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bnrockin
Joined: 27 Feb 2006
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 Posted: Mon Jul 19, 2010 8:12 pm Post subject: Taxed Housing Allowence? |
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As stated in my contract, my university is supposed to pay me $500 for housing allowance. They pay it to me by lumping it together with my normal salary. As a result, it gets taxed and I do not receive the full amount.
Is this a normal practice?
In my previous job, housing was directly provided and they paid the owner directly. With my current job, at first the university provided housing for me but still paid me $500 (which was taxed) and then I had to pay them back so that they could pay the owner. In this case, I know I was getting hosed so they did not have to pay the taxes.
Do I have any legal grounds in my current case? |
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Ramen
Joined: 15 Apr 2008
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| Posted: Mon Jul 19, 2010 8:17 pm Post subject: |
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Housing provided = Not taxed.
Housing allowance paid to you = Taxed. |
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Seoulio
Joined: 02 Jan 2010
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| Posted: Mon Jul 19, 2010 8:28 pm Post subject: Re: Taxed Housing Allowence? |
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| bnrockin wrote: |
As stated in my contract, my university is supposed to pay me $500 for housing allowance. They pay it to me by lumping it together with my normal salary. As a result, it gets taxed and I do not receive the full amount.
Is this a normal practice?
In my previous job, housing was directly provided and they paid the owner directly. With my current job, at first the university provided housing for me but still paid me $500 (which was taxed) and then I had to pay them back so that they could pay the owner. In this case, I know I was getting hosed so they did not have to pay the taxes.
Do I have any legal grounds in my current case? |
Its a government stipulation ( in practically every country)
A huse provided is NOt income ( its a perk)
Money for a house you get yourself IS income.
legal grounds, nope not a snowballs chance in a really hot place |
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Louis VI
Joined: 05 Jul 2010
Location: In my Kingdom
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| Posted: Mon Jul 19, 2010 8:32 pm Post subject: |
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| Let's quibble over peanuts. |
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Ramen
Joined: 15 Apr 2008
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| Posted: Mon Jul 19, 2010 8:40 pm Post subject: |
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| oh! forgot to mention that you can write off your monthly rent as a tax deduction (up to certain amount). |
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bnrockin
Joined: 27 Feb 2006
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| Posted: Mon Jul 19, 2010 8:48 pm Post subject: |
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| Louis VI wrote: |
| Let's quibble over peanuts. |
Stop wasting your time and mine.
Thank you to everyone for the advice. |
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winterfall
Joined: 21 May 2009
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| Posted: Mon Jul 19, 2010 9:21 pm Post subject: |
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I'm surprised at how many people who don't get the allowance replied to this post. Obviously all of the above.
The housing allowance is NOT TAXED. It's an additional lump sum on top of your normal salary. On your pay slip you should have 2 sections: salary and allowance. Taxes and pension should only be taken out of your salary.
At the end of the year when you file taxes, you'll have to list the allowance, that's where it's considered additional income. But its part of your work / living related expenses so it won't be taxed. |
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Seoulio
Joined: 02 Jan 2010
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| Posted: Mon Jul 19, 2010 9:30 pm Post subject: |
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| winterfall wrote: |
NO
the housing allowance is not taxed. It's an additional lump sum on top of your normal salary. Taxes should only be taken out of your salary. |
WRONG, it is 100 percent taxed, it is income. Icome is taxed, thats why countries call it INCOME TAXES, and not salary taxes.
Please do not post wrong information. I have personally checked with Korean tax law. ( and as I said, in most countries) your housing allowance is taxed |
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winterfall
Joined: 21 May 2009
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| Posted: Mon Jul 19, 2010 9:33 pm Post subject: |
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| Seoulio wrote: |
| winterfall wrote: |
NO
the housing allowance is not taxed. It's an additional lump sum on top of your normal salary. Taxes should only be taken out of your salary. |
WRONG, it is 100 percent taxed, it is income. Icome is taxed, thats why countries call it INCOME TAXES, and not salary taxes.
Please do not post wrong information. I have personally checked with Korean tax law. ( and as I said, in most countries) your housing allowance is taxed |
Are you speaking from experience? Do you actually get the allowance or not?
This is exactly how I'm getting the money. I've checked with the US IRS and Korean POEs. They shouldn't be taking it out of your monthly paychecks. At the end of the year when you file taxes that's when its considered income, salary + allowance, and you do all the deductibles. But the allowance isn't factored with your monthly salary.
If it was than my pension contributions should be almost 3x what it is now |
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Seoulio
Joined: 02 Jan 2010
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| Posted: Mon Jul 19, 2010 10:07 pm Post subject: |
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| winterfall wrote: |
| Seoulio wrote: |
| winterfall wrote: |
NO
the housing allowance is not taxed. It's an additional lump sum on top of your normal salary. Taxes should only be taken out of your salary. |
WRONG, it is 100 percent taxed, it is income. Icome is taxed, thats why countries call it INCOME TAXES, and not salary taxes.
Please do not post wrong information. I have personally checked with Korean tax law. ( and as I said, in most countries) your housing allowance is taxed |
Are you speaking from experience? Do you actually get the allowance or not?
This is exactly how I'm getting the money. I've checked with the US IRS and Korean POEs. They shouldn't be taking it out of your monthly paychecks. At the end of the year when you file taxes that's when its considered income, salary + allowance, and you do all the deductibles. But the allowance isn't factored with your monthly salary.
If it was than my pension contributions should be almost 3x what it is now |
yes I am speaking from experience, i get my housing allowance and it is taxed.
if you want to do it that way at the endo of the year fine, it is still taxed, one way o the other it is taxed.
Your pension contributions are on your salary alone. ( sad but true) as is your severance payment, but your housing allowance is subject to Korean tax.
and even if it was, a 500 dollar increase on your paycheck is not going to increase your pension contribution by more than ( going from memory) i think like 6000 won a month so your "3 times the pension" you should be getting clearly shows you are not that up on how this works |
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OculisOrbis
Joined: 17 Jul 2006
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| Posted: Mon Jul 19, 2010 10:45 pm Post subject: |
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| winterfall wrote: |
| Seoulio wrote: |
| winterfall wrote: |
NO
the housing allowance is not taxed. It's an additional lump sum on top of your normal salary. Taxes should only be taken out of your salary. |
WRONG, it is 100 percent taxed, it is income. Icome is taxed, thats why countries call it INCOME TAXES, and not salary taxes.
Please do not post wrong information. I have personally checked with Korean tax law. ( and as I said, in most countries) your housing allowance is taxed |
Are you speaking from experience? Do you actually get the allowance or not?
This is exactly how I'm getting the money. I've checked with the US IRS and Korean POEs. They shouldn't be taking it out of your monthly paychecks. At the end of the year when you file taxes that's when its considered income, salary + allowance, and you do all the deductibles. But the allowance isn't factored with your monthly salary.
If it was than my pension contributions should be almost 3x what it is now |
Try checking with the Korean Tax Service. The US IRS and your POE dont dictate the terms of how you pay your taxes to the korean government. It clearly states that housing allowances are taxed in the relevant tax act (I dont recall the specific act name or the section that is was specified, but I'm sure you could look it up yourself). I looked it up when it affected me and I had the same questions you have. Then I called the foreigner tax information line to verify. Housing allowance is taxed.
It can be taken out with your monthly withholding or you can wait til settlement time to ante up. The withholding amount is just an estimate anyway and will just save you from a large 'you owe us bigtime' at the end of the tax year or you might get a pleasent 'here's what we owe you'. Withholding of any tax is unimportant if you dont mind paying everything in one big lump at the end. |
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winterfall
Joined: 21 May 2009
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| Posted: Mon Jul 19, 2010 11:04 pm Post subject: |
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I looked it up. Looks like I was wrong, it is taxed. Well guess that's what the deductibles are for.
Well I may have exaggerated the 3x pension. But, Seoulio, you forgot about employer matching, your 60,000 = 120,000. (For PS. Not sure what the deal is in hagwons). |
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Seoulio
Joined: 02 Jan 2010
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| Posted: Tue Jul 20, 2010 12:17 am Post subject: |
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1) Pension is based on your salary as stated, not your income.
2) You cannot say that this is "120 000" seeing as 60 of that always came from your original income" so that would leave you with 60
3) unless your total contribution to pensions a month is 40 000, thn this 500 000 you are not getting a pension on does not raise your pension by 3 times, nice hyperbole though.
4) Good on you for admitting that you were wrong, but its slightly less admirable given that there were 3 or 4 posters who already came on before you informing the poster that what you were saying was in fact incorrect
5 ) i mixed up my numbers beofre, I was thinking of a 100 000 won pay raise when i said youd get like 6000 more. |
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WadRUG'naDoo
Joined: 15 Jun 2010
Location: Shanghai
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| Posted: Tue Jul 20, 2010 4:39 am Post subject: |
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It's not taxed in all countries. It's not taxed here in China.
I did some research on this while I was living in Korea (maybe 4 years ago or more) and housing allowance is taxed differently. I believe it's tax free up to a certain amount. So that could cause problems if you're being taxed at the same rate as your income tax and you don't file for taxes at the end of the year. Could mean you're being screwed out of money. Especially if your employer isn't on the up and up. |
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air76
Joined: 13 Nov 2007
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| Posted: Tue Jul 20, 2010 5:44 am Post subject: |
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| winterfall wrote: |
| Well I may have exaggerated the 3x pension. But, Seoulio, you forgot about employer matching, your 60,000 = 120,000. (For PS. Not sure what the deal is in hagwons). |
At hagwons there are generally 2 options:
1. You pay nothing, the hagwon pays nothing, and when you leave Korea you get nothing.
or
2. Your director deducts money from your pay each month for pension and then takes this money and buys soju and/or visits a prostitute (Lotte Department Store for the female directors), and when you leave Korea you get nothing. |
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