Korean Job Discussion Forums

[Jordaning]

Can someone give me an answer about this. We are finishing today and they are paying us our severance(cash) and deducting tax from it. He is trying to explain that it is so muc more tax as well. ...It seems like way too much.... Is tax paid on severance? How much tax is paid per month on 2.2?

[ttompatz]

[Jordaning]

Thanks , that is exactly what they did. We got taxed at the higher level. We paid more. I wouldn't expect anything less from them..

[ontheway]

You know, it isn't always the school or the owner trying to cheat.

Our Wonjangnim takes all the tax stuff to a Korean outside accountant. The accountant keeps saying that the foreign workers should pay 3.5% according to the tax law. The Wonjangnim shows the accountant the NTS website and says we withhold according to that site. The accounant says the school is wrong. She says he's wrong, but she has some trouble telling him because he's the accountant, he's the expert, he's older and he's a man. Still, she insists, very politely and every month he tells her he's right and the NTS site isn't correct for foreign teachers. Then everyone gets paid and the tax is deducted according to the NTS site.

She's a strong lady. A weaker person would just give in to the "expert."

(Since it's the outside, professional accountant who actually sends the money in to the tax service, sometimes I wonder if he's trying to skim off the school and the teachers. Of course it's possible that he's just wrong, or maybe the NTS site really doesn't apply to foreign teachers, but no one has noticed yet, or no one cares.)

[yingwenlaoshi]

The severance pay is taxed separately. It's actually a higher amount, but I can't be sure how much it is. It's a higher percentage, but you're only taxed on a certain amount of your severance. One of you guys above should know this. I'm only taxed at the same rate as my regular monthly taxes according to the amount on NTS's website because I'm sure my boss doesn't pay taxes. At least I don't get screwed that way and I can use the fact that he most likely doesn't pay taxes against him if that day should ever come...

OP, you're getting screwed on this...

[yingwenlaoshi]

[yingwenlaoshi]

Not sure if any of you are aware, but I noticed a while ago that taxes have gone up. Not on my paycheck, but if you check the calculator on NTS's website, you'll notice that the amount has gone up.

[ontheway]

Yes Ying, I noticed that the NTS withholding amounts have increased slightly. These rates are still low compared to the 3.5% and 5% that some teachers are paying.

If you're getting your pension and your health insurance, you can be sure that your tax payments (at least the NTS required amounts) are being paid in, because your name is in the system and the agencies share info often enough for you (or your school) to be noticed.

If you're underground and not getting pension and health insurance, then there's a good chance your taxes are diappearing somewhere between your paystub and the NTS.

[yingwenlaoshi]

[yingwenlaoshi]

Now I remember.

You deduct 50% of your salary and then another 300,000 from that. Take 9% of that and you have what should be deducted from your severance.

I'm not 100% sure, but I think that's right.

So if your salary is 2.2 million, bring it down to 1.1, take off 300,000 and you have 800,000. 9% of that is 72,000. Works out to a little less than 3.3%.

Deductions on retirement include 50% plus 300,000 for up to 5 years of service. Over 5 years of service would be different.

Don't confuse what your dedcutions should be with income tax percentage. Income tax is 9% (the last I heard). It's further reduced due to deductions such as basic deductions, pension, medical, etc.

Severance is a different animal. It's retirement income.

I think. Not sure, but it sounds good.

The only other thing I can think of with the above theory is it might not count as retirement income because you might continue with the company (re-sign). Then it might be taxed even higher. Like 300,000 being take out for up to 5 years service. 2.2 million minus 300,000 is 1.9 million. 9% of that is 171,000. That leaves you with 1,729,000 Won. 7.859% of your gross income.

If my most recent guestimation is correct, you could be deducted well over 200,000 in taxes. The newest amount on NTS's website that should be deducted from your monthly pay is 45,140. That plus pension is a total of 216,140 deducted.

What has your boss been deducting every month for income taxes?

Anyway, if you're not returning to the school then maybe the severence could be considered as retirement income making the deduction less on your severence (72,000 instead of 171,000).

It would be nice if someone knew for sure.

Tax deductions on your severence are not the same. I'd just convince him though that they are. Somehow.

Maybe he isn't screwing you.

Anyway, don't quote me on all that. Seems there's no one around here that can give concrete info with links.

[phoenixstorm]

Does salary include the amount you make before they deduct you "apartment" rent?

My salary is 2.4 but 300 gets deducted for my rent. However I am taxed on 2.4 not 2.1.

Does that mean my severance will be 2.4?

[yingwenlaoshi]