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JFuller317
Joined: 10 Oct 2008
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 Posted: Thu Oct 28, 2010 9:30 pm Post subject: Forgot to file for tax exemption. What will happen? |
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When I first got to Korea I heard about the tax exemption U.S. citizens get for their first two years here. My co-teacher told me to turn in a proof of U.S. tax residency form, but I put off doing it for awhile. Later I noticed that I was never having any taxes deducted from my paycheck, and after awhile I just forgot about it.
Now I'm in my 11th month. Last week I was told that I need to turn in the proof of U.S. tax residency form by the end of the month, or I won't be eligible for the tax exemption. Obviously that's not happening in such a short timespan. In fact, it might not even be possible to get Form 6166 by the time I leave (December 6th).
So here's my question: next month will they just deduct taxes for November (something like 100k), or will they go back and deduct taxes for the entire year (over 1 mil)? |
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Ramen
Joined: 15 Apr 2008
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| Posted: Thu Oct 28, 2010 9:53 pm Post subject: |
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IRS will hang you!
As long as you don't owe any money back to IRS, you're fine. Just file it late.  |
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JFuller317
Joined: 10 Oct 2008
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| Posted: Thu Oct 28, 2010 9:57 pm Post subject: |
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| I'm not worried about the American side of things, but the Korean side of things. Kinda scared that they're gonna go back and deduct back taxes for every month that they haven't been deducting them until now. |
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Ramen
Joined: 15 Apr 2008
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| Posted: Thu Oct 28, 2010 10:01 pm Post subject: |
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| JFuller317 wrote: |
| I'm not worried about the American side of things, but the Korean side of things. Kinda scared that they're gonna go back and deduct back taxes for every month that they haven't been deducting them until now. |
Most likely your school will pay taxes between december - february for a whole year. so save up some money for that. |
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passport220
Joined: 14 Jun 2006
Location: Gyeongsangbuk-do province
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| Posted: Thu Oct 28, 2010 10:09 pm Post subject: |
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You're right that you don't have to worry about the IRS. The certificate will only be scrutinized by your school paper pusher in the admin office. If they are satisfied that the rule has been met, they won't deduct tax and you are done.
For me, I saw a copy of a �proof of residency� certificate in the file of the Foreign Teacher who worked at my school previous to me. His was only from his home state of Georgia. I followed suit and supplied a certificate from my home state of Illinois and it worked.
Check with your home state, the process maybe a lot quicker and less bureaucratic than going through the IRS. Check to see if your home state has a website for their state level revenue department. |
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runthegauntlet
Joined: 02 Dec 2007
Location: the southlands.
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| Posted: Fri Oct 29, 2010 1:38 am Post subject: |
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| Ramen wrote: |
IRS will hang you!
As long as you don't owe any money back to IRS, you're fine. Just file it late. |
Something I've never been real clear on and have heard differing tales about.
By claiming U.S. residence and not paying Korean taxes, are you in fact required to pay American taxes or is the overseas income limit (90k or whatever) still in effect? |
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passport220
Joined: 14 Jun 2006
Location: Gyeongsangbuk-do province
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| Posted: Fri Oct 29, 2010 2:48 am Post subject: |
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| runthegauntlet wrote: |
| Ramen wrote: |
IRS will hang you!
As long as you don't owe any money back to IRS, you're fine. Just file it late. |
Something I've never been real clear on and have heard differing tales about.
By claiming U.S. residence and not paying Korean taxes, are you in fact required to pay American taxes or is the overseas income limit (90k or whatever) still in effect? |
Yes, you are required to file a US tax return. Yes, unless you have other significant income from investments, interest, etc. you would likely not own any US tax due to the overseas income exemption. |
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runthegauntlet
Joined: 02 Dec 2007
Location: the southlands.
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| Posted: Fri Oct 29, 2010 3:30 am Post subject: |
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| passport220 wrote: |
| runthegauntlet wrote: |
| Ramen wrote: |
IRS will hang you!
As long as you don't owe any money back to IRS, you're fine. Just file it late. |
Something I've never been real clear on and have heard differing tales about.
By claiming U.S. residence and not paying Korean taxes, are you in fact required to pay American taxes or is the overseas income limit (90k or whatever) still in effect? |
Yes, you are required to file a US tax return. Yes, unless you have other significant income from investments, interest, etc. you would likely not own any US tax due to the overseas income exemption. |
Yeah, always required to file. Seems odd that we can get out of paying any tax anywhere. I was under the impression that the 'tax treaty' was to prevent double taxation, not provide an outlet for people to avoid paying any taxes at all. |
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JFuller317
Joined: 10 Oct 2008
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| Posted: Fri Oct 29, 2010 6:20 am Post subject: |
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| So basically the consensus is that I'm going to get hit with a year's worth of taxes next month? |
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passport220
Joined: 14 Jun 2006
Location: Gyeongsangbuk-do province
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| Posted: Fri Oct 29, 2010 8:32 am Post subject: |
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| runthegauntlet wrote: |
| Yeah, always required to file. Seems odd that we can get out of paying any tax anywhere. I was under the impression that the 'tax treaty' was to prevent double taxation, not provide an outlet for people to avoid paying any taxes at all. |
You are still subject to the US tax code. It just works out for most foreign teachers that they will not owe due to the exemption. If you look at the stats, you might be surprised how many Americans living and working in America, who earn under 25K per year avoid paying any tax due to exemptions.
| JFuller317 wrote: |
| So basically the consensus is that I'm going to get hit with a year's worth of taxes next month? |
It is up to the school administrator what they withhold. If they are telling you they will withhold the tax, then yeah, it sounds like it.
I had my certificate back from the state of Illinois within 3 days via fax. Bring in what you can early next week and see what you can avoid from being withheld. |
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passport220
Joined: 14 Jun 2006
Location: Gyeongsangbuk-do province
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| Posted: Sun Oct 31, 2010 12:14 am Post subject: |
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I had two PMs asking about how I got the cert., my reply:
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Sorry, I requested my certificate back in late 2007 and I don't have a link / details anymore. At that time, I looked at the Illinois Department of Revenue website, found a contact name in a department that looked like it would fit and sent off an email to her.
The �residency certificate� was a surprisingly simple document, just a one sentence statement that I was a resident of Illinois. It was signed by a low level Illinois revenue department official. I had a Illinois e-fax number at that time and the clerk at the revenue department faxed it to that number. The fax was delivered to my email and I printed it out from my email inbox. I think the fax number stamp at the top of the document made it understandable to my Korean public school administrator how I got the certificate so quickly. |
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