Korean Job Discussion Forums

[Jammer113]

Hey, I'm sure this gets asked a lot, but I couldn't find the relevant information with the search function, or in the FAQ or combing through pages of posts...

How do I determine my tax liability for my earned income in Korea and what forms do I use to file?


I am a US citizen. I came here in March of 2008, I earned approx. 15,000 dollars in 2008 in the US prior to coming here. I've earned in the ballpark of 20 million won in Korea from March to December (not including free housing).

I searched the IRS site and it was clear as mud. Apparently, if I've been here for 330 days and am a "bonafide resident" then I get the tax exclusion.. Well, I've been in Korea for 330 days now, but I wasn't in Korea for 330 days of 2008.

My basic understanding is that I file a form 1040 with a form 2555 listing my Korean income. As this is my first year here, I've payed no income tax to the Korean government. Can someone direct (or show me) clear instructions about what forms I fill out and my tax liabilities?

[T-J]

I was a little confused on the 2555 myself. After reading up on it a little, this is my understanding. The 330 day physical presence test just needs to be met with part of the time falling in the tax year, so you are good there. You're foreign earned income is U.S. tax exempt up to a limit.

The limit is $86,000 (app. I'm going from memory). The actual amout of your limit depends on the amount of time you spent overseas during the actual tax year. in your case about 300 days out of 366 since you said you came in March. On the 2555 there is a section that asks you to divide 300 into 366 to get a percentage of the time spent overseas, then multiply this decimal times the maximum exemption amout to determine your maximum exemption. As long as what you earned is less you owe no tax on that amount.

For example again in your case approxiamatly 300 days in Korea divided by 366 equals 0.820 times the $86,000 gives you a maximum exeption amount for 2008 of $70,492. If you earned less than that, it is exempt from income tax liability.

Hope this helped. Good luck.

[Jammer113]

Ok, I figured it out. Unfortunately, the income from Korea may bump me up a tax bracket for my income earned in USA (the total might go above $32,000). I don't have the numbers in front of me, so I'm not certain.. but it partly depends on the exchange rate.

The IRS listed 6 different sites to get exchange rates. It also mentioned that I must

[I-am-me]

I havent filed a single IRS form in all my years of working in Korea. I just get my refunds from the Korean tax office. Why go through all the hassle of the IRS? For all they know, I was unemployed!!