Korean Job Discussion Forums

[Voyeur]

Ignoring the issue of whether an E-2 VISA holder can in fact be a Private contractor, are there any differences in how Taxes are assessed?

A certain school has the option of paying urs employees as contractors or as monthly employees.

Now, ignoring the issue of severance, pension refund, and medical - would someone making the same amount of money under either options net out the same at tax time?

The regular employee might get say 2.5 + a free apt. The contractor gets say 3 million and pays 500k rent. The regular employee doesn't get taxed on the free rent though (and that is from his highest bracket). Can the contractor deduct his rent in some other way? Or is getting less money and free rent more tax efficient?

Also, I have heard that employees can take advantage of certain deductions that were designed to help the common working man that a contractor cannot. Others have said that while the road is differnt, the overall tax nets out to about the same regardless of which option you take.

Anyone have any input?

[ttompatz]

[Voyeur]

Perhaps you are correct. Neverthless, any input on the question at ahnd?

[yashi]

The tax rate for contractors is a little over 3% for resident tax. Basically, that is all you pay. Contractors should file a Korean income statement in May (Most foreign contractors don't know this). It has been three years for me, but there are some decent deductions available (save all receipts). I believe a percentage of rent was one. I sent my wife with my 0 balance bank book to whine about how poor we are, and I believe we paid about 500k for the year on more than your 3 million a month scenario.

Let's say your contractor just pays the 3% resident tax of 90k and rent for 500k, but he doesn't file the Korean return. He takes home 2.41 million per month. I have no idea the deductions for the 'employee', but monthly take home is surely less. However, once you factor in the benefits, severence and pension return, the 'employee' probably makes more walking out the door.

Other things to consider are hourly rate and stability/security. A contractor works less hours for his 3 million than does the employee for his 2.5 million. As a contractor, if a school is not stable and/or the contractor doesn't perform up to scratch then hours begin to disappear.

[Voyeur]

I make 4 millionish a month as a contractor and have for 2 years. I pay the 3.3% witholding tax, but I have never filed for income tax. My understanding is that I probably OWE the government about 5 to 6 MILLION won for two years - even if I used an accountant, kept receipts, and used all the deductions I could.

If you made 3.3 million + housing / severance/medical (equivalent) over 2 years would you owe after that period? How much would your employer have been deducting? more than 3.3%?

I think I have a huge tax bill owing and am not sure what to do about it.