductions being about 600,000 won - compared to the 166,000 that is normally taken out and that was taken out of mine.

Our director said that this is normal with the extra pay it puts him into a higher tax bracket - also said something fishy about us leaving in Feburary, so she has to pay taxes for him for the rest of the year, so she has to take it out now.

What I need to know is, is this normal? I mean it is a bonus right? Should that even be taxed? What is the point if it is all taken in taxes? And what can we do to fight this, if it is wrong? Is there someone we can talk to or take this too? We live near Incheon airport.

Thanks for the help. Much appreciated

sadsac · Joined: 22 Dec 2003 Location: Gwangwang

Standard tax rates apply. Up until a couple of years ago it was tax free, now you should be paying the nominal tax rate on it. He shouldn't be paying any pension or health insurance on it. Your boss is stiffing you. Smile

halfmanhalfbiscuit · Joined: 13 Oct 2007 Location: Seoul

This isn't the usual nickle and diming-this is pocketing at least 500.000.

You pay basic tax,not pension or health on the severance bonus.What's this about paying tax for the rest of the year??You pay tax as you earn.

vox · Joined: 13 Feb 2005 Location: Jeollabukdo

The only time I heard about a tax rate that was this high was on the basis of a C4 Visa. You don't have a C4 visa, do you? That's a temporary worker's visa and the tax rate runs anywhere from 22%-27%.

If your extension has been done on an E2, then you've got to call in the NTS (National Tax Service) for help as he may be calculating your pay on a higher tax visa and reporting you as an E2 to the NTS and then pocketing the difference. Maybe not but it's possible.

Search it on this site they've been brought up several times.

yingwenlaoshi · Joined: 12 Feb 2007 Location: ... location, location!

I've heard something to the effect that severance pay is considered retirement money and with that 50% is deductible plus 300,000 for 5 years of service or less. 9% of that should be the taxes you pay.

Severance pay is seperate from your regular pay and is taxed differently. I just wish someone on this board could confirm exactly how it's taxed.

Go to the tax office. Or call the toll-free number. When or if you find out, please let us know.

Mr. Pink · Joined: 21 Oct 2003 Location: China

I've never been taxed on severance pay...when did this start happening?

(I've taught in Korea for nine years...never once did I get taxed on severance)

mindmetoo · Joined: 02 Feb 2004

mindmetoo · Joined: 02 Feb 2004

halfmanhalfbiscuit · Joined: 13 Oct 2007 Location: Seoul

Severance isn't considered income but you still pay minimal tax on itand that's it.

Call the tax service to get the full run-down and go to your local Labor Office.This is no "misunderstanding",it's just a director pocketing money.

You say you and your husband are staying on for a bit...not at the same school,surely?Doubt the director has any qualms about this either.More likely sees it as "resourcefulness"

jlb · Joined: 18 Sep 2003

I paid the standard 3.3 % on mine...any more than that just seems wrong. Get a Korean friend to phone the tax office and ask for you.

yingwenlaoshi · Joined: 12 Feb 2007 Location: ... location, location!

bassexpander · Joined: 13 Sep 2007 Location: Someplace you'd rather be.

Tell your boss to put in writing why he wants this much tax from you, because you plan on going immediately to the tax office. Do not pass go. Do not collect $200.

Tell him this after asking a few questions like, "How many students are at this hagwon total?" and "What do they pay per month for classes here?"

Then lay it on him that you are planning to call the tax office because you heard his tax amount is higher than 3.3 percent, and you want to sit down with them and figure this all out correctly.

He will likely freak, and may give in.

This guy is likely trying to cheat you. You need to sit down with the tax office and figure this out (if you're on an E-2, especially). C4 is a whole different tax matter I don't understand.

hugo_danner · Joined: 21 Jun 2006 Location: korea

Could just be the local taxes since you live on the island near Incheon Airport.

juliebaas · Joined: 19 Aug 2006 Location: Somewhere near Seoul

Okay this is what I found out when I called the NTS office. Granted the guys English wasn't great, but I THINK this is correct. Severence is considered retirement money and it is taxed separtedly from regular income. Only 55% of it is taxable. The 55% that is taxable is taxed at 8%, so on a standard severance of around 2,000won, only 1,100 about is taxable and at 8% a person should be paying around 95,000won.

So, that is what I got. Which means that my boss taxed me incorrectly. I have worked for them for a year and they are not bad people, I don't think it was deliberate, not sure what is going on. I have a meeting scheduled with them to try to work it out.

halfmanhalfbiscuit · Joined: 13 Oct 2007 Location: Seoul

Your tax has been reduced from $500+ to $100?

See it in your account and be done with it.

They don't care about you.Otherwise they wouldn't have tried to pull this stunt.