Korean Job Discussion Forums

Voyeur · Joined: 19 Jun 2003

I work for an academy that has all its teachers set up as independent contractors. They advertise explicitly that this allows for a minimum tax rate of 3.3% withheld and say that you pay less taxes than other teachers because you also get less: no NHIC, no Pension contributions - nada.

No problem. Seems Fair.

But One year into things, it is tax time. It turns out, that this means ALL my income is UNSALARIED and BUSINESS income. This seems to mean that:

a) I cannot get the 30% foreign SALRIED worker deduction
b) I cannot get almost any of the standard SALARY and WAGER earner deduction
c) The kinds of busniess deductions I could get are either not applicable to a teacher operating as an independent contractor or they require massive amounts of documentation that I have not kept

The business tax rate is 8% on the first 10 million won and 17% for everything else under 40 million. I made 3.5 million won a month for 12 months (had to pay own rent, key money, no severance, and no 4.5% pension net kickback that others get - so not so amazing).

But now, my average tax rate appears to be somewhwre in the neighbourhood of 15% and only 3.3% was withheld! I owe like 4-5 million won suddenly?

Can this be right? I have been paying off loans. I don't even have 1 million in the bankl and now I owe 5 million by the end of the month to the Korean government????

Dan The Chainsawman · Joined: 05 May 2005

The words, "Run forrest run" come to mind.

Voyeur · Joined: 19 Jun 2003

Unfortunately I have about 5 million in pension due me when I finally leave Korea - I imagine getting that might be hard while being behind in my taxes Sad

Never know though lol

uber1024 · Joined: 28 Jul 2003 Location: New York City

Voyeur · Joined: 19 Jun 2003

I see an accountant tomorrow.

Hopefully the other teachers got it wrong and I am just freaking out for no reason.

Otherwise, time to squeeze my lemon...

Dan The Chainsawman · Joined: 05 May 2005

You might want to confirm the sum due to the tax office first. If the tax office indeed does confirm that you owe 1 mill then I would get a bit antsy.

ttompatz · Joined: 05 Sep 2005 Location: Kwangju, South Korea

Voyeur · Joined: 19 Jun 2003

So e-2 viasa holders can't be "independent contractors"?

chiaa · Joined: 23 Aug 2003

Voyeur · Joined: 19 Jun 2003

I averaged about 3.5 million a month.

I work 4-10 pm 5 days a week. But I prepare for another 4 hours a week as well.

No pension (and I am Canadian so normally I get net 4.5% bonus on pension after refund).
No key money.
No severance.
No rent.
No airfare.
No vacations.
No paid-for Visa run.

Plus, the work is VERY hard for a Hogwon and class is challenging to teach. It is not a cushy job.

According to the internet, the overall monthly tax on this, no counting medical, pension etc.... i.e. PURE income tax would be about 2.8 million a year if you were a standard foreigner and no deductions (no 30% foreigner deduction etc..). According to many here, a foreigner making 3.6 million could pay less than that using his deductions. And if you were paid 2 million + free housing (same total) then even less as free housing is not txable.

Supposedly, because we are independent contractors our tax is about 4.5 million a year and that is using what deductions we can.

We thought we were doing well here, in the end, but maybe we aren't making that much money net-net after all.

I mean if you get say 2.2 million a month as a Canadian normally that is equal too:

Yearly: 26.4 million
Severance: 2.2 million
Rent @ 500,000 / month: 6 million
4.5% net Pension Refund Bonus: 1.2 million
Maintenance Fee @ Apt @ 100,000 month (not power/gas): 1.2
Airfare: 1.3 million

Total: 38.3 Million - 1 million taxes = 37.3 million

My School:

Yearly: 42 million - 4 million taxes = 38 million

OMFG its like we make 2.2 million with no medical or holidays and harder work.

ForceOne · Joined: 25 Aug 2005

What would happen if you "forgot" to submit your tax form? I know people who haven't done their taxes for a few years...and so far so good for them, no problems...(yet)...**knocking on wood as I type**

Voyeur · Joined: 19 Jun 2003

That may be an option - but how can I get my pension refund while never paying the taxes lol

And if I want to stay in Korea for a long time, could this all catch up to me?

Many questions, no good answers. *blech*