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Korean Job Discussion Forums
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Yada Yada
Joined: 21 Aug 2011
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 Posted: Mon Aug 22, 2011 2:07 pm Post subject: Korean Taxes |
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| I have worked at a Hagwon for three years and signed on for a final fourth year. Have not paid taxes at all. New boss wants me to start paying tax. What should the rate be? I called the tax office and they said I am classified as an "Independent Contractor" and it should be 3.3%. I told her it is illegal to be classified as such on an E-2 Visa and that I was an employee and the rate should be lower. The more people I talk with the more answers I get. Also, would I be responsible for back taxes and again at what rate? I am from the U.S. I want to do the right thing, but I am tempted to just let things stay the same. I can't be the only one in this situation. |
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nathanrutledge
Joined: 01 May 2008
Location: Marakesh
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| Posted: Mon Aug 22, 2011 7:36 pm Post subject: |
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Well, there is the whole treaty on double taxation - you fill out the form and you're liable for taxes only in the US or in Korea. That's only good for two years however. Beyond that, you have to pay taxes in Korea.
I don't know how/if they have grace periods, etc here, but I'm pretty sure you're liable for those taxes. Best bet, get a lawyer who knows tax law here and get it hashed out. If you didn't pay taxes, did you pay pension and insurance? Most of that stuff is linked together, so if you weren't paying one, I wouldn't be surprised if you weren't paying the other and that's why this is something you probably want to talk to a lawyer about. You could be liable for upwards of 10 million won (assuming an income of 2 mil per month, that's 3 mil in pension from you, about 1.75 mil for insurance, and 1 mil in taxes at 1.5% on gross income, PLUS fines and penalties - also, take those pension and insurance numbers and double them to include what the employer owes).
I'm no lawyer, but I read enough (and had tax trouble with the US because of my Korean income) that I know if I were you, I'd be a bit uncomfortable right now. Of course, if you can get the exemptions for those first two years, and your employer has been paying pension/insurance, then you're really not in any trouble whatsoever - maybe a few late fees, but nothing major. Good luck. |
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wishfullthinkng
Joined: 05 Mar 2010
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| Posted: Mon Aug 22, 2011 8:13 pm Post subject: |
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| i want to pay 3.3%... right now i'm paying 11% and in the states close to 19%... ugh |
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nathanrutledge
Joined: 01 May 2008
Location: Marakesh
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| Posted: Mon Aug 22, 2011 8:15 pm Post subject: |
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| wishfullthinkng wrote: |
| i want to pay 3.3%... right now i'm paying 11% and in the states close to 19%... ugh |
You know, the 3.3% is ONLY income tax - it's not every other deduction coming out, right? |
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wishfullthinkng
Joined: 05 Mar 2010
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| Posted: Mon Aug 22, 2011 9:20 pm Post subject: |
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| nathanrutledge wrote: |
| You know, the 3.3% is ONLY income tax - it's not every other deduction coming out, right? |
ah the op never stated it was income tax, just "taxes". if i look at just my income tax i'm still around 7% i think. |
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nathanrutledge
Joined: 01 May 2008
Location: Marakesh
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| Posted: Mon Aug 22, 2011 9:27 pm Post subject: |
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| wishfullthinkng wrote: |
| nathanrutledge wrote: |
| You know, the 3.3% is ONLY income tax - it's not every other deduction coming out, right? |
ah the op never stated it was income tax, just "taxes". if i look at just my income tax i'm still around 7% i think. |
Well, technically, they're all payroll taxes - deducted from the check. The 3.3% would be total because, as an independent contractor, pension/insurance is not being paid. The theory is that the contractor is paying it separately, because he has multiple contracts/multiple jobs. That's never the case with an E2 visa holder though.
But I just wanted to clarify - a lot of people say "oh yeah, I pay 10%-15%, etc," and other people say "you're an idiot! You should be paying under 2%!" So yeah, you're paying 11% PAYROLL taxes, but much less on the actual INCOME tax portion of it.
My question to YOU is - why are you paying taxes here AND in the US? The foreign earned income exemption is around 90,000 dollars per year - i.e., you only pay taxes if you make MORE than that. Again, talking ONLY about income tax - not capital gains or other investment income taxes. If you're making more than 90k, I'd imagine your Korean taxes would be higher, in which case, you'd want to take exemption of the 15% flat rate. Not wanting to pry into your income, but it seems like you're paying more than you should be? |
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Yada Yada
Joined: 21 Aug 2011
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| Posted: Tue Aug 23, 2011 1:20 am Post subject: Korean Taxes |
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| I have been paying insurance the whole time. I want to go to the tax office for help, but every time I call and talk to someone I get different answers. Anybody know a good lawyer? |
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