|
Korean Job Discussion Forums
"The Internet's Meeting Place for ESL/EFL Teachers from Around the World!"
|
| View previous topic :: View next topic |
| Author |
Message |
CaliUSA
Joined: 30 Jan 2011
|
 Posted: Mon Apr 09, 2012 3:27 am Post subject: 11th-hour tax advice: US exemption on Korean income |
 |
|
Would be grateful for some clarification. My situation: moved to Korea in mid-May 2011 -- so, about 200 days of residency in the country in 2011. Worked at a hagwon over summer, uni since September. I have two questions:
(1a) Do I qualify for the 2555 exemption? I do NOT meet either of the "tests" (http://www.irs.gov/pub/irs-pdf/f2555ez.pdf). But the phrasing is confusing, because the form says that the 330-day period of foreign residency (in order to qualify) can START in 2011. Well, since by now I've just reached the 330-day period of residence in Korea, I guess I DO qualify, even though my period of stay in Korea in 2011 was only 200 days.
(1b) Where the 2555 exemption is concerned, do I need a special form--from an employer or someone--that proves I've been here in Korea since May 2011?
(2) This is the really dumb question: how do I figure out my total Korean income? Haven't gotten the equivalent of a W-2 from a Korean employer. Calculating my uni income is easy--it's been four regular paychecks--but the hagwon payment was different each month, and I can't even track down the online pay stubs they sent me. I guess I'll just ask the hagwon directly for a total if they know it. This feels weird, though, because where the IRS is concerned, it feels like pulling numbers out of my you-know-what, without any documentation.
Thanks in advance ~ |
|
| Back to top |
|
 |
english puppet
Joined: 04 Nov 2011
|
| Posted: Mon Apr 09, 2012 3:59 am Post subject: Re: 11th-hour tax advice: US exemption on Korean income |
|
|
| CaliUSA wrote: |
Would be grateful for some clarification. My situation: moved to Korea in mid-May 2011 -- so, about 200 days of residency in the country in 2011. Worked at a hagwon over summer, uni since September. I have two questions:
(1a) Do I qualify for the 2555 exemption? I do NOT meet either of the "tests" (http://www.irs.gov/pub/irs-pdf/f2555ez.pdf). But the phrasing is confusing, because the form says that the 330-day period of foreign residency (in order to qualify) can START in 2011. Well, since by now I've just reached the 330-day period of residence in Korea, I guess I DO qualify, even though my period of stay in Korea in 2011 was only 200 days.
(1b) Where the 2555 exemption is concerned, do I need a special form--from an employer or someone--that proves I've been here in Korea since May 2011?
(2) This is the really dumb question: how do I figure out my total Korean income? Haven't gotten the equivalent of a W-2 from a Korean employer. Calculating my uni income is easy--it's been four regular paychecks--but the hagwon payment was different each month, and I can't even track down the online pay stubs they sent me. I guess I'll just ask the hagwon directly for a total if they know it. This feels weird, though, because where the IRS is concerned, it feels like pulling numbers out of my you-know-what, without any documentation.
Thanks in advance ~ |
A couple of thoughts on where to start.
I'd start with a call to the IRS on this as the 2555EZ form can be very confusing in the wording as you say. Call them and have your basic info ready. Tell them you have the form in front of you but the language is confusing and you want them to go through it step by step.
You'll undoubtedly be under owing the IRS money as the income limit is $92,500/year. Before you call the IRS, I'd go to Oanda currency page on the web (probably "historical" charts or graphs) and take the 1/1 to 12/31 of the year you're calculating and get a yearly average for the Won. Convert your total Won by the avg. to dollars. This way when you call the IRS for instructions you can plug the $US right into your form.
I wrote a brief letter to the IRS stating that W-2's and pay stubs were not issued by my employers in Korea and I had a copy of a couple printouts to give an example of my gross wages from a previous job here and I had my current school create a payment statement showing the total Won paid for 2011.
Finally, I photocopied the relevant page in my passport to show when I started/ended my work visa here in Korea. At a minimum, this shows you weren't in Korea prior to a certain date or after a certain date earning money here.
I wouldn't panic on getting it in on time frankly. I can't imagine you owe them money based on income earned in Korea so there's no financial penalty for filing it within the next couple of weeks. You may have to call them 2 or 3 times to get it done correctly.
When finished, make sure your make a scan or copy them and then you can, in all likelihood, keep a guide for next year's 2555ez & 1040. |
|
| Back to top |
|
|
cedarseoul
Joined: 16 Feb 2008
Location: nowon-gu
|
| Posted: Mon Apr 09, 2012 4:39 am Post subject: |
|
|
| Bear in mind that, since you are presently overseas, you have until June 17 to file--that's an automatic two month filing extension (not an extension on payment, but if you won't owe anything, then you have some extra flexibility). |
|
| Back to top |
|
|
RK12
Joined: 19 Feb 2012
|
| Posted: Mon Apr 09, 2012 5:06 am Post subject: |
|
|
If you go to instructions for the 2555ez: http://www.irs.gov/pub/irs-pdf/i2555ez.pdf they give you an example.
| Quote: |
| You establish a tax home and bona fide residence in a foreign country on August 14th, 2011. You maintain the tax home and residence until January 31, 2013. The number of days in your qualifying period that fall with 2011 is 140 (August 14 through December 31, 2011). |
If you came mid-May, say May 15th, between that date and December 31, 2011 is 230 days. For the 2011 year, you do NOT qualify for the bona fide residence for 2011 as you are 100 days short and thus cannot file the 2555ez. If you stay all throughout 2012, then for the 2012 tax year you would qualify.
In order to get out of the IRS possibly knocking on your door, the teacher needs to be in Korea (or whatever country) by February 5th in order to gain the 330 days minimum for the bona fide test. |
|
| Back to top |
|
|
english puppet
Joined: 04 Nov 2011
|
| Posted: Mon Apr 09, 2012 5:16 am Post subject: |
|
|
| RK12 wrote: |
If you go to instructions for the 2555ez: http://www.irs.gov/pub/irs-pdf/i2555ez.pdf they give you an example.
| Quote: |
| You establish a tax home and bona fide residence in a foreign country on August 14th, 2011. You maintain the tax home and residence until January 31, 2013. The number of days in your qualifying period that fall with 2011 is 140 (August 14 through December 31, 2011). |
If you came mid-May, say May 15th, between that date and December 31, 2011 is 230 days. For the 2011 year, you do NOT qualify for the bona fide residence for 2011 as you are 100 days short and thus cannot file the 2555ez. If you stay all throughout 2012, then for the 2012 tax year you would qualify.
In order to get out of the IRS possibly knocking on your door, the teacher needs to be in Korea (or whatever country) by February 5th in order to gain the 330 days minimum for the bona fide test. |
No argument from me on what you're reading out of the guide but I'd emphasize to the OP to set this stuff up on you kitchen table and call/Skype the IRS. I remember the first couple of customer service people I got last year deferred me to "specialists" on the 2555. In other words, even your front line IRS folks pass this one up the chain a bit. I remember reading through the descriptions of how you qualify and it did start to make my nose bleed and eyes cross over in funny ways.  |
|
| Back to top |
|
|
isitts
Joined: 25 Dec 2008
Location: Korea
|
| Posted: Mon Apr 09, 2012 6:18 am Post subject: Re: 11th-hour tax advice: US exemption on Korean income |
|
|
| CaliUSA wrote: |
Would be grateful for some clarification. My situation: moved to Korea in mid-May 2011 -- so, about 200 days of residency in the country in 2011. Worked at a hagwon over summer, uni since September. I have two questions:
(1a) Do I qualify for the 2555 exemption? I do NOT meet either of the "tests" (http://www.irs.gov/pub/irs-pdf/f2555ez.pdf). But the phrasing is confusing, because the form says that the 330-day period of foreign residency (in order to qualify) can START in 2011. Well, since by now I've just reached the 330-day period of residence in Korea, I guess I DO qualify, even though my period of stay in Korea in 2011 was only 200 days.
(1b) Where the 2555 exemption is concerned, do I need a special form--from an employer or someone--that proves I've been here in Korea since May 2011?
(2) This is the really dumb question: how do I figure out my total Korean income? Haven't gotten the equivalent of a W-2 from a Korean employer. Calculating my uni income is easy--it's been four regular paychecks--but the hagwon payment was different each month, and I can't even track down the online pay stubs they sent me. I guess I'll just ask the hagwon directly for a total if they know it. This feels weird, though, because where the IRS is concerned, it feels like pulling numbers out of my you-know-what, without any documentation.
Thanks in advance ~ |
Already a sticky on this topic. I'd check that. Also, you can't use a residency certificate for a hagwon. But if you've been here since last May, you should easily pass the physical presence test on the 2555 with two extensions.
[edit: Do the regular 2555 form, not the ez. Less restrictive options on the regular form.]
As for your second question, there is a W-2 equivalent that you can get from your employer, though you could just calculate it on your own if you wanted as you aren't required to send it to the IRS.
Last edited by isitts on Mon Apr 09, 2012 8:39 pm; edited 1 time in total |
|
| Back to top |
|
|
isitts
Joined: 25 Dec 2008
Location: Korea
|
| Posted: Mon Apr 09, 2012 6:48 am Post subject: |
|
|
| RK12 wrote: |
If you go to instructions for the 2555ez: http://www.irs.gov/pub/irs-pdf/i2555ez.pdf they give you an example.
| Quote: |
| You establish a tax home and bona fide residence in a foreign country on August 14th, 2011. You maintain the tax home and residence until January 31, 2013. The number of days in your qualifying period that fall with 2011 is 140 (August 14 through December 31, 2011). |
If you came mid-May, say May 15th, between that date and December 31, 2011 is 230 days. For the 2011 year, you do NOT qualify for the bona fide residence for 2011 as you are 100 days short and thus cannot file the 2555ez. If you stay all throughout 2012, then for the 2012 tax year you would qualify.
In order to get out of the IRS possibly knocking on your door, the teacher needs to be in Korea (or whatever country) by February 5th in order to gain the 330 days minimum for the bona fide test. |
Um...no. Read your own quote. 330 days is for the physical presence test. The bona fide residence test is if you've listed Korea as your tax home (as in, you pay taxes to the Korean government). And as your own quote says, only 140 days are needed.
[edit: Not that the bona fide residence test helps him in this case...unless the university doesn't need the residency certificate from the US to exempt him from Korean taxes.
But even if you have under 330 days for the physical presence test, you can still file for partial exemption, pro rata, for the days under 330 that you have been in Korea on the regular 2555 form.] |
|
| Back to top |
|
|
|
|
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum
|
|
FAQ
Search
Memberlist
Usergroups
Register
Profile
Log in to check your private messages
Log in
