Korean Job Discussion Forums

[jacl]

Guess I was.

I can see how medical and pension are deductions, but I don't see how they change the income tax. Income tax is tax on income. I did read, however, that pension benefits are taxable. So the 50% my boss pays is considered income. That does change things. I don't think it makes that much of a difference though. 100,000 Won more might still keep a lot of people in the same tax bracket or put them in not much of a different one. I don't pay health insurance so I don't know what that does for me.

[sheba]

I have no idea about the pension and health insurance....

Though I would assume you are taxed based on your entire income, not what you get after you've paid your pension and health insurance. Therefore, the money you use to pay those bills has been taxed already.

Or have I completely missed the point???

Admitedly, I'm not too clued up on that aspect.

[jacl]

Foreigners get a 30% reduction in taxes. That's what makes the rate so low. If you pay 5% on a 100% of your income then that's way too much. Should be 5% on 70% of your income. There's that to consider.

The global tax isn't anything anyone need worry about. If your home country dings you for something from information that you provide them or they acquire then so be it.

In short

Question: "Do you have income to declare from your home country or any other countries?"

Answer: "No."

I really don't get the pension/medical thing having anything to do with income tax.

Rental income is only such if you are given a housing allowance. If your accomodations are under your bosse's name then it is not income.

5% is too much.

[Grotto]

Stick with the monthly withholding tax....take your boss to the website and show it to them. Show them how much they should withhold.

[ontheway]

Jacl,

Here's why the dedution for pension and medical is important. Start with 100% as you did. Deduct 30% as a foreigner and you pay tax on only 70% of your income as you said. But you can also deduct the 5% you paid to National Pension and maybe 3% you paid in medical. So, you will now be paying tax based on 62% of your income. Your final tax liability would be lower so your withholding should be lower.

Conversely, in the absence of such deductions, and especially when significant overtime is involved, 5% withholding or more could be reasonable. The tax system here is steeply progressive. The NTS summary indicates that income tax marginal rates quickly climb to 36%.



As to the withholding tables, they're only estimates. Good enough for most teachers but not always accurate. That's why businesses tend to overwithhold on the advice of lawyers and accountants here. And although Grotto is laughing, employers in Korea and in the US can be held liable for the unpaid tax liabilities of their employees, especially if they facilitated it by failure to withhold properly. In addition, a sponsor agrees to pay such costs for the person he sponsors. That is why a sponsor is required.

I witnessed this "transfer of tax liability to a responsible third party" in the US in numerous situations. It is surprising and unbelievable when you first see it. It can be quite capricious and draconian. It is also quite common. Low level bookkeepers and even secretaries often face IRS tax liens for hundreds of thousands or even millions of dollars of other peoples' taxes. Thousands of businesses and individuals have been bankrupted by this.

[Mr. Pink]

Being deducted isn't really a problem most should think about, getting a refund is what you should be worried about. If you work for a shady place of business, chances are they aren't even reporting your taxes (this happened to me one year).

I am probably over-taxed atm, but when it comes to filing my income tax sheet next month, chances are I will get more than half my tax back.

Learn how you can get tax back and you will be even happier.

Pension and Medical don't make you pay less tax, but they help you get a tax refund...don't ask me why they do, they just do. I have done my own taxes for the past three years so that is how I know.

[desultude]

Does anyone have the full story on how the credit card deduction works? Are credit card purchases fully deductable? What about car insurance? I didn't know about that until this thread.

If you earn a lot in overtime, you will get dinged not only with extra taxes, but with extra payments on your pension and health insurance as well, as they are also progressive charges. The pension part is good, because, for those of us who get it back, it is a higher rate of forced savings, and the employer has to pay more in as well. The health insurance part doesn't bother me either- that sort of thing should be progressive. I don't mind covering a bit of the insurance for the 2,000 won worker.

But come February, you may be in for a shock when you see all of the extra deductions for last year's overtime come out of your pay. I sure was!

[littlemissy]

So let me get this straight, because I am totally starting to freak out about whether or not I should declare emigrant stauts before I leave home, i shouldn't worry about Canadian income taxes when I get home? My girlfirend just transferred all of her accounts and whatnot to her parents name and cancelled her driver's license and everything so that she loses residency status at home, which should guaruntee her exemption from Canadian income tax on any money she earns abroad. However, there are potential repercussions to losing your residency status, like starting all over again with credit and stuff when you return, and relying on your parents credit and banking to keep things going. I would like to avoid all this if possible, AND avoid paying double the taxes.

Should I just go abroad, work, pay my Korean taxes, file my Korean tax return, and carry on? I am going backpacking for a while before I go home, so I am scared that when I get home they will tell me I owe a bunch of "global tax" that I won't have the money for. Do they have ways of finding out?

Any advice would be great. I have the luxury of hopefully getting info before I leave, which will help things a lot while I'm gone. And I totally into saving myself a few thousand dollars if it doesn't mean erasing my existence in this country, so to speak

[sheba]

Im not sure if Canada is the same but.....

I have a credit card, a drivers licence, a student loan, and my entire family live back home, but I was still granted non-residency status.

They asked me about my immediate family (spouse and children) but I have none. Assets, I have a car but it was under my parents name anyway. Money - I was allowed bank accounts, but they werent allowed much money in them. Time away - had to be more than 225 days away in a given year I think.

It wasnt a very difficult process. I called the IRD and they sent a form out. It took 10 mins to fill in the form, and then I sent it back to them. A week later I got a letter confirming I would be a non-resident for tax purposes starting the date I left the country.

Easy-peasy.

[Mr. Pink]

[desultude]

[IwalkAlone]

For those who claim they deserve a 30% tax cut on
their entire income...where does one find proof of its
existence. In my research, I only know of non-residents getting such a tax break.


TAX CLAUSE FOR NON-RESIDENTS
Special Taxation Treatment for Foreign Employee :
- A foreigner may choose separate taxation of wage & salary income by multiplying such income by 17/100 instead of non-taxable treatment on 30% of total wage & salary income. In this case, provisions concerning such tax exemption, deduction, reduction, and tax credit shall not be applicable.
An employer who has not joined taxpayer assoociation
Return filing for Class A & B

ARE YOU A RESIDENT?
Principally, a resident is any individual who has his/her domicile in Korea or a place of residence for 1 year or more in Korea. The domicile shall be judged by the objective facts of living relationship, such as the existence of a family living together in Korea and of the property located in Korea. And, the 'place of residence' means the place where a person has dwelt for a long time besides his address, and in which no close general
living relationship is formed as the domicile.
A taxpayer who falls within in the following cases is deemed to have a domicile in Korea.
􀀀􀀀 Who has an occupation which would require him to reside in Korea for 1 year or more; or
􀀀􀀀 Who has his family in Korea and is likely to reside in Korea for 1 year or more in view of his occupation or assets held in Korea.

[flint]

[jacl]

I find this whole tax thing really confusing. I'd be best going to the tax office to find out. There were some people in the hagwon today. I've seen them before and my boss had already pointed out to me that they were from the tax office. I don't think they are, but there some sort of advisors. They say my tax is more, but it's not like I had a conversation with them.

Here's the deal. No other wages have been earned (as far as anyone knows) than my 2.2/month. I pay 3.7% taxes (81,400/month). I pay into pension, but that only started in August. I started this job in March. That gives me 10 months for the year. I'm not worried about a global tax. I figure that you're taxed for this year and I didn't work anywhere else. No other income. So, I will have 5 months of pension paid (98,550/month = 492,750) at the end of the year. I think that my pension benifit of the same amount may be considered as income. What are my taxes? Really puzzling. Their website sucks.

If someone knows how to figure out what my taxes should be for the year using the info above, please let me know.

Wouldn't my tax conribution be lower if I only earned income in 10 of the 12 months? That may be something to consider, too.

I'm afraid he may try to swindle me with reverse tactics while not paying taxes at all. Going to the tax office is, however, quite a harsh step to take.

[jacl]

Couldn't I just go into the tax office and give them a scenario without giving them any particulars about where I work?