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My school says they have to deduct 940,000 won for taxes!!!
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b-class rambler

Joined: 25 Mar 2009

Posted: Wed Dec 12, 2012 5:53 pm Post subject:

Taylormade wrote:

I get my pay receipt each month. There are several things deducted. It's naturally all in Korea, and I just assumed that one of the deductions was tax. Confused

In that case, the mistake is as much yours as theirs. In fact, they haven't done anything wrong at all by doing it this way. It's not the usual way, but it's still perfectly legitimate to deduct your tax as one lump sum at the end of the tax year. And you can't say they've been hiding it from you as it'll have been on your pay slips.

I don't totally lack sympathy as it's obviously a sizeable amount and something you didn't expect and your mistake is one many of us will have made sometime or other. But I'm afraid you'll just have to take this as one of those 'lesson learned' kinda things - check your pay slips, check you understand them and if you don't, then make sure you find out.

Something else I'd suggest, is that you file a year end tax return (get a Korean to help you if necessary) and claim every tax deductible item that you can. You might well find that this will considerably reduce your 940,000 deduction. The same happened to me a few years ago, similar to a poster above where I hadn't paid tax for 2 years and then in the 3rd year they deducted it all at the end. I was totally expecting it and was then pleasantly surprised that the lump sum of just over a million due in tax came down to not much over 100,000 after the tax adjustment calculation. I had a number of one-off expenses that very luckily fell in that particular tax year to make that much difference and I doubt you'd reduce it by that much. But I expect you could at least shave a little off that 940,000.

fustiancorduroy

Joined: 12 Jan 2007

Posted: Wed Dec 12, 2012 6:43 pm Post subject:

edwardcatflap wrote:

Quote:

I work as independent contractor. My tax rate is therefore 3.3 percent. Perhaps there is something I do not understand about my situation, but I have always read that this is the correct tax rate for my status. I do pay less than this total each year, but that's because I use a tax consultant to file my taxes. There is nothing illegal about what he does. He just finds ways to get refunds on my money. That's not illegal. That's just being smart.

You said in an earlier post that your income was around 8 million a month so unless you were you lying about that, you should be paying around 15%. Did you really think you could just carry on making as much as you wanted here and never go above 3.3% legally? Plenty of teachers avoid tax here but it's a bit rich when they also lecture people on respecting Korean culture.

My academy takes taxes out of my paycheck every month at the rate of 3.3 percent. The same is true for nearly every other teacher at my academy, save for a couple who chose not to be independent contractors. My taxes are filed every year through the proper channels. So far, I haven't been asked to pay extra money. If I'm doing something illegal, then the government hasn't told me otherwise.

In any case, this thread isn't about me, so I'll refrain from taking it further off topic.

edwardcatflap

Joined: 22 Mar 2009

Posted: Wed Dec 12, 2012 7:03 pm Post subject:

[quote]In any case, this thread isn't about me, so I'll refrain from taking it further off topic. [quote] Yeah I bet you will

edwardcatflap

Joined: 22 Mar 2009

Posted: Wed Dec 12, 2012 7:17 pm Post subject:

Quote:

You either lied about how much money you make or you're a tax dodger. There's no other way you'd be making 8 mil a month and paying 3.3%. And as I'm sure you know, ignorance is no excuse from the law

Wildbore

Joined: 17 Jun 2009

Posted: Wed Dec 12, 2012 9:57 pm Post subject:

edwardcatflap wrote:

Quote:

You either lied about how much money you make or you're a tax dodger. There's no other way you'd be making 8 mil a month and paying 3.3%. And as I'm sure you know, ignorance is no excuse from the law

He is right, you are wrong. Independent contractors have 3.3% withheld regardless of the total amount. This is specifically noted in the Korean Income Tax act. Go read it. Employees are are a sliding scale, the more you make the more the employer withholds.

We are not talking about tax liability, that is decided by the yearly tax return (or the year-end settlement for employees).

edwardcatflap

Joined: 22 Mar 2009

Posted: Wed Dec 12, 2012 10:20 pm Post subject:

Quote:

We know that, Ttompatz explained it on page one

Quote:

AS in independent contractor your withholding rate is 3.3%.
Your ACTUAL rate of taxes due will depend on your gross earning and deductions. Your advantage is that you are allowed some deductions that an "employee" doesn't get.

At the end of the day however you pay taxes according to the SAME scale as an employee on your taxable income.

Note the final line. If he is paying 3.3% of his total yearly salary he's presumably not declaring his entire income. Or lying on here about how much it is

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