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Omkara
Joined: 18 Feb 2006
Location: USA
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 Posted: Sun Apr 15, 2007 8:48 pm Post subject: "Application for Tax Exemption" |
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Working in a public school, I am exempt from paying taxes for two years provided that I can provide an "application for tax exemption." Anyone know which form this is and where I can find it?
It seems strange, since the application is for exemption from American Taxes.
Thanks. |
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ttompatz
Joined: 05 Sep 2005
Location: Kwangju, South Korea
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| Posted: Sun Apr 15, 2007 9:54 pm Post subject: Re: "Application for Tax Exemption" |
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| Omkara wrote: |
Working in a public school, I am exempt from paying taxes for two years provided that I can provide an "application for tax exemption." Anyone know which form this is and where I can find it?
It seems strange, since the application is for exemption from American Taxes.
Thanks. |
This was covered about 3 times last week.
You need to submit an IRS form 8802 (Applciation for United States Residency Certification).
It is ONLY applicable to US citizens. |
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Omkara
Joined: 18 Feb 2006
Location: USA
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| Posted: Sun Apr 15, 2007 9:57 pm Post subject: Re: "Application for Tax Exemption" |
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| ttompatz wrote: |
| Omkara wrote: |
Working in a public school, I am exempt from paying taxes for two years provided that I can provide an "application for tax exemption." Anyone know which form this is and where I can find it?
It seems strange, since the application is for exemption from American Taxes.
Thanks. |
This was covered about 3 times last week.
You need to submit an IRS form 8802 (Applciation for United States Residency Certification).
Well, wasn't looking for it last week...let alone three times! Didn't exist as a possible issue in my mind until an hour or so ago.
Thanks for helping me out.
It is ONLY applicable to US citizens. |
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Colorado
Joined: 18 Jan 2006
Location: Public School with too much time on my hands.
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| Posted: Sun Apr 15, 2007 10:20 pm Post subject: |
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I'll try to explain it.
If you are an American and you want to apply for an exemption from Korean income taxes, you will first need to get form 8802 from the IRS. Look it up on the IRS homepage.
You will need to pay for the form and there are instructions on the IRS page as to how to pay for it online.
The 8802 form is used in order to request form 6616 from the IRS which certifies that you are a US resident for tax purposes. Be advised, if you are a US resident for tax purposes, you can't claim the overseas income tax exemption when filing your US taxes.
Now, once you have your 6616 form, you need to get a Korean income tax exemption form from your school. If they can't/won't get you the form, you'll have to get it yourself from the Tax Office. Get someone who speaks Korean to go with you. Fill out the Korean exemption form and make your own copy of both forms. Submit the original forms to your school. They will submit them to the tax office. If you are successful, you will not be charged Korean income taxes. You will, however, need to pay your taxes to the United States IRS as you have claimed that you are a US resident, rather than a foreign resident for tax purposes. The idea behind the tax treaty is that individuals should not have to pay taxes in Korea and in the United States for the same income.
This is what I've learned, but don't take my word for it. I'm not a tax adviser. All the information is available on the IRS Homepage. I choose to pay Korean taxes rather than US taxes. It's cheaper. |
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Omkara
Joined: 18 Feb 2006
Location: USA
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| Posted: Sun Apr 15, 2007 10:33 pm Post subject: |
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Does anyone else agree with this last point that it is cheaper to pay Korean taxes than it is to pay American taxes?
I found a useful site for others looking:
http://forums.tochigigaijin.com/lounge/viewtopic.php?t=106
Here, you can get the 8802 and instructions on how to fill it in.
Thanks for the help. |
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archer904
Joined: 04 Sep 2006
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| Posted: Mon Apr 16, 2007 3:58 am Post subject: |
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| Omkara wrote: |
Does anyone else agree with this last point that it is cheaper to pay Korean taxes than it is to pay American taxes?
I found a useful site for others looking:
http://forums.tochigigaijin.com/lounge/viewtopic.php?t=106
Here, you can get the 8802 and instructions on how to fill it in.
Thanks for the help. |
http://www.nts.go.kr/eng/default.html
On 2.0 million a month, your taxes are 28,950 won. If you're making 2.5 million, that goes up to 70,790. If you're making 3.0 million, it is 143,920.
All those numbers are LOTS cheaper than American income tax. 2.0 million is about $2150 a month. Think about FICA, Medicare, Federal Witholding, and possibly State taxes. Back home, on $2150 a month (single, no dependents), they're probably taking $400 a month (or more) in total. And that's with you paying rent somewhere... |
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Omkara
Joined: 18 Feb 2006
Location: USA
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| Posted: Mon Apr 16, 2007 5:14 pm Post subject: |
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Indeed, cheaper. Are there any pitfalls I should be aware of should I decide to pay Korean taxes?
Very helpful, everyone, thanks. |
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dogshed
Joined: 28 Apr 2006
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| Posted: Thu Jun 07, 2007 8:37 am Post subject: |
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| Colorado wrote: |
I'll try to explain it.
If you are an American and you want to apply for an exemption from Korean income taxes, you will first need to get form 8802 from the IRS. Look it up on the IRS homepage.
You will need to pay for the form and there are instructions on the IRS page as to how to pay for it online.
The 8802 form is used in order to request form 6616 from the IRS which certifies that you are a US resident for tax purposes. Be advised, if you are a US resident for tax purposes, you can't claim the overseas income tax exemption when filing your US taxes.
Now, once you have your 6616 form, you need to get a Korean income tax exemption form from your school. If they can't/won't get you the form, you'll have to get it yourself from the Tax Office. Get someone who speaks Korean to go with you. Fill out the Korean exemption form and make your own copy of both forms. Submit the original forms to your school. They will submit them to the tax office. If you are successful, you will not be charged Korean income taxes. You will, however, need to pay your taxes to the United States IRS as you have claimed that you are a US resident, rather than a foreign resident for tax purposes. The idea behind the tax treaty is that individuals should not have to pay taxes in Korea and in the United States for the same income.
This is what I've learned, but don't take my word for it. I'm not a tax adviser. All the information is available on the IRS Homepage. I choose to pay Korean taxes rather than US taxes. It's cheaper. |
I know this is an old thread but just in case someone come across it you can get both the US income tax exclusion and the Korean tax break at the same time. Taking the Korean tax break will cause you to fail the Bona Fide Residence test but you can still pass the physical presence test.
See: http://forums.eslcafe.com/korea/viewtopic.php?t=87567&highlight=
Also, my school was able to make arrangements so that I did not need the form from the IRS. I'm not sure how they did this. |
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Colorado
Joined: 18 Jan 2006
Location: Public School with too much time on my hands.
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| Posted: Thu Jun 07, 2007 8:33 pm Post subject: |
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| Also, my school was able to make arrangements so that I did not need the form from the IRS. I'm not sure how they did this. |
Be very cautious. My school told me the same thing. Turns out they didn't know what they were talking about. Now it seems I may be liable for back taxes. |
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JD1982
Joined: 19 Apr 2007
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| Posted: Thu Jun 07, 2007 8:39 pm Post subject: |
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| Colorado wrote: |
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| Also, my school was able to make arrangements so that I did not need the form from the IRS. I'm not sure how they did this. |
Be very cautious. My school told me the same thing. Turns out they didn't know what they were talking about. Now it seems I may be liable for back taxes. |
How are K-gov't going to hit you up on your back taxes. All you have to do is, when you finish your contract, just exit and return to the country and get a new job with new E-2 visa number and a new ARC. |
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Colorado
Joined: 18 Jan 2006
Location: Public School with too much time on my hands.
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| Posted: Thu Jun 07, 2007 10:48 pm Post subject: |
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| How are K-gov't going to hit you up on your back taxes. |
Some people are in the middle of their second contract at the same school. They are looking at last year's unpaid taxes. |
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JD1982
Joined: 19 Apr 2007
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| Posted: Thu Jun 07, 2007 10:55 pm Post subject: |
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| Colorado wrote: |
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| How are K-gov't going to hit you up on your back taxes. |
Some people are in the middle of their second contract at the same school. They are looking at last year's unpaid taxes. |
Really? They are actually looking into making tax claims against FTs? I seriously doubt it.
So what if you take the 5th Amendment and deny their claim. Let them investigate further until you finish your contract and exit the country. And return the next day with new ARC number.  |
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dogshed
Joined: 28 Apr 2006
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| Posted: Fri Jun 08, 2007 12:38 am Post subject: |
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| Colorado wrote: |
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| Also, my school was able to make arrangements so that I did not need the form from the IRS. I'm not sure how they did this. |
Be very cautious. My school told me the same thing. Turns out they didn't know what they were talking about. Now it seems I may be liable for back taxes. |
Was it a public school? |
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