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Konglishman
Joined: 14 Sep 2007
Location: Nanjing
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 Posted: Tue Apr 13, 2010 2:19 am Post subject: |
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| naturegirl321 wrote: |
| Konglishman wrote: |
| Further down, I said that in order to be considered a nonresident of the U.S., you would have to be a noncitizen who is not a legal resident of the U.S. |
Ok see, ? that's what I mean with IRS speak. To me, a non resident in the US is someone who doesn't live there. But to you it's a non US citizen.
What gives? Why does the IRS do that? Why can't they just say non US citizen who doesn't live in the US? Wouldn't that make things HEAPS easier.
Are you sure it's a non US citizen, not living in the US? |
Yes, I am fairly certain that is what the IRS means. But like I said, I will give them a call later tonight to confirm that just to be sure that I am not confused myself.
Yes, I do agree that there many things the IRS could do to make the tax code clearer. I have not read this myself (until now that is... I googled it just now), but my dad commented once that Albert Einstein once said, "The hardest thing in the world to understand is the income tax."
Well, actually there are some "noncitizen", but nonetheless, legal residents who are not living in the U.S. And they can qualify for the 2555 as well.
Also, note that there are some legal nonresidents who are legally working and living in the U.S. that do not have to pay U.S. taxes due to the reciprocal nature of the tax treaties.
Last edited by Konglishman on Tue Apr 13, 2010 2:27 am; edited 1 time in total |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Tue Apr 13, 2010 2:27 am Post subject: |
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| Konglishman wrote: |
Yes, I am fairly certain that is what the IRS means. But like I said, I will give them a call later tonight to confirm that just to be sure that I am not confused myself.
Well, actually there are some "noncitizen", but nonetheless, legal residents who are not living in the U.S. And they can qualify for the 2555 as well. |
Konglishman, I think that we just understand resident differently. To me, it's where you live, not where you hold a passport from.
I suppose there are "non citizens" My mom was considered a non citizen (ie, stateless person) for 8 years by Romania. Funnily enough, that entire time, the US didn't consider her stateless, but a Romanian citizen. |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Tue Apr 13, 2010 2:33 am Post subject: |
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Just found this. What do you make of it?
http://www.irs.gov/pub/irs-utl/koreatrweb.pdf
In paragraph (1), the term "resident of Korea" is defined as . . . any person resident in Korea for purposes of its tax. Similarly,"resident of the United States" means . . . any person resident in the United States for purposes of its tax.
Thus, a resident of the United States includes a resident alien individual and a resident citizen. . . A citizen of the United States or Korea is not automatically a resident of the United States or Korea for purposes of this Convention. |
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Konglishman
Joined: 14 Sep 2007
Location: Nanjing
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| Posted: Tue Apr 13, 2010 2:34 am Post subject: |
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| naturegirl321 wrote: |
| Konglishman wrote: |
Yes, I am fairly certain that is what the IRS means. But like I said, I will give them a call later tonight to confirm that just to be sure that I am not confused myself.
Well, actually there are some "noncitizen", but nonetheless, legal residents who are not living in the U.S. And they can qualify for the 2555 as well. |
Konglishman, I think that we just understand resident differently. To me, it's where you live, not where you hold a passport from.
I suppose there are "non citizens" My mom was considered a non citizen (ie, stateless person) for 8 years by Romania. Funnily enough, that entire time, the US didn't consider her stateless, but a Romanian citizen. |
Sure, "where you live" is also typically how I also use the word. Unfortunately, based on reading everything and different conversations, my understanding is the legal definition according to the IRS is a bit more complicated.
In fact, like I mentioned earlier in my edited post, you can even be a legal nonresident in the U.S. in cases of having the benefits of the a tax treaty as they are always (if I am not mistaken) reciprocal.
Incidentally, I think the Korea Income Tax Treaty was made more to benefit Koreans who were coming to the U.S. to work. |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Tue Apr 13, 2010 2:39 am Post subject: |
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Just when I read something and I go, I think I understand, I read something else and am more confused. HAv eyou looked at the 1976 tax treaty?
And how did you file the 2555 as physical presence or as a bona fide resident? |
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Konglishman
Joined: 14 Sep 2007
Location: Nanjing
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| Posted: Tue Apr 13, 2010 2:57 am Post subject: |
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| naturegirl321 wrote: |
Just when I read something and I go, I think I understand, I read something else and am more confused. HAv eyou looked at the 1976 tax treaty?
And how did you file the 2555 as physical presence or as a bona fide resident? |
I have looked at it before a number of times after I started the other tax thread. But I cannot remember if I saw the saving clause in it or not. However, I do remember reading in a IRS tax guide for people living overseas that the saving clause is almost always in a tax treaty.
Yes, I have always filed the 2555 under the physical presence test. |
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Konglishman
Joined: 14 Sep 2007
Location: Nanjing
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| Posted: Tue Apr 13, 2010 3:12 am Post subject: |
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| naturegirl321 wrote: |
Just found this. What do you make of it?
http://www.irs.gov/pub/irs-utl/koreatrweb.pdf
In paragraph (1), the term "resident of Korea" is defined as . . . any person resident in Korea for purposes of its tax. Similarly,"resident of the United States" means . . . any person resident in the United States for purposes of its tax.
Thus, a resident of the United States includes a resident alien individual and a resident citizen. . . A citizen of the United States or Korea is not automatically a resident of the United States or Korea for purposes of this Convention. |
Unfortunately, the computer I am using is not letting me look at that site (I am not in my office right now and in fact, I am in Seoul at the moment).
Anyways, if I am not mistaken that is making reference to the tie breaker provisions for dual residents. So, if a U.S. citizen has very strong ties to Korea, then only for the purposes of the tax treaty, that U.S. citizen will be considered a resident of Korea and not the U.S. and thereby not qualify for the Korean Income Tax Exemption. I think a good example of someone who would probably not qualify to be considered a U.S. resident (for the purposes of the tax treaty) would be a U.S. citizen who is an F visa (the resident visa for foreigners in Korea) holder.
In short, U.S. citizens or legal residents of the U.S. who have established residency in Korea according to the legal definition, may or may not qualify for the Korean Income Tax Exemption depending on what which country the tie breaker provisions say their ties are closest to.
At any rate, I will take a look at that link later tonight or tomorrow. |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Tue Apr 13, 2010 3:21 am Post subject: |
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| Konglishman wrote: |
In short, U.S. citizens or legal residents of the U.S. who have established residency in Korea according to the legal definition, may or may not qualify for the Korean Income Tax Exemption depending on what which country the tie breaker provisions say their ties are closest to.
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I'm leaning towards that fact that I'm NOT qualified for this. Here's why
1. Left the US in March 2003 on a one way ticket to China. Havne't lived there since. Just visited,usually for one or two weeks. Max time was 5 weeks this year.
On to Peru.
1. Moved there in Aug 2004 from China, had a two week vacation in the US.
2. Bought an apartment, outright and car with no loans in Oct 2007
3. Sold them in July 2008
4. Bought anoter apartment and car, no loans, no mortage in July 2008
5. I became a Peruvian citizen in Jan 2009, meaning that not only CAn I vote, but legally I have to or pay a fine. I'll be paying the fine, since in order to vote I have to change my address on my ID from Peru to Korea and if I do that, when we sell property, I have to pay 30% instead of 5%
6. We still have the apartment and car in Peru. My husband and dog are still there too. (I guess my American self is there as well, since I entered as an American in Jan 2009, but left as a Peruvian in Jan 10)
So, I'm a Peruvian resident, right? NOt a US one, am I? Darn it. And then my husband will come here and we'll live here, have kids, and jobs and friends and will be Korean residents, not US or Peruvian ones? Right?
So basically, I have to pay Korean taxes, I think. sigh. Isn't there a paper saying that if I opt out of Soc Sec, etc, that I don't have to pay taxes, ? Without giving up US citizenship, I mean. |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Tue Jun 22, 2010 3:40 am Post subject: |
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Sorry for not updating this thread sooner. After filling out the IRS form, can't remember which one, I was snet a letter saying that I had to write another letter saying that I was a US tax resident, which I had written in the first letter.
Since I had paid 58 bucks last year, I decided to write the l,etter. My dad said if they gave it to me, despite the fact that I had filed the 2555 for nearly a decade, than that would mean there was some type of loophole or that the rules were so confusing that even the IRS peopel couldn't understand.
So I wrote the letter, again, and got a certificate saying that I'm a US tax resident.
Here's the thing, I can NO longer file the 2555EZ, becuase there's a section that says that you can't file it if you told the foreign govt where you're living that you're not a tax resident. I CAN file the 2555 normal, long form, AND get out of Korean AND American taxes, provided that I'm outside of the US for 330 days or more each year. Which I will be. Gott love loopholes! |
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hypnotoad777
Joined: 05 Apr 2010
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| Posted: Thu Jun 24, 2010 1:41 pm Post subject: |
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| So after 2 years, who are we paying in taxes? The U.S. or Korea? It would certainly encourage me not to file for the exemption if my taxes are going to be incread 3 to 4 fold as Korean taxes are around 4 percent and American ones are around 15. If someone could tell me definitively there's a legal way to just pay Korean taxes at that point, I'd be a lot less reluctant to mail this form into the IRS. |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Thu Jun 24, 2010 4:33 pm Post subject: |
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| hypnotoad777 wrote: |
| So after 2 years, who are we paying in taxes? The U.S. or Korea? It would certainly encourage me not to file for the exemption if my taxes are going to be incread 3 to 4 fold as Korean taxes are around 4 percent and American ones are around 15. If someone could tell me definitively there's a legal way to just pay Korean taxes at that point, I'd be a lot less reluctant to mail this form into the IRS. |
First, you have to file the form in order to get out of Korean taxes, then fulfill all the reqs in the long form 2555, and you get out of both.
EACH year, you have to fulfill the 2555 reqs to get out of US taxes. At the end of two years, then you just pay Korean taxes and file the 2555ez. If you fulfill the 2555ex reqs, then no US taxes, but you'll be paying Korean ones.
It's a loophole, in theory you're not supposed to get out of BOTH taxes, BUT, if you stay out of the US for 330 days or more a year, then you can file the 2555ez. And if you get the Form from the IRS, then no Korean taxes for two years.
Believe me, we're small fish to the IRS, there are bigger ones out there to fry than teachers in Korea. |
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isitts
Joined: 25 Dec 2008
Location: Korea
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| Posted: Tue Aug 03, 2010 6:58 am Post subject: |
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| hypnotoad777 wrote: |
| So after 2 years, who are we paying in taxes? The U.S. or Korea? It would certainly encourage me not to file for the exemption if my taxes are going to be incread 3 to 4 fold as Korean taxes are around 4 percent and American ones are around 15. If someone could tell me definitively there's a legal way to just pay Korean taxes at that point, I'd be a lot less reluctant to mail this form into the IRS. |
To only pay taxes in Korea, don't apply for the US residence certificate. File your 1040 and 2555 with the IRS and you don't pay tax to Uncle Sam. |
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isitts
Joined: 25 Dec 2008
Location: Korea
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| Posted: Tue Aug 03, 2010 7:28 am Post subject: |
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| naturegirl321 wrote: |
| hypnotoad777 wrote: |
| So after 2 years, who are we paying in taxes? The U.S. or Korea? It would certainly encourage me not to file for the exemption if my taxes are going to be incread 3 to 4 fold as Korean taxes are around 4 percent and American ones are around 15. If someone could tell me definitively there's a legal way to just pay Korean taxes at that point, I'd be a lot less reluctant to mail this form into the IRS. |
First, you have to file the form in order to get out of Korean taxes, then fulfill all the reqs in the long form 2555, and you get out of both.
EACH year, you have to fulfill the 2555 reqs to get out of US taxes. At the end of two years, then you just pay Korean taxes and file the 2555ez. If you fulfill the 2555ex reqs, then no US taxes, but you'll be paying Korean ones.
It's a loophole, in theory you're not supposed to get out of BOTH taxes, BUT, if you stay out of the US for 330 days or more a year, then you can file the 2555ez. And if you get the Form from the IRS, then no Korean taxes for two years.
Believe me, we're small fish to the IRS, there are bigger ones out there to fry than teachers in Korea. |
Naturegirl, I posted a question for you on some other thread, but now after reading this thread, I'm even more curious as to how you got a residence certificate. The only loop hole I saw for getting the residence cert after having filed a 2555 is that your 2555 was for a partial year.
The instructions for form 8802 do say that you can apply for a residence certificate even if you filed a 2555, but you have to make a statement saying why you think you are entitled to one.
In my case (I'm in the process of doing this now, but trying to make sure this is legit), I say that my tax home was the US for the first part of the year and then was Korea for the rest of the year. And that my time here is temporary, that I'm only here because of the economic downturn in the US (which is true), and that I intend to return to the US after my second year in Korea (could be true, as my school currently doesn't have the funding to keep me past two years).
Still, though, even if I make that statement, it seems the IRS would wonder why I filed the 2555.
I've not submitted for my residence certificate for 2009 yet because I've already filed my US taxes (with the 2555) and I don't quite see what kind of stement I can make saying why i deserve the residence cert.
But I mean if you got one, then maybe I will request one. The worst they would do is deny the request (which they did do my second year in Japan).
Ugh...I've spent like 4 or 5 days straight on this nonsense. |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Tue Aug 03, 2010 3:45 pm Post subject: |
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| isitts wrote: |
Naturegirl, I posted a question for you on some other thread, but now after reading this thread, I'm even more curious as to how you got a residence certificate. The only loop hole I saw for getting the residence cert after having filed a 2555 is that your 2555 was for a partial year.
The instructions for form 8802 do say that you can apply for a residence certificate even if you filed a 2555, but you have to make a statement saying why you think you are entitled to one.
In my case (I'm in the process of doing this now, but trying to make sure this is legit), I say that my tax home was the US for the first part of the year and then was Korea for the rest of the year. And that my time here is temporary, that I'm only here because of the economic downturn in the US (which is true), and that I intend to return to the US after my second year in Korea (could be true, as my school currently doesn't have the funding to keep me past two years).
Still, though, even if I make that statement, it seems the IRS would wonder why I filed the 2555.
I've not submitted for my residence certificate for 2009 yet because I've already filed my US taxes (with the 2555) and I don't quite see what kind of stement I can make saying why i deserve the residence cert.
But I mean if you got one, then maybe I will request one. The worst they would do is deny the request (which they did do my second year in Japan).
Ugh...I've spent like 4 or 5 days straight on this nonsense. |
It was for a full year. The tax cert is based on the previous year's taxes. I filed for the tax cert in Jan 2010, based on the 2009 calendar year. I' haven't been a US resident for 2003, 2004, 2005, 2006, 2007, 2008, 2009. But ther'es the loophole. While I wasn't a US resident, I WAS a tax resident, since I didn't owe any taxes in Peru, but I did have to pay to the US, since I was self employed and it was a US business.
I gave them my tax cert based on 2009 (not a US resident, but a US tax resident). And they (my employer) said it was good for two years.
I think you're getting resident confused with TAX resident. My case is different than most. If you don't feel you qualify for the US tax residency cert, don't apply. I do. I lived in Peru, yet paid taxes to the US. The least they could do was give me the cert.
Better yet, talk to a tax accountant. They know more than me.
Understand this: if you get the US tax cert you CANNOT file the EZ2555. Look at the part about not being a tax resident for the country you live in. you CAN however, file the 2555 long form IF you've been out of the US for 330 days. You qualify under the physical presence test.
I figured the same as you. If I were doing it wrong, they'd deny the cert. Yet they didn't, they gave it to me. |
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isitts
Joined: 25 Dec 2008
Location: Korea
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| Posted: Tue Aug 03, 2010 11:28 pm Post subject: |
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| naturegirl321 wrote: |
| isitts wrote: |
Naturegirl, I posted a question for you on some other thread, but now after reading this thread, I'm even more curious as to how you got a residence certificate. The only loop hole I saw for getting the residence cert after having filed a 2555 is that your 2555 was for a partial year.
The instructions for form 8802 do say that you can apply for a residence certificate even if you filed a 2555, but you have to make a statement saying why you think you are entitled to one.
In my case (I'm in the process of doing this now, but trying to make sure this is legit), I say that my tax home was the US for the first part of the year and then was Korea for the rest of the year. And that my time here is temporary, that I'm only here because of the economic downturn in the US (which is true), and that I intend to return to the US after my second year in Korea (could be true, as my school currently doesn't have the funding to keep me past two years).
Still, though, even if I make that statement, it seems the IRS would wonder why I filed the 2555.
I've not submitted for my residence certificate for 2009 yet because I've already filed my US taxes (with the 2555) and I don't quite see what kind of stement I can make saying why i deserve the residence cert.
But I mean if you got one, then maybe I will request one. The worst they would do is deny the request (which they did do my second year in Japan).
Ugh...I've spent like 4 or 5 days straight on this nonsense. |
It was for a full year. The tax cert is based on the previous year's taxes. I filed for the tax cert in Jan 2010, based on the 2009 calendar year. I' haven't been a US resident for 2003, 2004, 2005, 2006, 2007, 2008, 2009. But ther'es the loophole. While I wasn't a US resident, I WAS a tax resident, since I didn't owe any taxes in Peru, but I did have to pay to the US, since I was self employed and it was a US business.
I gave them my tax cert based on 2009 (not a US resident, but a US tax resident). And they (my employer) said it was good for two years.
I think you're getting resident confused with TAX resident. My case is different than most. If you don't feel you qualify for the US tax residency cert, don't apply. I do. I lived in Peru, yet paid taxes to the US. The least they could do was give me the cert.
Better yet, talk to a tax accountant. They know more than me.
Understand this: if you get the US tax cert you CANNOT file the EZ2555. Look at the part about not being a tax resident for the country you live in. you CAN however, file the 2555 long form IF you've been out of the US for 330 days. You qualify under the physical presence test.
I figured the same as you. If I were doing it wrong, they'd deny the cert. Yet they didn't, they gave it to me. |
Thanks, naturegirl! No I see the difference between the tax resident and resident thing. And I filed the long 2555 on turbotax using the physical presence test. So no worries there.
But on turbotax, even using the long form, they asked me where my tax home was for 2009 and I put Korea, established July 2009.
But I was thinking that based on the instructions for the 8802, I can make the case that I was only filing the 2555 for a partial year and that the US was my tax home for the first part of 2009. And the US was my tax home for all of 2007 and 2008.
I guess it would have been easier to list the US as my tax home and then file the 2555 under the physical presence test, but the instructions of both the 2555 long and EZ gave me the impression I couldn't file for exemption if the US was my tax home.
And since I was filing late this year, I didn't want to risk getting the 2555 rejected and owe interest on tax.
But on the other hand, I did file a 2555 when I returned from teaching in Taiwan. So, I did file as a US (tax) resident and used the physical presence test so I wouldn't owe taxes on my Taiwan income.
Ugh... If I apply for the residence certificate, I'll just have to word my case carefully. But the instructions on the 8802 do say that if I didn't establish permant residence (ie: address), then I might not get the cert.
Anyway, thanks again for your help! I appreciate it! |
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