Korean Job Discussion Forums

[Zach with a Z]

Hey is there a time limit on when your supposed to submit the application to be exempt from taxes for being American? Or whatever the hell the process is called... I put it off and am waiting on my residency form from the IRS.

Sorry if I am using the wrong terminology.

[climber159]

You're unclear. Depending how one reads your question here are the two possible answers:

1. As a citizen of the United States of America you are exempt from paying US taxes on your overseas income so long as your annual income is less than about $82,000.

2. As a citizen of the United States of America you are exempt from paying Korean income tax for your first two years in Korea. In order to qualify for this you need to fill out and submit IRS form 8802. The IRS will then mail your requested quantity of 6166 forms. It is this form (6166) that your school needs in order to exempt you from paying Korean income tax.

[Geckoman]

Here's an earlier thread about filing your taxes while abroad:

ATT AMERICANS!: FILE YOUR FEDERAL INCOME TAXES BY JUNE 15TH!
http://forums.eslcafe.com/korea/viewtopic.php?t=154390

[air76]

If you claim that you are exempt from Korean taxes then you'll have to pay US taxes, which will be more money....that is if you want to do it legally.

You don't need to apply to be exempt from paying US taxes on your Korean salary however...unless, of course, you have one of those crazy jobs that some posters on here lie about, making 10,000,000 won a month! You just fill out a form and send it in with your tax return....it is a good idea to file your tax return in the US for your Korean income. It lets the IRS know what you're up to so that you won't have any years missing if you ever go back home. You won't have to pay any taxes and it only takes an hour of your time.

[Zach with a Z]

sorry I wrote that when my brain was tired from screaming kids and saying hi 5000 times in the hallway.

At the end of the year Americans can get back the taxes we pay to Korea, no? I was told I need a form from the IRS saying I am a US resident and then I can get a refund after the end of the year from Korea. True?

if so, is there a time limit? My co-teacher doesnt know.. which is understandable he's a teacher not an accountant.

thanks

[Zach with a Z]

[T-J]

[Zach with a Z]

I had thought that Americans get 2 years of tax exemption from Korea, and that they get tax exemption if they make under 80,000$ abroad.

is this not the case? I should have carefully thought out this question before barfing it on the board with reckless confusing abandon.

[air76]

You can't have your cake and eat it too. (legally) You can't be tax exempt in both countries at the same time.

You have to either pay taxes in the US or in Korea. Of course there are many reasons why you might want to pay taxes in the US instead of Korea. If you own a home and have children and have a lot of investment income and want to be able to file using itemized deductions to limit your other tax liabilities then you wouldn't want to file a 2555 and therefore claim Korean residency for the year and lose many of your deductions.

If you ask for the money back from the Korean Tax Authority then in theory (legally) you need to send that money to the IRS....possibly along with a check for the remainder of the balance of your tax bill. That is of course if you want to be in compliance.

To make a long story short...unless you're earning a significant amount of money off of investments and interest in the US (say $30,000 or more per year) and own a home and have a family, then you'll want to just pay your taxes in Korea.

If you want to get your money back from Korea and then just not tell the IRS about it then of course that is illegal and you could possibly go to jail or pay huge fines. Especially when you're filling out a form stating that you'd rather pay your taxes in the US as opposed to Korea, I'd just go with paying your taxes here.

[redaxe]

[Zach with a Z]

well I guess my cheapness comes before my patriotism. Korea's tax is.. what like 5%? Versus... us 25%?

thanks

[MattAwesome]

you need to have it before they file your taxes here. it takes a few months to get back (8802)

why would you report your korean income to the US? without a w-2 from the us. the IRS has no way of accounting for your income here. you do however still have ot file your taxes. even if it's for $0 income. which should be true unless you are getting income from a savings account or something.
good luck and no worries

[air76]

The reasons that you would report your Korean income to the US are:

1. It doesn't cost you anything since you can make up to $80,000 tax free.

2. If you work overseas for say 5 years and then return to the US and start filing tax returns again the IRS may wonder where you've been for the last 5 years and do an audit. The same goes for filing returns with $0 income...it just looks fishy for someone to make no money for several years running. So it's best just to stay in compliance so you don't get flagged when you return to work in the US.

3. Officially you legally have to report overseas income, even when it's not taxable. Of course we don't always do everything legally, but when it doesn't cost you anything it's better to ensure that you will avoid unnecessary tangles with the IRS.

It's not entirely true that the IRS has no way of accounting for your income...if you claim $0 income for 3 years but then have $30,000 of bank transfers flowing into your accounts from yourself then that would be pretty hard to explain if you were to get audited. If you claim the income and then have it all deducted then there is a paper trail explaining where the money came from.

If you are really and truly only planning on being in Korea for 1 year and plan on pissing away all of your earnings then yes, it's probably ok to just claim no earnings and have the gov't imagining that you're still at home.