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myothercarisabackpack
Joined: 18 Mar 2008
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 Posted: Mon May 24, 2010 1:58 pm Post subject: Do I have to pay U.S. taxes on Korean Pension refund? |
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Hi, Everyone.
I returned from South Korea to America in March, and I recently received my pension refund. I'm wondering if I have to pay U.S. taxes on that money, and if I have to pay taxes on the first two months of wages I made in South Korea?
As I've now spent more than 35 days on U.S. soil this year, I'm ineligible for the tax shelter that comes with being out of America 330 days per year.
However, it doesn't seem right for the U.S. government to tax me on money that I made in Korean won.
Thanks for your help! |
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ChilgokBlackHole
Joined: 21 Nov 2009
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| Posted: Mon May 24, 2010 2:27 pm Post subject: |
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| It's income. You have to declare it. |
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mimi_intheworld
Joined: 19 May 2010
Location: South Carolina
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| Posted: Mon May 24, 2010 2:29 pm Post subject: |
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| You have to declare it, but (and please correct me if I'm wrong) isn't your first $80,000 earned out-of-country tax-free? |
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Adam Carolla
Joined: 26 Feb 2010
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| Posted: Mon May 24, 2010 4:19 pm Post subject: Re: Do I have to pay U.S. taxes on Korean Pension refund? |
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| myothercarisabackpack wrote: |
Hi, Everyone.
I returned from South Korea to America in March, and I recently received my pension refund. I'm wondering if I have to pay U.S. taxes on that money, and if I have to pay taxes on the first two months of wages I made in South Korea?
As I've now spent more than 35 days on U.S. soil this year, I'm ineligible for the tax shelter that comes with being out of America 330 days per year.
However, it doesn't seem right for the U.S. government to tax me on money that I made in Korean won.
Thanks for your help! |
Your foreign income is taxed on a pro-rated basis, IIRC. There's a spot on your income tax form that asks you to calculate what percentage of the year you were in the United States, multiply that by the total exemption amount (around $80,000) and that's how much exemption you get.
Example: You were in the U.S. exactly half the year. Your exemption is 50% of $80,000, which is $40,000. So, you pay no tax if your income is less than $40k.
Edit: Here's the link. (And the new income exemption total is $91k.)
http://www.irs.gov/pub/irs-pdf/f2555ez.pdf |
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tired of LA
Joined: 06 Nov 2006
Location: Seoul
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| Posted: Mon May 24, 2010 5:16 pm Post subject: Re: Do I have to pay U.S. taxes on Korean Pension refund? |
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| Adam Carolla wrote: |
Your foreign income is taxed on a pro-rated basis, IIRC. There's a spot on your income tax form that asks you to calculate what percentage of the year you were in the United States, multiply that by the total exemption amount (around $80,000) and that's how much exemption you get.
Example: You were in the U.S. exactly half the year. Your exemption is 50% of $80,000, which is $40,000. So, you pay no tax if your income is less than $40k.
Edit: Here's the link. (And the new income exemption total is $91k.)
http://www.irs.gov/pub/irs-pdf/f2555ez.pdf |
That isn't necessarily true. You first must qualify for the foreign income tax exemption by meeting the bona fide resident or physical presence test, and then your income is taxed on a prorated basis. If the OP didn't complete a one year contract, then he wouldn't meet the either test and would have to pay taxes on what he earned. However, if he completed the contract, he should meet the physical presence test and then his income from Korea would be taxed on a prorated basis. |
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Adam Carolla
Joined: 26 Feb 2010
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| Posted: Mon May 24, 2010 5:27 pm Post subject: Re: Do I have to pay U.S. taxes on Korean Pension refund? |
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| tired of LA wrote: |
| Adam Carolla wrote: |
Your foreign income is taxed on a pro-rated basis, IIRC. There's a spot on your income tax form that asks you to calculate what percentage of the year you were in the United States, multiply that by the total exemption amount (around $80,000) and that's how much exemption you get.
Example: You were in the U.S. exactly half the year. Your exemption is 50% of $80,000, which is $40,000. So, you pay no tax if your income is less than $40k.
Edit: Here's the link. (And the new income exemption total is $91k.)
http://www.irs.gov/pub/irs-pdf/f2555ez.pdf |
That isn't necessarily true. You first must qualify for the foreign income tax exemption by meeting the bona fide resident or physical presence test, and then your income is taxed on a prorated basis. If the OP didn't complete a one year contract, then he wouldn't meet the either test and would have to pay taxes on what he earned. However, if he completed the contract, he should meet the physical presence test and then his income from Korea would be taxed on a prorated basis. |
Yes, I left out the part that he needed to have been out of the U.S. for a full year (though it is clearly explained in the link I left for everyone to read.) |
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myothercarisabackpack
Joined: 18 Mar 2008
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| Posted: Mon May 24, 2010 6:10 pm Post subject: Thanks |
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| Thanks everyone for your input thus far. I did complete a year contract for a public school, which ran from March 2008 to February 2009. I sincerely appreciate your advice. |
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