Korean Job Discussion Forums

[RobLeeTeach]

How do I obtain Tax Exempt status? (US Citizen)

In my SMOE contract there's a clause that says I'm exempt from paying income tax for the first two years if I provide a "Residence Certificate" and an "Application for Tax Exemption".

Has anyone gone through this process?

[LindaUSF86]

My recruiter gave me this information:

United States of America

Order a transcript (by phone - it's a faster delivery time). There is no fee for ordering a transcript and it is arrives much faster (than the 6166). A transcript shows that you have submitted tax forms to the IRS and seems to be proof of residency.

http://www.irs.gov/pub/irs-pdf/f4506t.pdf
http://www.irs.gov/businesses/small/international/article/0,,id=122559,00.html

But it seems like it takes 45 days in order to get a Residence Certificate. So i'm still kinda confused as to what to do. Are we supposed to fill out this information at orientation or get it before we get to Korea??

[SFValley]

[RobLeeTeach]

[Lola O.]

http://gepiker.wordpress.com/form-8802/

I just got my residency certificate in the mail and I used this site to fill it out. You need to go to the IRS website to get the form then I would recommend faxing it and not mailing it.

Get 20 copies since it is the same price as getting 1.

[T-J]

It's important for people to make an informed decision when choosing the residency for tax purposes.

If you file a 8802 to get your 6166 certificate of U.S. tax residence, you are in fact exempt from paying Korean taxes for up to two years.

HOWEVER, by doing so you are INELIGIBLE to file a 2555 foreign income exemption when filing your U.S. taxes and are declaring your foreign earned income TAXABLE.

You can chose where you want to pay the tax on your income, BUT you are required to pay your taxes in one place or the other.

The tax rate is much lower in Korea, and I plan on living here for quite a few years, so I have no problem supporting local services with my tax dollars. Some might feel that regardless of where they plan on living, will take advantage of a lower tax rate.

The exemption that the OP is asking about is really a tax treaty set up for those that would rather pay a higher tax rate to their home country to support public services in the area that they plan on living permanently.

[SFValley]

[SFValley]

[trustie35]

Hello~ And thanks for the information.
I am aware of the tax exemption form.
However I really need some clarification about what happens to US resident, non-tax payers. Do non-taxpayers still need to file a 8802 form to obtain a certificate of residency?

[T-J]

[alphakennyone]

I've confirmed what T-J said with my recruiter. Here's what she said:

"For exemption income tax in Korea is only for teacher who come here for the first time and work at public school.

Also like before, if you pay income tax in Korea then you don�t pay USA tax but if you don�t pay income tax in Korea then you will need to pay USA taxes when you go back to your country.

This is what I known about income tax regulation, but for more information or detail, please find out the website here I gave.

http://www.nts.go.kr/eng/ "



So, they know this information. I don't know why they don't make it more up front.

[RobLeeTeach]

So how much cheaper is Korean income tax? Is it like the US where you get your tax money back if you make less than a certain amount of money?

Because of the low salary for my SMOE contract I foresee that I won't have to pay any taxes in the U.S.

Also, does Korea have a Provincial Income Tax and a National Income Tax like the U.S.'s State and Federal income tax?

[T-J]

[RobLeeTeach]

[T-J]