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  • Trybus
  • Waygookin

    • 11

    • November 17, 2010, 09:16:44 am
    • Michigan
Re: US Citizen Tax Laws
« Reply #160 on: April 15, 2011, 03:34:46 pm »
I read a lot of conflicting stuff about that last year.

Actually, it's not fraud.  I called the IRS in December and was told that I'm still eligible for the Foreign Earned Income Exclusion even though I don't pay Korean taxes.  As long as you meet all of the tests in the instructions of form 2555, you're good to go.  It doesn't get you out of paying all US taxes, just for income under $91,500. 

If there's any question, just file all of the right forms to get the deduction and be honest about your income.  If there's a problem, I'm pretty sure Uncle Sam won't hesitate to turn you down.
« Last Edit: April 15, 2011, 04:18:55 pm by Trybus »


Re: US Citizen Tax Laws
« Reply #161 on: April 15, 2011, 04:08:12 pm »
Agreed Trybus, it's not fraud. As long as you meet one of the requirements for Foreign Earned Income Exclusion you're fine in the eyes of the IRS. The issue with Korea is a separate matter. You have two years of tax free eligibility from the U.S. - R.O.K. Income Tax Convention entered into force Oct. 20 1979. Article 20 concerning teachers is pretty clear and is not influenced by your status with the IRS.
 


  • winterfall
  • Explorer

    • 9

    • December 01, 2009, 07:18:09 am
    • South Korea
Re: US Citizen Tax Laws
« Reply #162 on: April 17, 2011, 02:26:24 pm »
Agreed Trybus, it's not fraud. As long as you meet one of the requirements for Foreign Earned Income Exclusion you're fine in the eyes of the IRS. The issue with Korea is a separate matter. You have two years of tax free eligibility from the U.S. - R.O.K. Income Tax Convention entered into force Oct. 20 1979. Article 20 concerning teachers is pretty clear and is not influenced by your status with the IRS.

Thanks for clearing that up. To other posters. Even if you pay $0. You still need to file. And the exclusion is only on foreign income. It's not a across the board $91,500 tax break.


  • pdxinsk
  • Adventurer

    • 35

    • May 19, 2010, 03:29:08 pm
    • Hwaseong
Paying taxes on renewal/severance bonus with a US residency certificate?
« Reply #163 on: April 21, 2011, 01:28:01 pm »
Sorry if this question has been answered elsewhere on Waygook, I looked and didn't see anything though.

I'm wondering if this has happened to anyone else. I recently started my second year at my school (with GEPIK), and when I got a copy of my paycheck information for my bonus (renewal, re-signing, severance, whatever you want to call it - the bonus you get that's equal to one month's salary when you complete a one-year contract), I noticed I had taxes taken out - about 58,000 won for income tax, and about 6,000 won for resident tax.

I have my US residency certificate and submitted it to my school when I first got to Korea (so, before my first paycheck), so I have not had any Korean taxes taken out of my paycheck, until this one.

My co-teacher asked the administration office about it, and the answer they gave was that my bonus isn't counted as "income", so the tax exemption with the residency certificate doesn't apply.

This sounds strange to me, but I suppose it could be rightÖ.

Has anyone else had to pay Korean taxes on their bonus when they have their US residency certificate?  Iíve looked around online and looked through the Korea-US tax treaty, but havenít found anything that answers my question.  Iím just wondering if this is completely normal or if I should talk to my school about it. Itís not the biggest amount of money in the world, but, I wouldnít mind having it either.
 
Any responses would be greatly appreciated!


"income" is only income when it is given in exchange for a service.

Receiving severance is not income because a service isn't exchanged for it.  It is considered a fringe benefit, or bonus.

It only becomes income for tax purposes at the year end.  You should receive a credit note against the prepaid tax on the bonus at the year end.


  • pdxinsk
  • Adventurer

    • 35

    • May 19, 2010, 03:29:08 pm
    • Hwaseong
Thank you Daejeon! I appreciate the response and the information.

Since I posted this I've talked with a couple other NET's from the US, who also had the residency certificate, who did NOT have to pay tax on their bonus. I don't know if it varies from school to school, so I am  curious to hear what is the norm as far as if people have had their bonuses taxed in the past or not.


There was a system error, or benefit given to foreigners in Korea pre 2010 that allowed these FB's and bonuses to go untaxed.  They have since remedied this situation.  However, each province has its own tax department, and some aren't up to speed on the correct method of applying tax to bonus and benefit payments.

Hope that has cleared it up for you.


To Pay or Not to Pay...that is the question! (Taxes)
« Reply #167 on: April 22, 2011, 09:33:54 am »
So my school just asked me if I wanted to pay taxes in Korea or taxes in the United States. A recruiter suggested that I should pay taxes in Korea because they have a lower percentage of tax owed. This is my first year here in Korea so I haven't had to pay taxes in the States on money earned here...yet. How are you handling this issue? Do we really have a choice or does the US require us to pay taxes to them? Please give me any tips or advice you might have.  :)


  • pyeager
  • Fanatical Supporter!

    • 221

    • January 19, 2010, 08:19:14 am
    • Korea
Re: To Pay or Not to Pay...that is the question! (Taxes)
« Reply #168 on: April 22, 2011, 09:42:01 am »
You have to pay taxes everywhere. Luckily, the US gives you a foreign income exclusion up to like $85,000. You should definitely file so that you show income if you want a loan or something in the future. Just file an extension and do your final taxes after you pass the 330 day physical presence foreign residency test.


  • Ectofuego
  • Featured Contributor

    • 920

    • November 02, 2010, 09:21:10 am
    • Mars
Re: To Pay or Not to Pay...that is the question! (Taxes)
« Reply #169 on: April 22, 2011, 09:46:54 am »
State that you will pay in the states.  I am guess you are public school.  You get a 2 year exclusion from paying taxes in korea if you are public.  You get an exclusion from paying taxes in the states if it is under 85,000 annual international.
I'm Jason and I approve this message!


  • cc10det
  • Adventurer

    • 41

    • September 03, 2010, 07:17:56 am
    • Seoul, South Korea
Re: To Pay or Not to Pay...that is the question! (Taxes)
« Reply #170 on: April 22, 2011, 09:47:59 am »
Actually  for the first 2 years you are exempt from both as long as you work in Korea for more than 330 days in a tax year. See Korea/US tax treaty.

Fill form 8802/6166 http://www.irs.gov/businesses/small/international/article/0,,id=122559,00.html
When you get it returned you can submit it to your school or the Korea Tax office and you are exempt from Korean taxes (or you can get a refund if you paid)

Then fill form 2350: http://www.irs.gov/pub/irs-pdf/f2350.pdf and request an extension till the date you arrived in Korea (i.e. arrival August 2010..extend to August 2011) Submit a 1040 in August.. It's so sweet to fill in the 0000's

Fyi, This is as far as I understand it after spending hours on the phone with the IRS and talking to other waygooks. I am gonna roll with it. 


Re: To Pay or Not to Pay...that is the question! (Taxes)
« Reply #171 on: April 22, 2011, 09:58:37 am »
I opted not to pay it because that 8802 form cost more than the taxes I payed in my first year. Also mailing it in is an extra 15,000w. After I mailed it in they said I need to send something else and I got frustrated. Soooo, it's actually easier and cheaper to pay the Korean tax. That 8802 is effin retarded btw. I dare you to read it once (maybe even twice) and understand what's needed.


  • gookway
  • Super Waygook

    • 263

    • March 31, 2011, 12:22:19 pm
    • Korea
Re: To Pay or Not to Pay...that is the question! (Taxes)
« Reply #172 on: April 22, 2011, 10:08:59 am »
So my school just asked me if I wanted to pay taxes in Korea or taxes in the United States. A recruiter suggested that I should pay taxes in Korea because they have a lower percentage of tax owed. This is my first year here in Korea so I haven't had to pay taxes in the States on money earned here...yet. How are you handling this issue? Do we really have a choice or does the US require us to pay taxes to them? Please give me any tips or advice you might have.  :)

Why would they ask you if you want to pay taxes here or in your home country?  I didn't know the korean schools have the means to contact your home government or tax revenue agency to report to them everything you are earning in korea? o-o


Re: To Pay or Not to Pay...that is the question! (Taxes)
« Reply #173 on: April 22, 2011, 11:25:53 am »
I don't think they report what I make...I think they were just wondering if I was going to pay taxes here or be exempt and pay them at home.


Re: To Pay or Not to Pay...that is the question! (Taxes)
« Reply #174 on: April 22, 2011, 07:21:07 pm »
On a related note, I applied for the US Residency Certificate before I left. It's mildly frustrating because they said it would take 45 days to process and it took 60 before we got a letter that said it was going to take another 30 days. Then today, about 45 days after that letter, my mother in the US gets a phone call from the state department asking for me to fax a statement in that says "Under penalty of perjury I certify that I resided in the US in 2009, 2010, and will continue to reside in the US in 2011". From my understanding I'm still a resident of the US even though I'm working on a contract in Korea, right? I'd hate to perjure myself in order to get a tax benefit...any advice?


Re: To Pay or Not to Pay...that is the question! (Taxes)
« Reply #175 on: April 23, 2011, 12:27:22 pm »
On a related note, I applied for the US Residency Certificate before I left. It's mildly frustrating because they said it would take 45 days to process and it took 60 before we got a letter that said it was going to take another 30 days. Then today, about 45 days after that letter, my mother in the US gets a phone call from the state department asking for me to fax a statement in that says "Under penalty of perjury I certify that I resided in the US in 2009, 2010, and will continue to reside in the US in 2011". From my understanding I'm still a resident of the US even though I'm working on a contract in Korea, right? I'd hate to perjure myself in order to get a tax benefit...any advice?

Before you sign any statement under penalty of perjury, I'd highly recommend calling the IRS. You don't want to accidentally sign something that is technically untrue. Perjury is not to be entered into lightly...


Korean Tax Reimbursement for Americans
« Reply #176 on: April 28, 2011, 03:42:41 pm »
I'm American, and unfortunately I did not secure my IRS form stating that I'm an American resident before I got to Korea. No problem I thought, as I've been told that the money taken out for Korean taxes will get reimbursed once I've gotten the previously mentioned form.

Well, then my co-teacher told me that she was informed by the Daegu MOE that my school does NOT have to reimburse me. I've been looking around for something official to give my administration office to prove otherwise, but can't find it.

Has anyone been through this? Can you tell me what process you went through to get the tax reimbursement? Am I just out of luck?


  • Borababe1
  • Waygookin

    • 17

    • April 01, 2011, 11:13:34 am
    • Bora-dong, Giheung-gu, Yongin-si
Re: Korean Tax Reimbursement for Americans
« Reply #177 on: April 28, 2011, 07:16:18 pm »
Just get the form ASAP.  It takes about a month and costs $45, but once you get the form(after filing U.S. taxes), then the school can no longer collect tax money from you.  It's based on a U.S./Korea treaty, so it's federal law, and is good for two years. 


  • Gomdori
  • Veteran

    • 83

    • September 17, 2010, 01:29:51 pm
    • Seoul
I haven't filed my US taxes since 2009
« Reply #178 on: April 29, 2011, 07:27:25 pm »
I have not filed taxes in the US since I arrived in Korea in April of 2010.  Does anyone know what my punishment will be or what will happen when I go to file taxes again?  I have tried contacting the IRS in Beijing, but have never been given a simple answer about what I need to do.  Honestly, it is just too much of a hassle from what they have told me.  I have no W2's from 2008, no documents except for some paystubs from my time here in Korea.  I know I don't owe any taxes yet, but just wondering if anyone has been in this situation before.

Any help or information will be much appreciated!   :D


  • jrwhite82
  • Super Waygook

    • 268

    • September 09, 2010, 04:29:15 pm
    • South Korea
Re: I haven't filed my US taxes since 2009
« Reply #179 on: April 29, 2011, 08:08:22 pm »
You don't need a W2 to file taxes. 

You can back file easily by going to the IRS website, downloading the forms for back filing and then send them off.  I think even turbotax lets you back file too.

It's still not too late to file your 2010 return (I think people living abroad get an automatic extension). 

You might wind up owing some for 2009, but it won't be a lot.  In 2010, you probably won't owe much either.  Did you have any income from January to April while in America?  If so, you should at least have those W2s.  Then for the time in Korea, we really aren't making that much that your tax liability will be much.  Especially if you have student loans and other deductions you can take.  When you do file (WHICH YOU SHOULD!) focus on maximizing your deductions.
« Last Edit: April 29, 2011, 08:13:58 pm by jrwhite82 »