Korean Job Discussion Forums

desultude · Posted: Mon May 05, 2003 4:15 pm Post subject: U.S. income tax on ex-pats

The Herald Tribune had an article in the last couple of days saying that there may be an effort by the Bush administration to revoke the tax exemption for money earned abroad by U.S. citizens. I am sure that the administration is considering all options to raise taxes on the politically hopeless so they can support their tax cuts for the politically influential. On the other hand, lots of wealthy U.S. business people benefit from the exemption, so there will be some resistence. It will be interesting to see how this plays itself out, but I think that working in Korea would be a lot less appealing to me if Uncle Sam Bush gets a big bite of my wages.

whatthefunk · Joined: 21 Apr 2003 Location: Dont have a clue

You are supposed to pay taxes on internationally earned income unless you have lived in that country for a certain amount of time or unless you meet certain requirements. I say that if they want to collect my tax money, they can come to korea and get it from me...hopefully they don't feel the need to do this though.

whatthefunk · Joined: 21 Apr 2003 Location: Dont have a clue

Check out the IRS internet site...

[url]http://www.irs.gov/businesses/small/international/article/0,,id=96796,00.html[/url]

desultude · Posted: Tue May 06, 2003 3:57 am Post subject:

Yes, You are supposed to pay taxes on income, but I believe that there is an exemption for income under $70,000.

The article I read said that the administration was considering eliminating the $70,000 exemption.

I would like to think that they won't come here to collect it, but I am not ready to give up my citizenship (yet anyway, another Bush administration and I will give it serious consideration), so I don't want to become a tax evader. I hope that the idea is just a political trial balloon, and it will be shot down by international business interests. We teachers abroad are definitely politically expendable- most of us probably don't vote anyway, and I doubt any are big campaign contributors.

rudyflyer · Joined: 26 Feb 2003 Location: pacing the cage

Pilcrshr · Joined: 22 Jan 2003 Location: Seoul, Korea

kayakorea · Joined: 06 May 2003

it's about a potential audit when you start working in the States again.....

If you spend a whole year living abroad (you can return home during that year but for no more than one month) you are exempt for any income you earn up to 80,000. But even if you are exempt you still are required to file a return every year (by June - you get a filing extension). A lot of folks don't and if I were them I would be worried that if and when they do return home and start working, when they file that first return in 1-10 years the IRS is probably going to be more than a little curious about why they hadn't been filing all that time and might slap you with an audit.

If Bush has his way, it's still the same problem. Sure they're not gonna come get your money from you. But if you don't file a return from Korea, when you do start working in the States again they're going to notice the gap and you risk an audit.

If Bush has his way, I think the game will be up for a lot of us here.

Maybe I'm wrong about their record keeping abilities and diligence in noticing past non-filers. What do you think?

Romulus · Joined: 07 May 2003 Location: Ilbon/Japan

The exemption is for under $80,000 but you are responsible for SSI payments and if you dont file anything you might need in the future can be held up as I found out from the Consulate here in Japan ie.your spouses visa etc.

Kwangjuchicken · Posted: Tue Dec 27, 2005 6:12 am Post subject:

Be it the first 70,000 or the first 80, 000 here is my question. Everything I see is so confusing. Is it first 70,000 per year, or does it add up over the years. The wording is so strange. If it said, a yearly foreign income of 70,000 or less is tax free, then ok. But this first 70,000 makes it sound like total lifetime overseas. As a matter of fact, at this moment I know people who are saying it starts fresh each year and others who say it adds up year to year to that being the max. Even a friend of mine in the USA who is a CPA can not answer this for me. So, is it yearly total , or life time total?

bluelake · Joined: 01 Dec 2005

It's per year.

desultude · Posted: Wed Feb 01, 2006 2:23 pm Post subject:

Yes, I sat down with my CPA in Miami yesterday, and it is per year. Funny though, he said that on the form it is an "election"- like "I elect (choose) to have this income not taxed". It is normally not a problem, but apparently it is not a given, either. There are certain provisions that you must meet to be eligible.

Yeah, I have been in Korea for three years- and I am just now filing my taxes for all three years in the States. Embarassed

If you owe no taxes, and you don't get "caught", there are no real penalties for filing late.

There is one other thing that is important about filing- if you have assets in "financial institutions" outside of the States in excess of $10,000, you have to report it. My accountant said that this was a little noticed requirement before, but with the beloved Patriot Act, it is now getting close scrutiny.