Korean Job Discussion Forums

[Steve22]

This my first time in Korea and teaching after 5 months I felt I do not want to be here anymore. I reached a agreement with the employer and we both decided to end our working relationship. I only mentioned this as background info.

I am going back to the United States for graduate school. I made some money in Korea would I have to pay US taxes on my income earned in Korea?

I already paid Korean taxes on the money I earned, so I want to know will I be taxed twice?

I would also like to hear people who have been in same situation as me. Working in Korea or overseas for 5 months or less before return back to the US. If so what did you do?

[asams]

you won't be taxed, don't worry about it. Korea and the US have an agreement where US citizens do not have to pay taxes on income earned unless it is above something like $80,000. I doubt you made that and if you did then please pm me and tell me what job that was.

Here is that treaty:

http://www.irs.gov/pub/irs-trty/korea.pdf

I would however ask your boss if you can get a receipt of your withholdings and everything since you'll have to file when you return

(disclaimer: I know this is a very simple explanation, no one blast me for this)

[johnriley007]

http://www4.law.cornell.edu/uscode/uscode26/usc_sec_26_00000911----000-.html

[tired of LA]

i haven't been in your situation, but from my understanding is you will be taxed on the income that you earned. to be tax exempt from foreign earned income, you basically have to be in korea for a year. i think you have to be out of the us for 330 days out of a 12 month period. otherwise you are subject to taxation on the income when you file your income tax return.

http://www.irs.gov/newsroom/article/0,,id=108276,00.html

[thrylos]

If you're a US newbie (working in the same place for under 2 years), you SHOULD NOT be paying ANY taxes.

My first hagwon took out taxes and medical (and put it right into their own pockets, but that's another story) for my first 8 months or so. I then got a job at a national uni in the same town and was not getting taxed there. I explained the situation to my uni K-boss and he reamed the hagwon owner for taking out taxes for a US citizen. Eventually, I got back all my taxes AND my (non-existent) health insurance.

Long story short, not only you won't have to pay US taxes when you file, but you shouldn't be paying Korean taxes, either, if you've been at your workplace for under 2 years. Get it back.

[tired of LA]

[dennis66]

Let's set the record straight. ALL American citizens and resident aliens are subject to U.S. federal income tax on their world wide income. Foreign sourced, earned income (meaning income earned from the sweat of your brow, not interest, dividents and so on) can be excluded from tax if you are a.) out of the U.S. for 330 full, calendar days in a consecutive 12 month period, or are a bonafide resident of a foreign country for a period including a full tax year; usually Jan 1 to Dec 31. The amount of the exclusion depends on your earnings and the number of days in the 12 month period within your tax year. You need to file Form 2555 or Form 2555EZ with your 1040 and make the appropriate computations.

In the specific case of the person who was only here in Korea for 5 months, if that was your only period overseas then your salary here in Korea is fully taxable in the U.S. You will report the Korean tax paid on Form 1116 and claim a foreign tax credit for the amount you paid in Korea. You will not be taxed twice on the same income as you fully recover your Korean tax on your U.S. 1040.

The items I have mentioned above are U.S. tax law and have NOTHING to do with the U.S./Korean bilateral tax treaty. Article 21 of that treaty exempts foreign teachers from Korean tax for the first two years they are in Korea. This applies ONLY to public schools, universities and NOT to hogwans. You may have to provide proof that you are a U.S. resident to obtain the exemption. Our friends at the IRS have provided forms for this too. You make the request on Form 8802, Application for U.S. Residency Certification, and you can request up to 30 copies of Form 6166, Certification of U.S. Tax Residency. You must specify the country for which you are requesting the certification; here Korea. I requested mine in December and have received two, nice notices from the IRS that they received my $35 fee (yes, there is a fee) and they assure me "they're workin' on it!"

While we all love to hate the IRS, they don't write this crap, it's congress! I hope this clarifies the situation for everyone.