Korean Job Discussion Forums

[Snowkr]

Hi everyone.

To all the American teachers...
I am aware that I can get a foreign income exclusion for my U.S. income tax on my Korean salary but I've just been informed that I have to pay over $1400.00USD in soc security and medicaid based on 5 months of income I've earned over here. Is anyone else having to do this? I thought I was exempt from paying ANY tax on my income here due to some agreement between the two countries.

Please... any response from other U.S. teachers would be good.

[J.B. Clamence]

Did you file the right form? I think it's the 2555 or something like that which has to be filed together with your 1040. You have to file both forms to get the exclusion.

Also, you mentioned "5 months of income." In order to qualify for the exclusion, you can't have spent more than a month in the US during the year you are claiming the exclusion for. So if you were only here for 5 months of that year, you don't qualify. However, you can file it as starting the year when you arrived and pay tax on whatever you made in the US before you came, but it sounds like it's too late for that.

[hogwonguy1979]

if you are paying into Korean pension, you can count that. You get that option when you cash out when you leave.

besides that i've never heard of anybody having to pay US soc security on Korean income. check with H&R Block in Seoul

[OiGirl]

You are definately not filing right if you owe that much, or owe at all!

[Snowkr]

Thanks to everyone who answered.

I did check with H&R Block in Seoul before I filed. I did file a 2555 with the 1040 and I do get an extension on INCOME TAX but I was told by my accountant at home(who has done my taxes since I was old enough to work) that I still must pay in for social security and medicaid. H&R Block however has said that I do not have to pay it. They said there is some sort of agreement between the two countries that will exclude my foreign income from s.s. taxes in the states.
Who knows something about this "agreement"? I looked at the IRS website... no luck.

[J.B. Clamence]

[Snowkr]

thanks to everyone who replied.

It looks like I will have to pay up by April 15 regardless. I did work and earn income in the U.S. from Jan to July 2005 but the S.S. was deducted from each paycheck whereas here... because I've reported my foreign income, the IRS requires me to pay that tax as it wasn't witheld.
I'm guessing most teachers in my situation just don't report the foreign income and therefore don't end up paying the tax?

[jaykimf]

[red headed stranger]

US Citizens overseas are not required to pay into the Social Security system if they are paying into a social security seytem in their country of emplyment.

The only time you have to pay into the US system is if you are an independent contractor that is not paying into the local system. In that case you must pay the 15.3% self employment tax.


As mentioned earlier you can still fill out an amended return.

[xingyiman]

Screw em! Stay over here forever and become a professional expat!

[lastat06513]

The tax exemption and SSI are totally different and should be treated so.

1. Yes, you are exempted from paying tax for income of up to $70,000 a year.

1A. You are exempt from filing for up to 3 years for every tax year you spend outside the US.

2. IF YOU ARE PAYING INTO THE KOREAN PENSION PLAN~ You are exempt from paying any form of SSI tax or medicare.

You might need to contact a tax rep or even the IRS to get the exact info.

[pdxsteve]

[red headed stranger]

[lastat06513]

umm....

I filed for my overseas tax exemption for tax years 2000 to 2002 and I was told by a CPA with IRS experience that people ARE given a grace period of 3 years, I was told that because people might live in remote areas where there might not be an H&R Block office to file them.

So, this year, I will file for my 2003 to 2006 tax exemptions.

If you have any questions, go to a tax office or contact a CPA with experience doing US income tax.

thank you

[J.B. Clamence]