Korean Job Discussion Forums

[naturegirl321]

I don't get it. So, I have to get a paper saying that for "Federal tax purposes" I'm a US resident and will be a US resident for the rest of 2010, right?

(But I'm not since I live in Korea and spent the last 8 years in Scotland, Czech Rep, Spain, China, and Peru)

And then I give that to Korea and that means taht I don't pay KOREAN taxes, correct?

So then, I have to pay US taxes?

OR

I get out of BOTH Korean and US taxes for two years?

If someone could explain this, simply, I'd appreciate it, becuase it's doing my head in.

Thanks!

[jameltoe]

according to my recruiter unless you are making over 90k usd you do not need to pay american or korean taxes after submitting your 8802 form

[naturegirl321]

[English Matt]

Seeing as how the Korean income tax rates are so low, I've always thought this 'exempt from paying taxes in Korea for 2 years' things is a sort of a poisoned chalice.

Like you, I figured that if I am not paying taxes in Korea (and am legally resident for tax purposes in the UK) then I would inevitably at some point have to pay UK income tax on all or part of my income here in Korea. I did a little reading around the subject and, in my situation, I am only liable to pay UK tax on any income I repatriate to the UK.

I am moving to Germany after I leave Korea so, as far as I have been able to work out, I will not have to pay UK tax on my savings from Korea as I will not be taking the money back to the UK. I'm not sure how it works with US citizens, but this may at least give you some context.....

EDIT: On second thoughts, if you have been away from the US for so long are you actually classified as a resident any longer? If you tell your school that you are not classified as a resident then maybe you can avoid all these worries and just get them to tax you (the rate is somewhere between 1-3%).

[air76]

You have to pay taxes in one country or the other...end of story. The two-year tax exemption is not there for teachers (who pay 3.3% taxes) but for workers in other fields making a lot more money with much different tax burdens.

If you take the 2-year tax exemption you will be legally liable to pay taxes in the US....they probably would never find out, but yeah, if you want to be on the straight and narrow you should forget about the exemption, pay the 3.3% in Korea and file a 2555 (which I am sure you're already doing as you've been living in Peru for a long time). You don't need to be in Korea for a year to be considered a bona fide resident, as long as your contract lasts for a year you can write the start/end date of your contract on the 2555 and then pro-rate your exemption as a percentage of $94,500 with the same ratio of the number of days you've earned money in Korea in 2009.

[naturegirl321]

[pkang0202]

[naturegirl321]

Ok, on my Korean contract, I had to put my US home address, my parents', because I couldn't put my Peruvian one, since we're selling out flat.

1. File the 8802 and you don't have to pay Korean taxes for 2 years. File your normal Tax returns to the US IRS and claim the income tax exemption because you make less than $90,000. No US taxes.

That sounds good to me. But brings me to the same question: how can I say I'm a US resident for tax purposes, when I file the 2555 and have filed for years?

It's not complicated. I just don't know if it's legal.

[air76]

If you are a US citizen you owe taxes in the US, regardless of whether or not you were given Peruvian citizenship...but as you already know, you can make up to $94,500/year overseas and deduct all of that income. You can actually make more than that as you can deduct travel expenses and overseas living expenses and all sorts of other things (as opposed to taking the standard deduction), but of course this is not a worry with teachers as making over 100 grand a year is not going to happen.

These laws are not in place to try and tax English teachers and other folk traveling and working overseas...they are there to prevent the owners of very large American businesses from relocating their headquarters overseas in an attempt to lower their tax burden. For all intents and purposes you'll never have to pay taxes in the US as long as you have no income there.

I do agree that it is best to file your return every year, even if you aren't paying any taxes...if in 10 years time you decide to return to the US, but now they notice that you've got $100,000 in the bank, it's best to have documented it over the years to show that you earned that money overseas and filed for your tax exemption.

[air76]