Korean Job Discussion Forums

[rehab]

I'm a little confused about this paragraph in my contract:

○4 Employees with the exception of Canadians, shall be eligible for exemption from paying Korean income tax during the period of the first two years if he/she provides the following documents to the employer before the first payment of salary:
1)"Residence Certificate" issued by a competent authority of employee's resident country 2) �an Application for Tax Exemption" on non-resident's Korean source income provided under the Korean Tax Treaty. If employee has already worked more than two years in Korea, he/she shall not be eligible for tax exemption.

I've figured out what the residence certificate is, and I'm working on that. What is the "application for tax exemption?" Is that something I have to get from home, or do I get it in Korea? I just can't figure out what it is..

Also, I've heard that I'll be exempt from US taxes for 2 years by working in Korea. Is that true, and I'll be exempt from paying US AND Korean taxes for 2 years? Sorry, I'm a little tax retarded..

[Jeff's Cigarettes]

I think the tax application is on the Korean side of things...I did the residence cert but never was asked about any "tax app" You won't have to pay US taxes cause ur exempt by working abroad and not making over 86,000$...but u still need to file the 1040 and 2555 every year, though.

[mmstyle]

To the best of my knowledge (and I did my taxes today) you must pay taxes to EITHER Korea OR the US. This form exempts you from Korean taxes, but you would still be liable to in that case to pay them back home. My personal experience is that taxes are much lower in Korea.

I'd rather do a 2555 & 1040 as per JCig's post (like I did earlier today) and exempt all foreign income (up to $87,600 for 2008) and pay taxes in Korea. Much lower. And, as he says, all my income in Korea was exempt, because I met the physical presence test (you can still go home for a visit, it is prorated).

It is my understanding that (and I put it this way just so I don't get flamed, but then again, this is Dave's) if you don't pay taxes in Korea, you are required to pay them in the US (of course).

My 2 cents.

[T-J]

You have to pay income tax to someone. Korea gives you the opportunity as a temporary foreign worker to elect not to pay Korean taxes for the first two years. If you so elect then you are not eligible for the U.S. foreign income exemption.

This is for someone that out of conscience says "Why should my tax money go to a government or people that I have no ties to?"

The Korean tax rate is much lower, you will save considerable coin if you elect to give your tax money to the Korean system.

On a personal note I still pay plenty into the American system through property and school taxes. I elect to take the savings by paying the Korean income tax.