Korean Job Discussion Forums

[working title]

Does anyone know if your end-of-year severance is taxable?

I'll be receiving mine in August for a three-year stint (three years worth of severance) in a p.s. Two of those years when the severance was earned, I was tax exempt.

My question is, will I be taxed on all three years? (this year I began paying taxes)

[Hotpants]

Yes - taxable.

Can't believe you held out for 3 yrs without severance, though. I hope you get what's due. Not sure how it will work, since severance should be calcuated as the average of your final 3 months' gross of salary.

[lifeinkorea]

[ontheway]

Hindsight:

Teachers should collect their severance annually during their first two years if they are tax exempt during those years.

By collecting your severance for the first two years during your third year you will be taxed on the whole amount, and at a higher rate.

[working title]

I agree with the above poster, I guess hindsight is always 20/20. In the end I should have checked into this and gotten my severance beforehand.

I work for SMOE and according to their regs, I needed to wait until I left SMOE to get my severance. Three years with SMOE. And yes, I was tax exempt for the first two years.

Alright, there's really nothing I can do about it now except figure out my tax bracket this year. Also, I need to start saving receipts for deductions.

Thanks for the info guys, I hope this thread serves as a warning for future SMOErs.

Edit: I just checked my tax bracket with and without the extra two years worth of severance. The increased amount I will receive (2.3 million x 3 years as opposed to 2.0 + 2.2 + 2.3) and the increased amount of paid taxes is about the same (W400,000) So waiting to get my severance now or getting it before, in the end it's all basically a wash.

[naturegirl321]

Count yourself lucky. I have a friend who changed schools last year and asked for her severance. They said, no, severance is only for people who are leaving Korea. You don'�t get anything.

[working title]

As for SMOE, when you leave SMOE, they will pay you your severance x amount of years of service.

So, if I left SMOE for a new job with EPIK in Busan, they would have to pay me severance.

Pension, on the other hand, is a different matter.

[OculisOrbis]

[Njord]

If you are staying at the same school and wish to get your severance after one year, you need to fill out a Korean document which translates to "application for early severance payment." The accountant at your school should be able to help with this. However, there are pros and cons to taking the severance early:

pros:
Money is in your pocket
Avoid taxes if you are in your first two years

cons:
Miss out on increase in salary (severance calculated on your last salary)
Do not get partial-year severance if you have to quit before another full year
Some schools might give you a hard time

Really depends on your personal situation.

[naturegirl321]

[deadhead]

I will receive my severance pay next month for working 1 year at my hagwon. I have lived in Korea for 3 years, but I forget how it works.

Will I have to pay taxes on my severance pay? For example: If my severance pay is 1,000,000, will I receive 1,000,000, or will I receive less?

I'm sorry if this answer is already somewhere in here, but if it is, I don't understand At least I didn't make another post!

[Who's Your Daddy?]

Get your severance every year end, even if you're continuing the hogwon. I've never had a problem insisting on that.

[cj1976]

I'm in my 5th year with SMOE and my first year was tax-exempt. Oh well. I wonder how much I will actually get after the taxman takes his pound of flesh.

[Who's Your Daddy?]

You've lost interest income. Also you've risked an increase in tax rates, and non-payment.

[r122925]