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Mariposa1418
Joined: 06 Dec 2009
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 Posted: Mon Jan 31, 2011 5:25 am Post subject: No residency certificate. Will I have to pay in? |
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| I'm from the U.S. and about to finish up my contract with a public school. To be honest, I was just too lazy to fill out the Residency Certificate when I came here, and after I arrived, was told there was no point. Am I liable to pay taxes in both countries now? This contract is done in a month. Is there a point in trying to fill out the form? |
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isitts
Joined: 25 Dec 2008
Location: Korea
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| Posted: Mon Jan 31, 2011 7:19 am Post subject: Re: No residency certificate. Will I have to pay in? |
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| Mariposa1418 wrote: |
| I'm from the U.S. and about to finish up my contract with a public school. To be honest, I was just too lazy to fill out the Residency Certificate when I came here, and after I arrived, was told there was no point. Am I liable to pay taxes in both countries now? This contract is done in a month. Is there a point in trying to fill out the form? |
I'm assuming you've been working in Korea one or two years?
You won't need to pay in both countries. If you didn't get the certificate, then you're liable for Korean taxes. You can submit the 2555 or 2555ez to be exempt from paying tax in the US.
If you're leaving in a month, you won't get the certificate in time anyway. Better to pay Korean tax than US tax. |
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isitts
Joined: 25 Dec 2008
Location: Korea
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| Posted: Mon Jan 31, 2011 7:26 am Post subject: Re: No residency certificate. Will I have to pay in? |
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| Mariposa1418 wrote: |
| I'm from the U.S. and about to finish up my contract with a public school. To be honest, I was just too lazy to fill out the Residency Certificate when I came here, and after I arrived, was told there was no point. Am I liable to pay taxes in both countries now? This contract is done in a month. Is there a point in trying to fill out the form? |
There is no point in getting the certificate unless you're trying to use the loophole to avoid paying taxes in both countries.
If you get the certificate, then you have to pay tax in the US (which is a higher rate than Korea, so still can't figure out why people want it).
If you don't get the certificate, then you pay tax in Korea (and file the 2555 with your 1040 so you don't get taxed in the US). |
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passport220
Joined: 14 Jun 2006
Location: Gyeongsangbuk-do province
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| Posted: Mon Jan 31, 2011 7:46 pm Post subject: Re: No residency certificate. Will I have to pay in? |
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| isitts wrote: |
...If you get the certificate, then you have to pay tax in the US (which is a higher rate than Korea, so still can't figure out why people want it)... |
Because the US tax code allows for an aprox 91K exclusion of foreign earned income. For most US teachers their US tax bill will be zero. |
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isitts
Joined: 25 Dec 2008
Location: Korea
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| Posted: Mon Jan 31, 2011 8:40 pm Post subject: Re: No residency certificate. Will I have to pay in? |
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| passport220 wrote: |
| isitts wrote: |
...If you get the certificate, then you have to pay tax in the US (which is a higher rate than Korea, so still can't figure out why people want it)... |
Because the US tax code allows for an aprox 91K exclusion of foreign earned income. For most US teachers their US tax bill will be zero. |
You can only file for that exclusion if the US is not your tax home. But the residency certificate is saying it is your tax home. So your tax is not zero.
...unless you file for the exclusion under the physical presence test. This has been discussed to death on other forums. I didn't mention it here because it's a loophole that's a little tricky to jump through and because the OP is out in a month. |
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passport220
Joined: 14 Jun 2006
Location: Gyeongsangbuk-do province
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| Posted: Mon Jan 31, 2011 8:53 pm Post subject: Re: No residency certificate. Will I have to pay in? |
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| isitts wrote: |
| passport220 wrote: |
| isitts wrote: |
...If you get the certificate, then you have to pay tax in the US (which is a higher rate than Korea, so still can't figure out why people want it)... |
Because the US tax code allows for an aprox 91K exclusion of foreign earned income. For most US teachers their US tax bill will be zero. |
You can only file for that exclusion if the US is not your tax home. But the residency certificate is saying it is your tax home. So your tax is not zero.
...unless you file for the exclusion under the physical presence test. This has been discussed to death on other forums. I didn't mention it here because it's a loophole that's a little tricky to jump through and because the OP is out in a month. |
Yeah, people are confused "to death" about the term "tax home" (they imagine what it might mean, instead of reading what is written in the IRS code). The foreign income exclusion applies to US citizens teaching English in Korea. You need to be in Korea for the full tax year, if you meet that test, the exclusion is a perfectlly appropriate to claim to make. |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Tue Feb 01, 2011 6:06 pm Post subject: Re: No residency certificate. Will I have to pay in? |
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| isitts wrote: |
There is no point in getting the certificate unless you're trying to use the loophole to avoid paying taxes in both countries.
If you get the certificate, then you have to pay tax in the US (which is a higher rate than Korea, so still can't figure out why people want it).
If you don't get the certificate, then you pay tax in Korea (and file the 2555 with your 1040 so you don't get taxed in the US). |
It's a fantastic loophole though!
The PPT, physical presence test, is needed if you file the 8802. Like ittis said, there are threads about it. Try seraching. I'd paste the threads, but the search function isn't woriing for me.
You can still file the 2555 long form even if the US IS your tax home via the PPT. AND get out of Korean taxes. .LIke I said, it's a fantastic loophole! |
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isitts
Joined: 25 Dec 2008
Location: Korea
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EmGen
Joined: 27 Oct 2009
Location: Bucheon
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| Posted: Sun Feb 06, 2011 3:22 pm Post subject: |
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When does that residency certificate need to be completed? Just before your contract ends in Korea?
Can I fill it out before I leave for Korea? I've gotten a job but I don't have an address for where I'm staying yet, and I think that it asks for that on the form. Do I need to fill that out and give it to my school before my first day? |
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kimc0486
Joined: 17 Nov 2010
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| Posted: Sun Feb 06, 2011 10:34 pm Post subject: |
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I just received my contract and it stated that I had to have the tax exemption (the 8802) filed before my first pay check, or else I have to pay tax. I just found this out and according to the IRS it takes about 45 days to get back...starting work on the 1st of March. Does that sound right?
If I can't submit the 8802 because of timing, then I pay tax in Korea (4.5% right?) but I don't have to pay taxes in the US?
Very confused and feel like I am reading conflicting info...thanks for the help. |
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