Korean Job Discussion Forums

[Penelope]

Help! I am completely confused!

Everyone is telling me to do different things. My parents tell me that I should be registering my income quarterly with the IRS, but others tell me I only have to do it once or twice, starting in August. After working for a year teaching in Korea, do we even have to pay tax? My parents say yes, but people here say no, only if you make above a certain amount.

How would I register my income with the IRS in the first place? Can I do it online?

Thanks for any advice and help yall can offer.

Pen

[Woland]

As an American citizen, you are legally obligated to file an income tax return every year. If you are outside the US, you have an automatic two month extension in the filing date, to June 15th. You may request an additional two month extension to August 15th. But note that you have to request this. The form for requesting an extension should be available on the IRS website. Failure to file by the due date may result in a penalty (which, if your tax obligation is zero, is usually zero as well).

There's a lot more to know about doing your taxes from overseas, particularly in terms of how you can get credits which will likely reduce your tax burden to nothing. You should consult a good tax accountant about this. I have been outside the US for ten years now (plus two years even further back) and have had no American tax obligation in this time. It's worth it to me to pay my accountant between 150-200 dollars each year to take care of my taxes for me.

[RachaelRoo]

Ok, I'm not even an American, but I used to do taxes for people and one thing I learned is that you should never, ever take advice from relatives when it comes to these matters.

It was incredible how many times I had to help people who had done STUPID things or made ridiculous assumptions because their dad or cousin had told them so. Of course, nobody questions what the relative said because they're family, and the (sometimes) well meaning relative passes on third hand, out of context, broken information as fact. Or even more frequently, mistakes assumption with fact.

Anyways, I believe that either the first $80,000 or $100,000 you make while living abroad is tax free if you're an American. I can't remember how much, but either way you would be fine. Wish it was this way in Canada!

Sorry for the rant, but really you're best to find info out yourself on a gov't website, or if that's not enough, spend a few dollars to ask a professional.

http://www.irs.gov/businesses/small/international/index.html

[Woland]

[swade]

I�m just in the process of doing my taxes. I spoke with a rep from the IRS some time last week. He recommended that I fill out form 1040A along with form 2555 or 2555EZ. Last year I was also out of the States for tax year 2004 and I just filled out the 1040 form. I didn�t have a W2 to send them and they said that I should just estimate what I�ve made. If you�re not sure what you should do, calling the IRS is really your best bet. I called them at night and I really didn�t have too long a wait. Good luck!

[John Henry]

What are you guys using in place of a W-2 form? I get jack in the way of "official records" fom the monster that ran my hagwon.

[Drew345]

You mentioned "registering your income" with the government quarterly. I think what your relative was talking about was paying estimated taxes.
Self-employed people, or other people who do not have income tax deducted from their paychecks, often pay estimated taxes 4 times a year. This is to avoid paying a penalty for owing too much at the end of the year. As others here have just pointed out, you will get 80K foreign income deduction, and so probably will not have to pay any (much?) income tax at the end of the year. So there is no need to pay the quarterly estimated tax. I think you can safely forget about that quarterly "registering your income" statement; UNLESS you have some other substantial income in America such as dividends and interest or capital gains.

[enchoo]

Korea and US made a tax treaty to prevent double taxation

See this website
http://www.irs.gov/pub/irs-pdf/p54.pdf

You must file a Form 2555 to claim this. click here
http://www.irs.gov/pub/irs-pdf/f2555.pdf

Any income earned overseas in Korea is excluded from American taxes provided that you paid Korean taxes on it already.

Beware, if you have any interest bearing accounts in the States like CD or bank interest, that income is considered "unearned" and subject to American taxes since.

You must file your 1040 correctly to claim Foreign Income Exclusion under the catagory OTHER INCOME and then write your earned income in parentheses ( ).