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nathanrutledge
Joined: 01 May 2008
Location: Marakesh
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 Posted: Wed Feb 16, 2011 7:04 pm Post subject: |
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| Slowmotion wrote: |
I don't understand this system. The more I use my check card the less I get taxed? I have to pay back taxes because I didn't use my check card enough 
Can we get those cards for cash purchases like Korean people?
What about money like paying rent and bills that are wired? |
The system is designed to punish tax cheats. IF you use your card OR register with the system for cash purchases of 5000 won or more, then you can get tax rebates. It's a way to force businesses to pay their taxes.
Use your card. At the end of the year, you get a letter from your bank showing how much you spent. You can then use that for rebates. Same thing if you register for cash receipts.
Anyone who pays taxes in Korea can get them. As far as rent and bills, I don't know. IF they are qualified then yes, the bank will report them on your statement, and you're set. I wouldn't worry about them, just make sure you're registered and it will work itself out. |
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red_devil
Joined: 30 Jun 2008
Location: Korea
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Slowmotion
Joined: 15 Aug 2009
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| Posted: Wed Feb 16, 2011 9:49 pm Post subject: |
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| nathanrutledge wrote: |
| Slowmotion wrote: |
I don't understand this system. The more I use my check card the less I get taxed? I have to pay back taxes because I didn't use my check card enough
Can we get those cards for cash purchases like Korean people?
What about money like paying rent and bills that are wired? |
The system is designed to punish tax cheats. IF you use your card OR register with the system for cash purchases of 5000 won or more, then you can get tax rebates. It's a way to force businesses to pay their taxes.
Use your card. At the end of the year, you get a letter from your bank showing how much you spent. You can then use that for rebates. Same thing if you register for cash receipts.
Anyone who pays taxes in Korea can get them. As far as rent and bills, I don't know. IF they are qualified then yes, the bank will report them on your statement, and you're set. I wouldn't worry about them, just make sure you're registered and it will work itself out. |
But why punish people who are trying to save money or use their money in other means? |
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nathanrutledge
Joined: 01 May 2008
Location: Marakesh
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| Posted: Wed Feb 16, 2011 10:02 pm Post subject: |
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| Slowmotion wrote: |
| nathanrutledge wrote: |
| Slowmotion wrote: |
I don't understand this system. The more I use my check card the less I get taxed? I have to pay back taxes because I didn't use my check card enough
Can we get those cards for cash purchases like Korean people?
What about money like paying rent and bills that are wired? |
The system is designed to punish tax cheats. IF you use your card OR register with the system for cash purchases of 5000 won or more, then you can get tax rebates. It's a way to force businesses to pay their taxes.
Use your card. At the end of the year, you get a letter from your bank showing how much you spent. You can then use that for rebates. Same thing if you register for cash receipts.
Anyone who pays taxes in Korea can get them. As far as rent and bills, I don't know. IF they are qualified then yes, the bank will report them on your statement, and you're set. I wouldn't worry about them, just make sure you're registered and it will work itself out. |
But why punish people who are trying to save money or use their money in other means? |
If you are an individual taxpayer or a dependent of a taxpayer, the main taxpayer is able to receive a 20-percent deduction on his/her year-end tax settlement on the amount of total cash spending that exceeds 20 percent of one�s reported yearly income, up to a total of 5 million won.
That means that as long as you spend 1/5 of your income, you get the rebate. If you spend all of your income, you only get a rebate of up to 5 million. Thus, someone who earns 2 mil a month has to spend 400k a month to become eligible for the rebate. Also, there is a limit of 20% on the income.
Thus, a person who earns 2 mil a month has a year end total income of 24 mil (let's ignore the flight/housing/bonus). At a rate of 2.5%, their tax bill would be 600,000. They are only eligible to deduct 120k using this system. If they spend 4.8 million PLUS 120k, they will have maxed out their deduction. If they spend all of 5000 won per meal, 3 meals a day, 365 days a year, they will have spent 5,475,000 over the course of the year, and they have maxed out the deduction.
Long story short, everyone is qualified and no one is punished except tax cheats. |
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OculisOrbis
Joined: 17 Jul 2006
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| Posted: Wed Feb 16, 2011 10:09 pm Post subject: |
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| nathanrutledge wrote: |
| The system is designed to punish tax cheats. IF you use your card OR register with the system for cash purchases of 5000 won or more, then you can get tax rebates. It's a way to force businesses to pay their taxes |
I believe it is only a minimum of 500W to register a purchase - so basically anything you might buy, use the card.
Actually, just found this. It's been 1 won since 2008 - so use the card for EVERY cash purchase.
"Thus, the government began the cash receipt system, through which cash incentives are offered to consumers to help track taxable transactions. The threshold for registering transactions stood at 5,000 won ($3.75) until June 2008, when it changed to 1 won beginning in July of that same year. "
http://joongangdaily.joins.com/article/view.asp?aid=2903760 |
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Slowmotion
Joined: 15 Aug 2009
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| Posted: Wed Feb 16, 2011 10:20 pm Post subject: |
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| nathanrutledge wrote: |
| Slowmotion wrote: |
| nathanrutledge wrote: |
| Slowmotion wrote: |
I don't understand this system. The more I use my check card the less I get taxed? I have to pay back taxes because I didn't use my check card enough
Can we get those cards for cash purchases like Korean people?
What about money like paying rent and bills that are wired? |
The system is designed to punish tax cheats. IF you use your card OR register with the system for cash purchases of 5000 won or more, then you can get tax rebates. It's a way to force businesses to pay their taxes.
Use your card. At the end of the year, you get a letter from your bank showing how much you spent. You can then use that for rebates. Same thing if you register for cash receipts.
Anyone who pays taxes in Korea can get them. As far as rent and bills, I don't know. IF they are qualified then yes, the bank will report them on your statement, and you're set. I wouldn't worry about them, just make sure you're registered and it will work itself out. |
But why punish people who are trying to save money or use their money in other means? |
If you are an individual taxpayer or a dependent of a taxpayer, the main taxpayer is able to receive a 20-percent deduction on his/her year-end tax settlement on the amount of total cash spending that exceeds 20 percent of one�s reported yearly income, up to a total of 5 million won.
That means that as long as you spend 1/5 of your income, you get the rebate. If you spend all of your income, you only get a rebate of up to 5 million. Thus, someone who earns 2 mil a month has to spend 400k a month to become eligible for the rebate. Also, there is a limit of 20% on the income.
Thus, a person who earns 2 mil a month has a year end total income of 24 mil (let's ignore the flight/housing/bonus). At a rate of 2.5%, their tax bill would be 600,000. They are only eligible to deduct 120k using this system. If they spend 4.8 million PLUS 120k, they will have maxed out their deduction. If they spend all of 5000 won per meal, 3 meals a day, 365 days a year, they will have spent 5,475,000 over the course of the year, and they have maxed out the deduction.
Long story short, everyone is qualified and no one is punished except tax cheats. |
I'm confused because I had to pay back 200,000 this year. I sent about 8 million back to the states. Also tend to use cash a lot. This puts in the same boat as tax cheats?
Anyone know if we can get one of those cards for cash purchases that Koreans use? |
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nathanrutledge
Joined: 01 May 2008
Location: Marakesh
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| Posted: Wed Feb 16, 2011 10:23 pm Post subject: |
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This has been a cash based society for centuries. The government does this to catch BUSINESSES not paying taxes. Since businesses MUST issue a receipt it allows the government to track businesses that are cheating, effectively turning the entire country into tax narcs. But, it's been an outstanding success.
Yes, you can register. It's easy. The link that occulis put up has the information on it.
www.taxsave.go.kr |
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OculisOrbis
Joined: 17 Jul 2006
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| Posted: Wed Feb 16, 2011 10:24 pm Post subject: |
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Yes, its possible. Every foreigner should have one unless they make all their purchases with their credit or cheque card or they like the large year end tax bill.
http://joongangdaily.joins.com/article/view.asp?aid=2903760
English instructions for the application site here.
Or if you live near a tax office, you can go there and get one. It's actually easier that way. |
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Slowmotion
Joined: 15 Aug 2009
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| Posted: Wed Feb 16, 2011 10:34 pm Post subject: |
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Thanks for the info guys.
So people who send money home or wire pay bills/rent through the atm, are they screwed? Or is there a way to submit that as well?
Also did they stop the whole two years tax free at a public school thing? This is my second year in a public school (third year in Korea) but I'm having to pay taxes unless my school is doing it wrong.
EDIT: Gotta love these Korean websites, always have to install active x junk. On top of that, the program wouldn't install properly, then it suddenly disabled my keyboard. I couldn't type lol
So I had to reboot and reinstall my keyboard drivers. |
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Zach with a Z
Joined: 19 Feb 2009
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| Posted: Thu Feb 17, 2011 3:51 pm Post subject: |
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I've been told I can file for a tax exemption thing if I get that thing from the IRS. I am American at a public school.
Is there a deadline for this? I called the tax office guy and he told me, that I first pay the 1.5 million that I owe (for some reason...) and then I send them the residency cert; and then I can apply for the exemption and get back the 1.5 on a later date.
I do not have the cert yet; as last year the IRS never sent it to me and I just forgot/put it off.
Has anyone ever gotten the certification after paying tax? insight?
thnks |
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Draz
Joined: 27 Jun 2007
Location: Land of Morning Clam
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| Posted: Fri Feb 18, 2011 7:49 pm Post subject: |
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| nathanrutledge wrote: |
If you are an individual taxpayer or a dependent of a taxpayer, the main taxpayer is able to receive a 20-percent deduction on his/her year-end tax settlement on the amount of total cash spending that exceeds 20 percent of one�s reported yearly income, up to a total of 5 million won. |
Oh is that how it works? That explains why it made no difference whatsoever when I put it in the tax calculator. I used my card for EVERYTHING possible this year, and still ended up spending less than 20%.
This year is going to be different though! It's only February and I've already spent half of the total for my credit card last year. Hooray! |
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crossmr
Joined: 22 Nov 2008
Location: Hwayangdong, Seoul
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| Posted: Fri Feb 18, 2011 9:30 pm Post subject: |
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| nathanrutledge wrote: |
Taxes should equal between 2-3% of your income, unless you're making serious money (which, if you're on this board, you aren't).
The rules have changed to INCLUDE ALL compensation - paycheck, housing, airfare; it's all taxable.
The OLD system said that foreigners could be taxed at regular rates on 70% of their income OR take a flat 15% tax rate. This was designed to attract foreign labor, cheap and expensive. Well, NOW they've done away with the 30% tax free income, and the only options are 1) pay regular Korean tax or 2) pay a flat 15%.
A lot of schools/districts/office workers THINK that means you HAVE to pay the 15%. Obviously, the only people who want to pay 15% are the doctors/lawyers/engineers/etc who are obligated to pay a rate that is in the 30-40% range.
Let's assume that you're making 2.5 a month, that equals out to 30 over the year. Housing at 400 a month, plus airfare, and your total for the year is about 36 million. You should be paying about 750k in taxes, assuming the rate is 3% (I'm not sure of the actual rates/income levels/whether medical, pension is taxed, but it's between 2-3%).
Of course, if you came in the middle of the tax year, then you only pay on PART of the income, and you can claim lots of deductions IF you keep records. But definitely, you should not be paying over a million. |
Not according to the tax website:
http://www.nts.go.kr/eng/help/help_53.asp?top_code=H001&sub_code=HS05&ssub_code=HSE3
You can do your year end taxes there. If you're making 2.5 million a month, so about 30 million a year and have nothing to declare in terms of cash payments or anything else, you should pay 943,250W in taxes for the year.
At the top you can clearly see:
Gross Wage &Salary Income 30,000,000 KRW
Deduction for Wage &Salary Income 11,250,000 KRW
Adjusted Wage &Salary Income 18,750,000 KRW
Basic Deduction Taxpayer him/herself 1,500,000 KRW
income still gets deducted.
Anyway fill in your income there and calculate it out and see if it seems right to you.
If you're actually claiming 36 million, then it almost doubles your tax amount to 1,834,250 KRW |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Fri Feb 18, 2011 10:40 pm Post subject: |
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| Zach with a Z wrote: |
| Has anyone ever gotten the certification after paying tax? insight? |
Yep, I paid taxes in March, April and May, then in June got them all back. |
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Slowmotion
Joined: 15 Aug 2009
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| Posted: Wed Feb 23, 2011 8:20 pm Post subject: |
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Correct me if i'm wrong, but this system seems to reward people lying about their taxes.
Let's say I really make $60,000 a year but I claim I only make $30,000, I get rewarded in my taxes cuz I easily spend 20% of the 30,000 i claim I make.
Yet the man who saves most of his salary gets punished for not spending 20% of his income? I don't understand this weird system. |
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livinginkorea
Joined: 11 Jun 2004
Location: Korea, South of the border
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| Posted: Wed Feb 23, 2011 8:32 pm Post subject: |
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| I strongly recommend using your credit card for everything - drink, shopping, restaurants, taxis, buses...everything. It's easier that way in the end. |
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