Korean Job Discussion Forums

[Lady_Firefly]

okay, so i hope i'm posting good info. I've been in Korea for about 20 days now, and I did a lot of research before arriving, have discussed much with my employer, and have made calls to the tax office, pension offices, and the national medical company. this is what I came up with: (this was originally sent as a fb message to another teacher, so the wording might be a bit odd)

Here is the info for benefits. There are two ways you can file for tax purposes, and that affects which benefits you qualify for.
How you file depends entirely on the wording of your contract (according to the woman from the Tax Office who I spoke with on the phone) This means that if your contract states you are the employee and the hagwon is the employer, then you have legal ground to file as an employee if you wish (and you may be legally obligated to do so, if anyone will ever check. which they wont)

Option 1: File as an independent contractor -

Taxes: Flat rate of 3.3% of monthly income
Medical : Not eligible
Pension: Not eligible
See http://atek.or.kr/index.php?option=com_content&view=article&id=160&Itemid=223

this info was verified in my phone convo with the tax office.

Option 2 : File as an employee

Taxes: Calculated using the Simplified Tax Calculator found on the National Tax site. The English version of the site doesn't have it, so you'll have to go to the Korean site.

English site: http://www.nts.go.kr/eng/index.asp
English help number : 02-2076-5711 (the other number is a Seoul line, and I couldn't get through, even using the 82 area code)

Korean NT site: http://www.nts.go.kr/cal/cal_06.asp
Scroll down to the pic of the magnifying glass and paper.
In the first box, input your monthly salary
in the second box, the number you will claim for dependents. I used 1 because i am unmarried and have no kids.
Click the gray button.
The totals you will get are for two taxes :
Federal income tax is the larger number
Residential tax is 10% of Fed. Income Tax
The two combined are your total tax rate

For more info, call the foreigner helpline M-F before 6pm, but not between 11:30 and 1pm, because the English speaker takes her lunch then. 02-2076-5711. The website also shows a Seoul phone number, but I couldn't get through, even when I added the 82.

Medical: The National Health Insurance Company is the socialized medical plan that all employees in Korea are required to be on. The total contribution each month (premium) is 5.08% of your monthly income. 50% of this contribution is the employees responsibility and should be withheld. 30% is the responsibility of the employer , and 20% is paid by the government. This is according the the "Contribution" section of the website.

English medical site: http://www.nhic.or.kr/portal/site/eng/
Click contribution on the bottom.

I tried calling, but was put on hold for about 10 minutes with busy lines and then disconnected.

Pension: This information I got from calling around to the different pension sites. First I called the international site for the US and got hung up on after I tried to speak English to the guy who said he spoke it. Then I called back and was told I needed to call my local pension office, which is located at Gangdong station line 5.

English site: http://www.nps.or.kr/jsppage/english/main.jsp

I cannot remember the phone number for the local office, so call the international line and ask for the Gangdong station office, or tell them you are living in hanam-si and they will give you the number. 02 2176 8707

Pension should be a total of 9% of your monthly salary, with the employee contributing 4.5% and the employer contributing 4.5%. The school has the option of submitting this monthly or quarterly, or may never pay the pension office, so it is important to check with the office about 2 months in to make sure your account is there and has the proper amount in it.

In the end, we opted to file as employees. For taxes we pay about 50,000 won less per month, and our share of medical is just under 55,000, so it's basically like getting medical for 5,000 per month. Instead of a savings account for returning to the states, we will simply put the 94,500 into our pension each month. The school must match this. We can only get this once we are no longer residence of Korea. The same is true for the taxes I believe , but I didn't ask about refunds on that, so call the tax office and ask.

Other helpful sites :

korea4expats.com - amazing site with all the pension/medical/tax info, though some of the tax stuff is a bit confusing.

hope this helps!!!

[OculisOrbis]

You also need to add that as an independent contractor you are still required by law to be enrolled in the National Pension Plan and the National Pension Plan -- you just have to enroll yourself and you have to contribute EVERYTHING yourself (approx 5.8% for health and 9% for pension). The employer contributes nothing and you are liable for everything, including the fines, if you dont enroll yourself.

So in addition to paying a higher tax rate (~+2%) than an average teacher, you also have to pay an extra 7-8% of your income to cover those deductions that would normally be paid by your employer. Factor in that your employer would have added an additional 4.5% above your income for your pension (which most nationalities get refunded when leaving korea so it's a bonus), an independent contractor is operating at about 10% greater loss of income when compared to an employee.

And this is not even getting into the debate about E-2 holders not even being legally eligible to considered 'independent contractors'.....Never agree to be a contractor. It's just stupid.