Korean Job Discussion Forums

[Doogie]

I'm a Canadian who is just finishing up in Korea after nearly 2 years. When I came here in 2005, my co-teacher told me that Canada was one of the countries that was tax exempt over the initial 2 year period. I figured he knew what he was doing and I took him at his word. My school hasn't taken tax off my entire time here (nearly 2 years). My new co-teacher has discovered this error and has told me that I must fork over 600k in back taxes before I leave at the end of August. My contract is the standard GEPIK one that says "Income tax won't be charged for 2 years between 2 countries if those 2 countries have special agreement". Considering I was misled, do I have any recourse here or should I just pay up and shut up. In all honesty, it's not even so much the money as it's the fact that the school screwed up and the should take some responsibility.

[Colorado]

Good question, but you probably won't like the answers.
check this thread:
http://www.efl-law.com/forum/viewtopic.php?t=1219

[Doogie]

Thanks for the quick response, Colorado. Actually, I figured that I wouldn't have any options here. I just thought I'd check. As you said in your post, it just makes me angry as hell that they won't take any responsibility for misleading me and making the error. I'm pretty sure that my current co-teacher hasn't brought this to the attention of the Principal. I think she's just hoping I'll pay without creating a fuss. It wasn't her fault. It was my idiot former co-teacher that screwed up. I'm leaving Korea with a lot of good memories but, unfortunately, it's a number of circumstances like this that will leave a bad taste in my mouth. I worked in the corporate world in Canada for quite a while and my experience was that most places I worked for took responsibility for their errors. In this country, they just sweep it under the rug and say "tough luck". I doubt I'll ever work here again.

[Colorado]

I wouldn't just hand it over to a co-teacher. Tell her it needs to be properly deducted and accounted for so you can file for a tax refund.
Put the ball back in her court. Maybe she'll drop it.

[sjk1128]

Don't give them the money unless they agree to do a bunch of paperwork and show you the year end settlements that should be completed for you each January. Even without applying for an exemption, you should get almost all the money back that they take out when working at a public school.

Besides, do you really think they're planning to turn that money in now? It will likely be directly added to the teachers' drinking and partying budget for the next semester, and it's probably the principal's idea. Your new co-teacher is just his puppet on a string. That's the reality of Korea. Don't buy all the false politeness.

Read the links below carefully to understand how your taxes should have been treated. My school refused to properly file my taxes and give me my refund until I filed a formal complaint with the city office and got the Seoul office to call here and put some fire under their asses. The Busan city tax office finally had to send a letter ordering my school to revise my year end tax settlement and pay me my refund.

This is a little off the point of your original post, but people should know this:
Almost every foreign teacher who works in a public school should get back almost 100% of what they pay in in taxes. Ask for a statement of your pay. Plug your numbers in to the automatic calculator, print it out and take it to your school's officer if you have not been refunded your money. To do an estimate, a typical foreign English teacher makes 2.2m, pays 90k in taxes, 50k in medical insurance, and 90k in pension. Multiply all of that by 12 months and plug it in the calculator to see what the typical foreign English teacher should be getting back. (Paid in 1,080,000; gets back 940,000.) See my point? Your tax payable for 2 years shouldn't be higher than 280,000 even if you started Jan 1 and worked for 2 years straight. Ask them why they want more than 2 times what you should legally owe.

Tax home page
http://www.nts.go.kr/eng/

Calculator
http://www.nts.go.kr/eng/front/jungsan2006/refer_2006jungsan_eng.asp

Guide for foreign English teachers
http://www.nts.go.kr/front/service/publish_book/valgan_book_view.asp?news_seq=5808
(Then click on the PDF link to the guide.)

BTW, have they also not taken out pension from your pay? You get double the pension back from the pension office when you leave regardless of whether it's a public school or not. If they're not doing that, they're screwing you out of at least another 2m.

[yingwenlaoshi]

[Doogie]

Thanks for the advice guys. My new co-teacher only told me about the mistake this past week but she hasn't mentioned a word about issuing tax receipts. I know they have a legal obligation to issue tax receipts for any monies that they withhold from me. I'm meeting with her about this tomorrow so I'll tell her that , by Korean law, I'll be expecting the school to issue backdated tax receipts for the last 2 years so I can file my return. Actually, since I haven't filed since I've been here, I guess I'll have to file for 2 tax seasons (?). I find it interesting that he didn't mention a word about issuing a tax statement or receipts. I honestly think she was expecting me to just hand the cash over to the school and not file a return.........not a chance of that. Thanks again for your advice.

[sjk1128]

[sjk1128]

Also check out #10, same location:

10. Is there a way we can get a refund for last year's income tax on my paycheck?

The tax amount taken off your wage is treated as a credit against the overall amount of tax payable by you for the tax year in question. In January of the following year or at the time of the last payment of income in the year, your tax liability is settled and finalized through exact calculation by applying the related tax rates.

And then, the balance between the sum of the amount of tax withheld monthly and final tax due to be paid is collected or refunded to you, which means you have to check your tax settlement with your employer, not NTS.

[sjk1128]

So have you plugged you numbers in the tax calculator? It's really easy and will tell you exactly how much you owe. Then you can print it out and take it with you to work. 600k for working 2 years at a public school is way too much. I'm saying this because I had to battle it out last year with my school. Don't let people rip you off like this. It happens way too often in Korea.

Calculator:
http://www.nts.go.kr/eng/front/jungsan2006/refer_2006jungsan_eng.asp

All you need is your salary and how much they deducted for taxes, pension, and health insurance. Click the 30% reduction for foreign workers. If you have credit cards in Korea, very high medical bills, etc. you can will see a further deduction to your tax liability upon entering that info. This information is straight off the Korean NTS website, and it is the same calculator your employer should have used to calculate your tax liability.

[sojourner1]

Wow, that comes up to 593,000 Won tax return if you earned 24 million Won for the year.

Is this correct?

In January you're to get a tax form from your hagwon in order file for the return or do you just use the calculator and file with the NTS?

[sjk1128]

Again, your employer should do this automatically for you in January. You are only responsible for submitting documentation for any deductions your employer does not have records for (i.e. credit cards, medical expenses, educational expenses, etc.) Obviously, your employer already has your identity documents and records about how much tax, pension, and insurance premiums were withheld.

However, it should have all been done in January. You should have automatically received a refund -or been charged- in the following (Feb) month's paycheck. It seems almost no hagwons are doing this. As you will already know, many do not deduct taxes, pension, or health insurance premiums at all. Many of the few that do so do not then pass that money on to any authority; They pocket it. Of the few who actually deduct appropriate amounts and submit it to the appropriate government authorities, precious few actually fill out the paperwork in January that they should to get you your refund.

This leaves you basically screwed. But yes, if you plugged in your numbers in the calculator and that's the answer it spit out, that is theoretically how much money you should have gotten back in Feb. I had to fight with my public school employer, file a formal complaint here at the Busan tax office, and then call the Seoul office several times to have them lean on the Busan office in order to get my refund processsed. That leaves me less than optimistic about how you will fare with a hagwon boss.

Note that you are not eligible to be tax exempt if you are a private school teacher, but you are still eligible for a refund if you have overpaid. If your employer does not do it for you or if you have income besides your wages earned for work in Korea, you can file before the end of May directly with NTS to get your money back. I don't know how to do that because I never have. Good luck. Read all the guides on the website for foreigners. If you file for a refund of taxes your boss never submitted, you will, in effect, be reporting him to the tax office for tax evasion. If your goal is to get your money any way possible, there's some leverage for you.

The thing that perplexes me is that there are not more people out there angry about this. We all gripe when our employers try to keep our salaries, severence pay, or weasel out of paying for the plane ticket. Between not making pension contributions and not filing appropriate tax documents, employers routinely cheat us out of ~3m per year. Doesn't that bother anyone else?

[yingwenlaoshi]

If you want to file your tax return, you certainly have the right to do that. It's personal income tax, isn't it? Your employer sends your tax deductions to the tax office and you file your return. Employer is supposed to give you tax receipts. I really don't think they're responsible for the refunds or collecting debits. Then they'd be acting as your employer and the government.

Taxes are probably not going to work out exactly to a tee as they're shown in the monthly withholding calculator on their website. That's basically just a guide. There are other things to consider when filing your tax return.

[sjk1128]

Sojourner1,

It depends on your numbers. According to the tax withholding calculator (NTS website http://www.nts.go.kr/eng/), at 2m per month, your boss should only have been taking out 33,620. He (or she) should also be withholding 4.5% for pension, or 90,000. Your part of the medical insurance is usually 50,000-55,000. Plugging in those numbers, you would be due back 315,240 won.

Many employers seem to withhold much more for taxes, up to 5%. If your employer is doing that (100,000 per month for taxes), you'd be due back 1,111,800 - assuming you have no other deductions - like Korean credit card expenditures, a cash card, medical expenses, educational expenses, etc. and worked the whole year (Jan-Dec).

BTW, going from 2m to 2.6m, the tax withholding triples, but most foreign Eng teachers would still get it almost all back. Isn't that odd?

Good luck.

-Sjk1128

Again, I encourage anyone who has too much tax withheld or didn't get a refund to raise hell. I'm sick of Korean dishonesty with money. I'm not asking for special treatment; I'm just demanding they follow their own damn laws when dealing with me.

[sjk1128]

So where'd you get your info, yingwenlaoshi? Mine is coming straight off the Korean NTS website and I gave my references above. I'm not trying to be difficult, but why spread misinformation?

According to the guide published by the NTS for foreign English teachers and the full guide available in English on their website, the only cases in which an employee would need to file his or her own tax return is if the employee earned income other than wages in Korea - or his/her boss shirked their responsibility to do it. The website clearly states that it is the employer's responsibility to do the year end tax settlement in January and that you should take up any issues with your employer before contacting the NTS directly.