Korean Job Discussion Forums

[Tobias]

Do these guys tax pension refunds? If so, will I have to take my 6166 to the pension office to make sure they don't do that? Exempt, to me, at least, means EXEMPT.

I can't believe our passports aren't good enough to use to get a refund on our tax withholdings. This situation has me looking like that lady from Dilbert. The chick who always has the steam coming out of her ears, she gets so pissed off.

[ontheway]

Pension refunds are not taxable.

Your pension was paid out of your already taxed income. So, taxing it again would constitute a form of double taxation.

[Tobias]

This is what I was thinking, too. I wasn't sure if the pension was taken out pre-or-post.

[SunnyD]

I'm not sure if the K income tax from the monthly paycheck is figured before/after any deductions are taken out. But I know how the pension refund is handled, at least for Americans. I got my "lump sum distribution" refund in 2008.

The statement I received from the K pension office says that I earned interest on the total contribution (my half + my employer's half). Then, they took out a small amount for K income tax and K inhabitants tax. I'm not sure how they figured that tax, but honestly I don't care because it wasn't that much.

Here's where this is important, at least for Americans. When doing your IRS taxes, we of course get to claim the earned income exclusion. The pension (and any interest on it) is not considered "earned" income. So you can't exclude either of these amounts on the 2555.

However, USA has a fancy tax treaty with K, that says pension monies distributed to Americans by K are taxable by K, but not the USA. So you don't even write it down on your 1040/2555. So we only have to pay the meager K tax on this big load of moolah, instead of paying the giant USA tax on it. I'm fine with that!

However, the pension interest is taxable in both countries, so you do need to claim that income on your 1040. Remember, it doesn't go on the 2555.

If you did not receive a statement on your pension refund, you can submit an inquiry on the K pension website. Make sure to note your ARC number, name, current address, and which branch of the pension service you filed your refund forms at. I did this, and received a statement in the mail within 2 weeks.

[SunnyD]

I forgot to mention that I did not work for public schools/universities, so that 2-year tax exemption didn't apply to me. I have not idea how it works for that.

[Tobias]

Thanks for that information, SunnyD. I was going to do my taxes today, but now I'll hold off until after I get that pension settlement sheet. I'm going to both the tax office and pension office this week, so I'll do what I have to do at both places, including requesting the information on interest amounts, that sort of thing. I'll get my 6166 for the tax office tomorrow, and I'll take that to get my refund.

I'll post my experiences here for others to see. Some of the info we all need is seriously lacking here at the funny farm.