Korean Job Discussion Forums

[MollyBloom]

I read in a SMOE contract that an employee can avoid paying income tax for two years if forms are handed in before the first pay day. The forms needed are:

1. " 'resident certificate' issued by a competent authority of employee's country (US in my case)"

2. " 'an application for tax exemption' on non-resident's Korean source income provided under the Korean Tax Treaty"

It's just too vague for me to understand. Is the first an IRS form? Do the two years of tax add up to a pretty good amount?

[Ut videam]

Yes, the first is a letter issued by the IRS certifying that you are a resident of the U.S. for tax purposes as of the beginning of your contract in Korea. This certificate is known as Form 6166, and it's obtained by filing Form 8802 with the IRS. The form can be obtained from the IRS website: http://www.irs.gov

[Bibbitybop]

You don't have to submit them before the first payday. I when I started with SMOE, I sent in the form to the IRS at the end of September. By the end of October, I was given the proper documents from the IRS. So my "proof of residency for taxation reasons" was given to SMOE after the 2nd payday, probably at the end of October or early November. I was exempt for the first 2 years.

This doesn't only apply to SMOE, it applies to all foreigners working in Korea (I think).

[Ut videam]

Under the tax treaty, only those teaching at universities or public schools are eligible for the two-year exemption.

[Bibbitybop]

[nobbyken]

For people working at public schools, I think.

At Gepik, mine is automatically not paid.
UK citizen here.

[TheUrbanMyth]

The two year tax exemption though does not apply to Canadians even if they work at a P.S.

[mogbert]

I've already taken advantage of the 2 year tax exemption during my first stint in Korea. I've been away a year and plan on returning this fall. Does anyone know if I'm still exempt from paying during my next two years?

[blade]

[MollyBloom]

Thanks for the info. Is it worth being exempt? I mean, in terms of having to pay the income tax, does it amount to a lot you can save?

[eac02]

If you opt to be exempt from korean taxes for the first two years then do you still have to pay taxes in the US?

If you decaral residency in Korea and can prove you have been paying into the local taxes you can be exempt from the yearly taxes in the US. Wouldn't it be better to be exempt from the taxes in the US because they are higher than those in Korea?

[blade]

[Ut videam]

It's the first $85,700, and you don't have to declare residency in Korea to claim the exemption. You just have to show that you were physically present outside the US for 330 days during any continuous 12-month period.

You can also claim the exemption by claiming that you are a bona fide resident of Korea, but for most people it will be more advantageous to use the physical presence criterion. Doing so allows a university or public school teacher to remain exempt from both Korean and US income tax for the 2 years.

[Dome Vans]

[butlerian]