Korean Job Discussion Forums

[PBRstreetgang21]

I work for a major university down south and they have made a huge tax snafu that has left me not sure what to do. I have worked in three hagwons here in Korea and at all those hagwons I paid Korean income taxes. When I came here they said I wasn't required to. I pressed them on this insisting that I paid income taxes at my hagwons before, and they had said that, that had been unnecessary. I assumed they knew what they were talking about and let it slide. Now a year later they have come back and said that they made a mistake that they want me to pay the taxes back for the previous year. A years worth of income taxes! We're talking a few million won here. Shouldn't they have to pay since it was their accounting error? Also, they said they need it as one lump sum, which sounds fishy to me because I know in the States, if you owe taxes you can work out monthly installment plans. Might it be the case that the university has already paid the government and they want me to reimburse them? If so, can I legally tell them to F off seeing as how it's their mess they want me to pay for?

Also, they said that Americans don't have to pay Korean income taxes for two years. Is this true? And, since I had been paying taxes for over two years, shouldn't the govt have records of that, which being the case, shouldn't that enable me to not have to pay this money for this year? I really have no clue what to do.

[kprrok]

YOU are responsible for YOUR income taxes. Jobs take it out monthly to help you out, but they are not required to do this. You still have to pay the taxes. The government doesn't care what your job tells you about what you owe. They say you owe it, so you owe it. Pay up. I'm pretty sure the uni will just deduct it from your pay anyway, so not much you can do about it.

[Son Deureo!]

Who exactly is the "they" saying that you owe money, your old hogwon boss or the Korean tax office? One of those demands carries a lot more weight than the other....

[jrwhite82]

The above poster is right. But it sounds like it is the government requiring this.

Therefore you have to pay.

[PBRstreetgang21]

"They" would be the university accounting office.

I understand that while I am responsible for my taxes, when it comes to tax law things can be more gray. I was led to believe that its more complicated, and that I legally didn't have to pay taxes, and now Im being told I do. If it is the case that Americans are tax exempt for two years, then whats the deal with my having had paid taxes for my first two years in Korea? If thats the case, then shouldn't my last year figure into that somehow? Not to mention, the government hasn't said anything to me. This is only my university telling me, which seems a bit strange. If you owe the IRS money back home, the IRS doesn't call your boss, the IRS calls YOU. Thats not what is happening here. It seems to me that the accounting office make a mistake, and now they want me to cover their ass. What Ive been told is that if I dont pay, the university has to pay. Well, that doesn't make much sense (in my limited understanding of tax law). If you dont pay taxes, then YOU are in trouble with the government, they don't take the money from your boss as I understand it. There is something about this situation that just seems suspect to me.

Especially about the whole "lump sum" thing. Wouldn't the government be willing to work out a payment plan-- this is a lot of money we are talking. Look if I owe the government tax money-- I owe the government tax money, but there seems to be another dimension. Why hasn't the government said anything.

Also, and this is really weird. The University has said that, if I give them a list of all my debit card transactions they will deduct the tax from any "items" I paid for, from the overall tax bill? Excluding ATM withdrawals. That also sounds exceedingly odd to me, and doesn't seem to make much sense. A meal at Outback gets deducted from income taxes but 50,000 won I withdrew from the ATM to buy groceries doesn't? That doesn't add up. Also, I'm not keen on the idea of handing a years worth of banking transactions over to my University.

[kumoh]

Better go to local tax office and talk with them.

[kprrok]

[PBRstreetgang21]

I suppose you're right about the language thing. I am fairly fluent in Korean, and can handle my own in any situation (my gf speaks no English at all) but the aveage Korean (and I'm sure the tax office) probably assumes I'm completely FOB.

Well that post was certainly helpful. So It appears you went through the same thing. I guess I'll try and work something out with the accounting office, that being the case. This is a several thousand dollars they're asking for, not exactly the kind of money I'm ready to fork over and not lose a few Zzzs over. Or perhaps I should just get it over with, and not have to think about it anymore.

It's just simply very frustrating to be going through. If it were a few hundred I wouldn't care.

In the case of the debit card purchases, did you get that? Or, at the very least do you know how I could obtain such a statement? Do I just go down to the regular bank teller flash my card and tell them what I need?

[kprrok]

Honestly, my tax liability for the past few years has only been a few hundred thousand or so, so I didn't worry about any more deductions.

I think, over one year, my entire tax payment was about 400k, and then I had to pay an addition 60k. That 400k would not cover a single month of tax payments back in the States, so I don't even care to worry about reducing it any more. I can't imagine how your payments are several thousand dollars...

[asutrack]

I too was wondering how you could owe more than a million KRW in taxes for one year. While there has been a change in the tax laws here for foreigners it really only changes things by about 300,000-400,000krw in all (depending upon your yearly salary). If you school is factoring your taxes at the 15% rate THEN it would be several million krw owed BUT you don't have to follow the 15% rate. Just file as a Korean resident.

Go to the National Tax Service website: http://www.nts.go.kr/eng

You can calculate your tax online to see how much you will owe for 2010.

[jinju necklace]

As kprrok already posted, Americans are only tax-exempt for their first two years in Korea - and only if you fill out the proper paperwork at your local tax office (you need a proof of residency document from your State Department). Since you have already been in Korea for more than 2 years, this exemption no longer applies to you.

The person in your university admin office made a mistake when they said you didn't need to pay taxes - a stupid mistake. They have probably haven't paid the tax office yet, since all businesses in Korea are sorting out that amount at this time of year. What you can maybe do is work out a payment plan with your university to pay the amount over the next 2-3 months (especially since it was the admin office's mistake). The Korean Tax Service does not set up payment plans, they have to be paid in full.

Again, as previously mentioned you qualify for deductions if you have a Korean credit card, a tax save card (for cash purposes), a bank debit card, car or life insurance, medical expenses over 1 million won, investments, charitable donations, etc.

You can print out all these deduction forms by going to http://www.yesone.go.kr/login/raeaw001.jsp?logout_fg
The website is only in Korean, but you should have no problem since you said you know Korean well. Once you login with your ARC number and digital certificate (공인인증서) all your deductable items will be there and you should print out these documents and give them to your school's admin office.

The National Tax Service has information in English and is very informative. There is also a hotline you can call for advice in English.