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Mariposa1418
Joined: 06 Dec 2009
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 Posted: Mon Jan 31, 2011 5:25 am Post subject: No residency certificate. Will I have to pay in? |
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| I'm from the U.S. and about to finish up my contract with a public school. To be honest, I was just too lazy to fill out the Residency Certificate when I came here, and after I arrived, was told there was no point. Am I liable to pay taxes in both countries now? This contract is done in a month. Is there a point in trying to fill out the form? |
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isitts
Joined: 25 Dec 2008
Location: Korea
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| Posted: Mon Jan 31, 2011 7:19 am Post subject: Re: No residency certificate. Will I have to pay in? |
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| Mariposa1418 wrote: |
| I'm from the U.S. and about to finish up my contract with a public school. To be honest, I was just too lazy to fill out the Residency Certificate when I came here, and after I arrived, was told there was no point. Am I liable to pay taxes in both countries now? This contract is done in a month. Is there a point in trying to fill out the form? |
I'm assuming you've been working in Korea one or two years?
You won't need to pay in both countries. If you didn't get the certificate, then you're liable for Korean taxes. You can submit the 2555 or 2555ez to be exempt from paying tax in the US.
If you're leaving in a month, you won't get the certificate in time anyway. Better to pay Korean tax than US tax. |
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isitts
Joined: 25 Dec 2008
Location: Korea
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| Posted: Mon Jan 31, 2011 7:26 am Post subject: Re: No residency certificate. Will I have to pay in? |
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| Mariposa1418 wrote: |
| I'm from the U.S. and about to finish up my contract with a public school. To be honest, I was just too lazy to fill out the Residency Certificate when I came here, and after I arrived, was told there was no point. Am I liable to pay taxes in both countries now? This contract is done in a month. Is there a point in trying to fill out the form? |
There is no point in getting the certificate unless you're trying to use the loophole to avoid paying taxes in both countries.
If you get the certificate, then you have to pay tax in the US (which is a higher rate than Korea, so still can't figure out why people want it).
If you don't get the certificate, then you pay tax in Korea (and file the 2555 with your 1040 so you don't get taxed in the US). |
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passport220
Joined: 14 Jun 2006
Location: Gyeongsangbuk-do province
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| Posted: Mon Jan 31, 2011 7:46 pm Post subject: Re: No residency certificate. Will I have to pay in? |
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| isitts wrote: |
...If you get the certificate, then you have to pay tax in the US (which is a higher rate than Korea, so still can't figure out why people want it)... |
Because the US tax code allows for an aprox 91K exclusion of foreign earned income. For most US teachers their US tax bill will be zero. |
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isitts
Joined: 25 Dec 2008
Location: Korea
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| Posted: Mon Jan 31, 2011 8:40 pm Post subject: Re: No residency certificate. Will I have to pay in? |
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| passport220 wrote: |
| isitts wrote: |
...If you get the certificate, then you have to pay tax in the US (which is a higher rate than Korea, so still can't figure out why people want it)... |
Because the US tax code allows for an aprox 91K exclusion of foreign earned income. For most US teachers their US tax bill will be zero. |
You can only file for that exclusion if the US is not your tax home. But the residency certificate is saying it is your tax home. So your tax is not zero.
...unless you file for the exclusion under the physical presence test. This has been discussed to death on other forums. I didn't mention it here because it's a loophole that's a little tricky to jump through and because the OP is out in a month. |
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passport220
Joined: 14 Jun 2006
Location: Gyeongsangbuk-do province
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| Posted: Mon Jan 31, 2011 8:53 pm Post subject: Re: No residency certificate. Will I have to pay in? |
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| isitts wrote: |
| passport220 wrote: |
| isitts wrote: |
...If you get the certificate, then you have to pay tax in the US (which is a higher rate than Korea, so still can't figure out why people want it)... |
Because the US tax code allows for an aprox 91K exclusion of foreign earned income. For most US teachers their US tax bill will be zero. |
You can only file for that exclusion if the US is not your tax home. But the residency certificate is saying it is your tax home. So your tax is not zero.
...unless you file for the exclusion under the physical presence test. This has been discussed to death on other forums. I didn't mention it here because it's a loophole that's a little tricky to jump through and because the OP is out in a month. |
Yeah, people are confused "to death" about the term "tax home" (they imagine what it might mean, instead of reading what is written in the IRS code). The foreign income exclusion applies to US citizens teaching English in Korea. You need to be in Korea for the full tax year, if you meet that test, the exclusion is a perfectlly appropriate to claim to make. |
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naturegirl321
Joined: 18 Jul 2006
Location: Home sweet home
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| Posted: Tue Feb 01, 2011 6:06 pm Post subject: Re: No residency certificate. Will I have to pay in? |
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| isitts wrote: |
There is no point in getting the certificate unless you're trying to use the loophole to avoid paying taxes in both countries.
If you get the certificate, then you have to pay tax in the US (which is a higher rate than Korea, so still can't figure out why people want it).
If you don't get the certificate, then you pay tax in Korea (and file the 2555 with your 1040 so you don't get taxed in the US). |
It's a fantastic loophole though!
The PPT, physical presence test, is needed if you file the 8802. Like ittis said, there are threads about it. Try seraching. I'd paste the threads, but the search function isn't woriing for me.
You can still file the 2555 long form even if the US IS your tax home via the PPT. AND get out of Korean taxes. .LIke I said, it's a fantastic loophole! |
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isitts
Joined: 25 Dec 2008
Location: Korea
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EmGen
Joined: 27 Oct 2009
Location: Bucheon
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| Posted: Sun Feb 06, 2011 3:22 pm Post subject: |
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When does that residency certificate need to be completed? Just before your contract ends in Korea?
Can I fill it out before I leave for Korea? I've gotten a job but I don't have an address for where I'm staying yet, and I think that it asks for that on the form. Do I need to fill that out and give it to my school before my first day? |
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kimc0486
Joined: 17 Nov 2010
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| Posted: Sun Feb 06, 2011 10:34 pm Post subject: |
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I just received my contract and it stated that I had to have the tax exemption (the 8802) filed before my first pay check, or else I have to pay tax. I just found this out and according to the IRS it takes about 45 days to get back...starting work on the 1st of March. Does that sound right?
If I can't submit the 8802 because of timing, then I pay tax in Korea (4.5% right?) but I don't have to pay taxes in the US?
Very confused and feel like I am reading conflicting info...thanks for the help. |
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EmGen
Joined: 27 Oct 2009
Location: Bucheon
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| Posted: Mon Feb 07, 2011 12:48 pm Post subject: |
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| kimc0486 wrote: |
I just received my contract and it stated that I had to have the tax exemption (the 8802) filed before my first pay check, or else I have to pay tax. I just found this out and according to the IRS it takes about 45 days to get back...starting work on the 1st of March. Does that sound right?
If I can't submit the 8802 because of timing, then I pay tax in Korea (4.5% right?) but I don't have to pay taxes in the US?
Very confused and feel like I am reading conflicting info...thanks for the help. |
Yeah, this is what I'm afraid of. I'm starting on March 1 also. |
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kimc0486
Joined: 17 Nov 2010
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| Posted: Mon Feb 07, 2011 1:26 pm Post subject: |
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| Uh, that sucks and is so frustrating! Are you starting March 1st in chungnam? |
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warmachinenkorea
Joined: 12 Oct 2008
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| Posted: Mon Feb 07, 2011 4:22 pm Post subject: |
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If you don't get your exception form in before they pay you then they will take taxes. However, from my understanding, once the form is turned in the schools are supposed to give back what you paid in.
I think many people read into this too much. My wife and I never got a 8802. Our first 2 years we didn't pay any Korean taxes. We filed our info for the US with Turbo tax and paid no US taxes. Now that our 2 years is up we are paying Korean taxes and will file a tax return for Korea and the US. We should pay no US taxes and get some kind of small return here in Korea. |
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wallythewhale
Joined: 12 Mar 2009
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| Posted: Mon Feb 07, 2011 4:59 pm Post subject: |
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| warmachinenkorea wrote: |
If you don't get your exception form in before they pay you then they will take taxes. However, from my understanding, once the form is turned in the schools are supposed to give back what you paid in.
I think many people read into this too much. My wife and I never got a 8802. Our first 2 years we didn't pay any Korean taxes. We filed our info for the US with Turbo tax and paid no US taxes. Now that our 2 years is up we are paying Korean taxes and will file a tax return for Korea and the US. We should pay no US taxes and get some kind of small return here in Korea. |
Sucks getting taxed here in Korea. I filed my taxes this year and I didn't get anything back. In return though, I had to pay the gov't 500,000won. Why I ask? The world may never know.
I always thought that I would get some money back since I'm not ballin' or anything. I do work at an elementary school so the pay is the norm. So why do I have to pay back the gov't?
Warmachineinkorea, you seem to know quite a bit so any info you can conjure up will be greatly appreciated. |
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nathanrutledge
Joined: 01 May 2008
Location: Marakesh
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| Posted: Mon Feb 07, 2011 6:41 pm Post subject: |
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Don't quote me on this, but...
From my understanding, if you worked for a public school a few years ago, the exemption was automatic and you didn't have to turn anything in. However, in the last year or two, they changed the rules and now you have to supply the form. My first year, I was exempt from taxes and didn't need the form. The second year, however, I was required to get it and turn it in.
IF you don't have it now, then they'll deduct taxes. You get them back if and when you turn the form in, though, so don't worry about that.
The other thing to realize is that your employer here in Korea does not report your income to the IRS, so as far as the IRS and US government knows, you don't earn anything.
When I first came here, my father talked with his accountant for me and the accountant said that I don't even have to bother filing if I didn't want to. I still did/do for other reasons, but he said in that case, I was not required to report my income. Not that I could get away with it, but that I wasn't required to.
Long story short, the IRS and US Tax Code doesn't have the brains that God gave a bowling ball. |
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