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acornrevolution
Joined: 16 Jul 2007
Location: Pusan, SK
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 Posted: Tue Oct 16, 2007 4:27 pm Post subject: Specific US/KR tax question |
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I know this has been answered on this board before, but I have read no clear conclusions about this, so I am re-asking:
My public school wants me to apply to the US IRS to get a residency certificate so I dont have to pay taxes in Korea. I have read that if you do so, you will need to pay taxes in the US. I have also read, that this is not true, that as long as you meet the physical presence test you are tax exempt in both countries. Which is true? How can I verify this? Have any of you been tax exempt in both coutries and are definitley sure that you dont have to pay US taxes? |
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Snowkr
Joined: 03 Jun 2005
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| Posted: Tue Oct 16, 2007 4:41 pm Post subject: |
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| I'd also love a clear answer to this. I've only gotten about 5 different ones, however I am thinking that you are exempt from taxes in both countries if you are here for a full tax year. |
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acornrevolution
Joined: 16 Jul 2007
Location: Pusan, SK
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| Posted: Tue Oct 16, 2007 4:53 pm Post subject: |
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| I've also just emailed the IRS to see if they can answer. I would love an answer with experience, someone who has done it and definitley had no problems. |
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MarionG
Joined: 14 Sep 2006
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| Posted: Tue Oct 16, 2007 5:09 pm Post subject: |
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Just remember that you cannot rely on the answer from the IRS. Studies (studies conducted by the IRS no less) have shown that the answers given by phone, letter and email to taxpayers questions are wrong 35% pf the time, and the taxpayer is STILL HELD RESPONSIBLE FOR HAVING FILED WRONG. All penalties and interest will apply...
Nifty system, no? |
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Snowkr
Joined: 03 Jun 2005
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| Posted: Tue Oct 16, 2007 5:36 pm Post subject: |
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very nifty.
Just a warning to teachers who may be excluded from the national pension plan here... if you don't pay into Korean pension.. you WILL PAY social security taxes on your Korean income. Maybe not immediately, but whenever the IRS decides to do an audit, be assured they will expect S.S. tax to be paid. |
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purple_buddha
Joined: 18 Apr 2003
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| Posted: Tue Oct 16, 2007 7:23 pm Post subject: |
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Snowkr:
| Quote: |
| Just a warning to teachers who may be excluded from the national pension plan here... if you don't pay into Korean pension.. you WILL PAY social security taxes on your Korean income. Maybe not immediately, but whenever the IRS decides to do an audit, be assured they will expect S.S. tax to be paid. |
Where are you getting your information from? I'd also like to know when the Social Security Administration became part of the Internal Revenue Service. |
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Snowkr
Joined: 03 Jun 2005
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| Posted: Tue Oct 16, 2007 8:26 pm Post subject: |
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I contacted the IRS ( in Feb 2006) immediately after my CPA told me what I would owe in S.S. taxes and they informed me that I was exempt from federal U.S. income tax but that I did owe in social security.
That is where the info came from...! I didn't pay in $3100 USD because it made me feel good... |
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purple_buddha
Joined: 18 Apr 2003
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| Posted: Tue Oct 16, 2007 9:35 pm Post subject: |
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Snowkr,
Unless your self-employed why would you owe social security anything? As of April 1, 2001 the US and South Korea jointly entered into a Totalization Agreement. The details of said agreement may be viewed here: http://ssa.gov/international/Agreement_Pamphlets/korea.html
If you didn't pay into the National Pension Corporation here as the result of a shady boss, then I suggest you contact NPC and visit your local labor board to get the matter resolved. You have the option of paying NPC or SSA, but NPC is the better option IMO. At least you'll receive a return on your investment. Social security may not be there for most of us at retirement age.  |
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acornrevolution
Joined: 16 Jul 2007
Location: Pusan, SK
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| Posted: Thu Oct 18, 2007 7:02 am Post subject: |
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From the IRS, via email:
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Assuming you are a United States (US) citizen who has not renounced
your citizenship, you are required to file your US tax return and report
world-wide income.
The U.S. Residency Certification is a statement claiming residency of
the US.
Assuming your inquiry about the physical presence test is for the
purpose of the foreign earned income exclusion. To qualify for the foreign
earned income exclusion you must be a resident of a foreign country.
Review Publication 54, Tax Guide for U.S. Citizens and Resident Aliens
Abroad, and the instructions for Form 2555, or Form 2555-EZ.
You cannot claim residency in the US to eliminate foreign taxes, and at
the same time claim residency of a foreign country to exclude US taxes
by filing Form 2555, Foreign Earned Income, or Form 2555EZ, Foreign
Earned Income Exclusion. |
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bacasper
Joined: 26 Mar 2007
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| Posted: Thu Oct 18, 2007 5:36 pm Post subject: |
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| purple_buddha wrote: |
Snowkr,
Unless your self-employed why would you owe social security anything? As of April 1, 2001 the US and South Korea jointly entered into a Totalization Agreement. The details of said agreement may be viewed here: http://ssa.gov/international/Agreement_Pamphlets/korea.html
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From that agreement:
If you do not have enough work credits under the U.S. system to qualify for regular benefits, you may be able to qualify for a partial benefit from the United States based on both U.S. and Korean credits. However, to be eligible to have your Korean credits counted, you must have earned at least six credits (generally one and one-half years of work) under the U.S. system. If you already have enough credits under the U.S. system to qualify for a benefit, the U.S. cannot count your Korean credits.
So one must opt to pay US or Korean taxes bbut one will receive Social Security credits whatever the choice. Note that if you choose the Korean option (as most do), your credits are discounted at some unspecified rate. |
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