Korean Job Discussion Forums

[cadburys]

hi,
just wondering about the above?
why is this? I heard canadians, south africans etc. pay tax but not americans.

[Carla]

[.38 Special]

Why Americans need not pay taxes while working in the public school system I do not know. It is totally plausible that it was a carrot for American graduates to supply the Korean MoE with English teachers.

Every country has their own trade and expatriate agreements. The dealings between two countries is very complicated, so make sure that you do your homework.

For Americans, as an example, you needn't pay any taxes while a resident abroad if you make less than 80 some thousand dollars. You do, HOWEVER, need to file your taxes just the same. You won't pay anything, but you do still need to file. After all, if you do not file, how should they know you made less than 84-ish thousand dollars?

But don't get too flustered: Korean income taxes are really no big deal. Tax exemption would mean a lot more if the taxes weren't so lenient. Tax exemption for middle class Americans would be a huge boon (I paid 40% of my income in taxes while making about 4k USD monthly, and about 30% while making 2.5k USD monthly). 30-40% of 30-50k USD per year is quite a bit of money, 9k and 20k respectively.

So, yeah, it's a carrot. It sounds great until you find out that the RoK's income tax is quite reasonable.

[Crockpot2001]

I think the reasoning behind the exemption is that many people work abroad and end up paying double taxes. This is a huge disincentive. As well, we are not using as many resources in the US while out of country. This agreement means that you have to prove you've been out of country for 330+ days (non-consecutive is OK) or have had files your taxes with the appropriate out of country paperwork for the previous tax year.

I am certainly no tax expert and would appreciate any expansion on the topic.

[winterfall]

Nope. You have to pick one. Either Korean or American taxes. I thought I found the perfect loop hole. Until I realized that was fraud.

American taxes for a single, independant. If I remember correctly is 20-30%.

Korean taxes are maximum 9%. Go to the Korean tax page. There's a special link for public school teachers.

My advice, max out your pension contribution. Max is 106,000 a month. Employer matches it. And you get a full refund when you leave Korea. It'll come out to be a nice little bonus.

[redhed]

I am pretty sure that you don't have to pay one or the other, you are exempted from paying korean tax, and you still don't have to pay in the US, a couple of folks got into a big pissing contest in a thread a couple of months ago and I believe that was the consensus.

[winterfall]

[dogshed]

The Korean two year tax exemption is for EPIK teachers. It might also be for other public teachers but it's in my EPIK contract.

You qualify for the exemption from Korean taxes by getting a statement from the US IRS that says you are a resident of the US for tax purposes.
(This is form 6166 but I never turned one in and my school still exempted me.)

There are two ways to claim the Foreign Income Exclusion on the US taxes; bona fide resident or Physical Presence.

Because you are stating that you are a resident of the US for tax purposes to get the Korean tax exemption you have to use the Physical Presence test to claim the Foreign Income Exclusion on the US taxes.
(Form 2555 part 3)

[catchshime]

We've been talking about PUBLIC schools (EPIK, SMOE, etc) but what if you're working PRIVATE as an hourly worker at a hagwon? What would be the best thing to do in this case?

It sounds like I shouldn't pay Korean taxes, but file anyway since I am making under 80k. Would I essentially be avoiding taxes altogether this way?

Remember, I am not public... I'm an "hourly contractor."

[T-J]

I've talked to the IRS directly about this issue. If you have a 6166 you are NOT eligible to file a 2555. Sorry no free lunch. The 6166 and 2555 are to prevent double taxation, not to eliminate all tax responsibility. The IRS's words not mine. Call them yourself.

[Mirabilis85]

I never gave my EPIK school any document related to the american tax exemption and they still never took taxes out. I think most of the schools out in the country dont know much about the tax law or dont care. Guess it was my lucky year

[dogshed]

[T-J]