Korean Job Discussion Forums

[shl82]

Hey can someone please clarify if Americans have to file tax for money earned here. We pay tax 3.3% on our income here but do we have to file our taxes back home. Thanks in advance.

[dharma bum]

the short answer to your question is that you will have to file taxes and declare your income while living here - but you will not have to pay any tax on what you earn here as long as you earn less than $80,000 per annum.

[AgDragon01]

I was under the impression that that 3.3% income tax was total bullshit, and that for the first 2 years, we don't have to pay either Korean or American taxes.

[kprrok]

[KuroBara]

My PS has told me that in order to get the tax exemption in Korea, I have to fill out some form from the IRS. I found the form on IRS.gov, 8802, I think. The form is to get a certifcate verifying that you are a US citizen(because for some reason, passports don't count) during the year you are in Korea. You have to pay $35 for the cert, but it can be filled out, submitted and paid for on the IRS website. To be honest, I have not completed the process yet. The form is standard IRS incomprehensible, and I'm wondering how much 3% really adds up to anyway.

[Ultimo Hombre]

When you file your taxes with the IRS forms online, they will lead you to the foreign income form. If you earn under 80 grand you are exempt. It's that simple. Public school or hagwon. It doesn't matter. It's easy and you may even get the stimulus bonus for filing.

[nene]

My understanding:

Exemption from Korean tax for 2 years is for public school employees.

The under $82k exemption from US taxes is only if you qualify as having a foreign tax home or whatever... looked like the easiest way to do that was to be abroad for 330 of any 365 day period. In order to fulfill that, I'll need the automatic exemption and another one in order to qualify.

[phoneboothface]

Not directly related but I found out the hard way that if you make over $8950 in interest/dividends in the US, then you get taxed at the lowest rate. Under that and you don't pay tax.

You get taxed if you make over that amount even if you work overseas.

[ChinaBoy]

[Suwon23]

Hagwon employees also pay a special low rate for the first two years, 1.7% I think, though hagwon bosses usually charge the full rate anyway. Is this what you mean by "tax exempt," or are public school employees exempt from taxes completely?

[nene]

[iamrosa]

Hey guys,

I've worked abroad in several different countries, and in the US for short periods of time, over the past two and a half years, and let me tell you, the actual tax laws are more complicated than you may realize. A lot of people get sucked into this "no tax for two years" business and it's not actually true. I've spent a lot of time reading the IRS documents concerning taxes when working abroad, and as an American citizen, it is ILLEGAL to be working and pay no taxes anywhere. Here's the low down:

- If you have a job anywhere in the world, you MUST file every year in the US, no matter what. Don't just think you can get away with it because you're not at home.

- If you choose to not pay taxes in Korea, and use the IRS form to claim US permanent residency, you're basically telling the IRS you'll be making money and you're going to owe them money at the end of the year. If you got this document from the IRS, you are responsible for paying standard US tax on all your earnings AND your housing subsidy/whatever rent your employer is paying for your housing AND whatever the employer has reimbursed you for (ie. flight money) AND whatever bonuses you get at the end of your contract. I know, I know, it's like they tricked you when they said, "Oh, you won't pay our 3% Korean tax (you'll just have to pay 28% American tax)!!!" Remember, it's easy to fudge this stuff on your tax forms, but it's a very, very bad idea. Don't cheat. Save some money every month and suck it up.

- If you choose to pay taxes in Korea (I'd recommend it, but it means you can't have gotten that residency paper from the IRS, if you did, too late, sorry), there are a few things you can do that are helpful and mean you pay lower taxes at home, or none at all. Here are those two options. Both of them involve some serious paperwork, so keep track of all your expenses and what your employer is spending on you, at least to the best of your ability, and keep track of every time you travel to another country (EVERY time, especially if you go home!) and the length of time you're in each country.

1. For the people that will not be working in Korea (or any one country) longer than one year: To use some IRS lingo, your "tax home" is still considered the US. Your only *honest* option is to claim all your income, write down the amount of tax you paid to Korea, and you'll take what is called a "tax credit," the amount of which is based on the amount of tax you paid in Korea (or wherever). Sometimes this means you won't owe anything to Uncle Sam, but usually you will still owe something. Again, just put some money aside every month so you don't get a big ugly surprise. Keep in mind, if you have a one year contract, this is probably what you'll need to do, especially if you're going home afterwards.

2. For the people that will be working in one country that isn't the US for over a year: Now, the wording gets a little vague here. Trust me, the IRS wants it's fair share every time, so they actually state that one year contracts don't *generally* qualify for this, so be careful when you're filling out your forms. Some public school teachers can file this way if they've been offered a renewal, because it means the contract is potentially for longer than one year. Otherwise, only do this if this is your second straight year in the ROK. You can file your taxes in such a way that Korea is your "tax home" AND you've been out of the US for 330 days out of one calendar year (it doesn't have to be January 1 - December 31). Take note, you MUST fulfill BOTH requirements, and really the only way to claim Korea as your tax home is if you have only worked in Korea during the tax year (that is, Jan 1-Dec 31), and your contract will extend beyond that tax year. If you were at home, whether working or not, in January and most of Feb, and showed up at EPIK orientation, you do NOT qualify for this, even though your contract ends after the tax year is over. However, if you do satisfy both the tax home and the being out of the country stuff, you do not have to pay any US income taxes up to, I believe, the $80,000 limit.

YOU MUST FULFILL BOTH REQUIREMENTS TO QUALIFY!


No matter what, you need to claim all your income, take note of all the taxes you paid in Korea, and claim all the reimbursements, bonuses, and rent/housing subsidies your employer has given you, because the United States government counts it all as income. Remember, too, that you must convert all the values into US dollars, so maybe you'll get a little levity if you convert your amounts when the exchange rate is low, hahaha.

So there you have it. Sorry to all those you were led astray by the "no taxation" hype.

[gregoriomills]

Damn, double post

[gregoriomills]

I was in every grey category this topic has to offer! I had earned income from January 08 - July 08 when I came here, I had been here LESS THAN 330 days, I worked at a public school, blah blah blah. Let me tell you how this works in short:

There are 2 tax games going on for Americans, and they almost have no overlap: the Korean tax and the American tax. You can get out of paying both.

To get out of the Korean tax, simply apply for the IRS 8802 certificate. It takes about 45 days to process, but somehow you gotta fill it out, send in the IRS (I emailed it to my parents) and get it back over to yourself, here in Korea. Turn that form into your school (who will then turn it in to the local ROK tax office). That should be all you need.

Since the US tax system is a little more complicated, and this topic's title is maily about the ROK tax, I'll stop there. PM me if you need help with the US tax stuff. Cheers!

[ThingsComeAround]

I agree with imarosa, this is the same as what the woman from IRS told me when I called.
If you apply for the IRS form, they are aware that you are claiming residency and you pay back the govt the tax you owe. If you don't, then you are not obligated to pay US tax.