Korean Job Discussion Forums

[tokkibunni8]

What is the tax rate for Americans who's been working in Korea for more than two years? Does it vary depending on your salary? My tax used to be 3% of my 2.4mill salary, but now I'm taxed at 7% at a salary above 3mill. Does it sound right?

[tired of LA]

The tax rate for Americans is the same as it is for everyone else. It depends on how much you make, but that isn't the reason for the big tax increase. Its was discussed a lot a couple months back, but foreigners no longer receive a 30% deduction in their taxable income starting this year, so you should expect to pay more in taxes this year compared to before. However, how much its supposed to increase our monthly withholdings, I'm not sure. I read in a post that it would be around 100,000 per month, but haven't heard anyone confirm it.

[OculisOrbis]

Since Jan 1, 2010, the 30% income reduction benefit has been canceled. It doesn't mean that your monthly taxes taken off your check should go up, it means that when your employer does your tax settlement at the end of the year, you just wont get a (or as much of) a refund (so for most people nothing will change if you didn't even know about the settlement refund that you were likely supposed to have gotten in the past).

What i just said refers to when your employer had been with holding the prescribed monthly amount (which can be found using the simplified tax table or calculator on the NTS website) without factoring the previous 30% reduction and using your entire gross monthly income.

If your employer was applying the 30% reduction to your income before calculating the withholding, you may see your taxes increase a little. The main reason an employer would do that was to scam you and the government. It saved them a little bit of money by contributing to your pension and health insurance at 70% of your income instead of all of it. They save money and you get screwed out of a little bit of pension benefit.

The monthly withholding works on a sliding scale - the more you make, the higher the percentage taken for tax. An average FT's wage (2.0-2.4 mil) would be taxed from 1.5 - 2.5%. You can find your rate from the simplified tax table (2008)(excel spreadsheet download) under Resources ---> Publications on the English NTS site.

salary 0f 2 000 000 per month: Monthly withholding of 31 190
salary of 2 200 000 per month: Monthly withholding of 39 930
salary of 2 400 000 per month: Monthly withholding of 52 130
salary of 2 600 000 per month: Monthly withholding of 75 100
salary of 3 000 000 per month: Monthly withholding of 132 250

So, to the OP: Yes, that sounds about right. (as long as you were getting a healthy refund after your employer did your your end tax settlement up to the beginning of this year - otherwise your employer has been stealing 300 000 to 1 000 0000W each year from you depending on what additional deductions you submitted in addition to the 30%reduction.)