Your renewal bonus taxed (?) and other fun tax time stories.

I'm currently doing the tax thing at school and for the second time in the six years I've been at my current school, a new office lady is trying to retroactively tax my housing stipend for the year.  I know some people have it taxed and some don't.  I have never had it taxed at this school and am trying to explain the knock on affect it will have if they tax me on it now.  I can pay up, no problem, but it also means my income rises which also affects pension contributions and how my severance will be calculated. Anyone ever had them change gears part way and start taxing a housing stipend?  Because my stipend is exactly my rent and is paid separately from my salary its never been taxed or been an issue.  I just can't see them changing it for this past year and it not rippling back through the years.  Again, ultimately benefits me with NPS.  Just trying to get that through the office lady's head as she thinks a simple tax payment on my behalf is the only result of her deciding my housing should be taxed. 

Also, I have never heard of a renewal bonus being taxed in any way.  She's mentioned this as well.  Anyone's bonus ever taxed?

 according to the "2021 Year-End Tax Settlement Manual for Foreigners" found on https://www.nts.go.kr/english/main.do "All forms of compensation received in exchange for provision of service based on employment relations or a similar contract (excluding compensation for service provided by daily workers)" are subject to tax which would suggest that housing allowance and bonuses are taxed.

Edit - it goes on to give an example

"James worked as an instructor in 2021 under a labor contract with a private English education institute.
He earned 3,000,000 won every month (including 500,000 won offered by the institute to pay monthly rent).

Annual wage & salary income - ₩36,000,000

Non-taxable income① (-)   0


① The 500,000 won offered by the institute for payment of monthly rent does not fall under non-taxable income."

Yeah, I know some people have their housing taxed. I have never heard of the bonus being taxed but that doesn't mean they don't just include it as income when calculating tax.  Just never heard it before.  That just may mean it was given without being taxed but later was included in the year end tax settlement and that was communicated to me.  My big concern is that I'm going to get dinged by a big bill this year because housing wasn't taxed, and that might then roll into why hasn't it been taxed for the last six years and just the hassle of having to try and work that out, and how it would affect pension and severance.  Those would have to be recalculated as well.  Hopefully they can contain it to just this year. 

And this:

"Currently, the qualified housing benefit is treated as "income excludable from employment income", not "non-taxable employment income", so it does not need to be added back to income for the foreign employees applying the flat tax rate.

However, due to the changes of the relevant provisions, effective from January 1, 2021, it will be reclassified as "non-taxable employment income". But as a transitional measure, the foreign employees applying the flat tax rate can exclude the qualified housing benefit incurred until December 31, 2021 from taxable income. "

If it is income, then maybe they should start including it as part of the pension contribution which they currently don't.  Meaning you would get more money put into the pension each month. 

Either way, Korea is grasping desperately for more tax any way they can get it.  Closing loopholes, looking for excuses, etc.  I remember when I first got here, the total deductions were around 8% of my pay and I always got a bit back at the end of the year.  Nowadays, my total deductions are around 13 or 14 % and I still am stuck paying 300 plus thousand at the end of the year.  Yeah, they are always scamming to take more while keeping your pay the same for years.  Will be time to get out of here in the next couple of years. 

If it is income, then maybe they should start including it as part of the pension contribution which they currently don't.  Meaning you would get more money put into the pension each month. 

Either way, Korea is grasping desperately for more tax any way they can get it.  Closing loopholes, looking for excuses, etc.  I remember when I first got here, the total deductions were around 8% of my pay and I always got a bit back at the end of the year.  Nowadays, my total deductions are around 13 or 14 % and I still am stuck paying 300 plus thousand at the end of the year.  Yeah, they are always scamming to take more while keeping your pay the same for years.  Will be time to get out of here in the next couple of years.

What loopholes have been closed for you recently?

What loopholes have been closed for you recently?

Whatever loophole that has me paying 13 percent plus extra money at the end of the year versus paying 8 per cent and getting money back at the end of the year.  Supposedly tax rates are the same, but yet tricks and scams have me paying more. 

Whatever loophole that has me paying 13 percent plus extra money at the end of the year versus paying 8 per cent and getting money back at the end of the year.  Supposedly tax rates are the same, but yet tricks and scams have me paying more.

You've made no attempts to try and understand the tax system and why you are paying more?

You've made no attempts to try and understand the tax system and why you are paying more?

Rates the same, the government looking for excuses to take more cash.  But they do try to control your behavior here a lot more like asking for your debit card usage, etc.  I will be able to claim rent for 4 years back now.  So, will look into that.  As I remember it though, my first few years, they never asked about my debit card usage. 

Rates the same, the government looking for excuses to take more cash.  But they do try to control your behavior here a lot more like asking for your debit card usage, etc.  I will be able to claim rent for 4 years back now.  So, will look into that.  As I remember it though, my first few years, they never asked about my debit card usage.

What had you been doing about your rent before?

What had you been doing about your rent before?

I'd always heard that you couldn't claim rent.  What's the latest on that?

I'd always heard that you couldn't claim rent.  What's the latest on that?

I had submitted paperwork to have it treated as cash spending in the past. But I heard from this year the "Monthy Rent" tax credit is available to foreigners.

I had submitted paperwork to have it treated as cash spending in the past. But I heard from this year the "Monthy Rent" tax credit is available to foreigners.

That would be something that would be helpful. Thanks. 

That would be something that would be helpful. Thanks.

2021 year end tax settlement guide can be found here

https://www.nts.go.kr/english/main.do

Here is the 2021 year end tax settlement guide

https://doc.nts.go.kr:8080/SynapDocViewServer/viewer/doc.html?key=906365b063ce4b8194f59cec4ae715f8&convType=html&convLocale=ko_KR&contextPath=/SynapDocViewServer/

Thanks, but doesn't open to any documents for me.  Working at anyone else's end?

Thanks, but doesn't open to any documents for me.  Working at anyone else's end?

There's a "2021 Year-end Tax Settlement" box on the tax office website. You can find a link there

https://www.nts.go.kr/english/main.do

There's a "2021 Year-end Tax Settlement" box on the tax office website. You can find a link there

https://www.nts.go.kr/english/main.do

Excellent, thanks.  I've added it to favourites. 

I'd always heard that you couldn't claim rent.  What's the latest on that?

You can now.  But just the last year or so.  One of the Facebook groups said you can now go back 4 years and maybe get a form from the bank?  If you know the account or name of the landlord you sent the money to?  I haven't tried yet.  But will look into it soon. 

You can now.  But just the last year or so.  One of the Facebook groups said you can now go back 4 years and maybe get a form from the bank?  If you know the account or name of the landlord you sent the money to?  I haven't tried yet.  But will look into it soon.

Ah, thanks.  They already did my taxes here and are trying not to charge me tax on the stipend.  If it runs into problems I'll have to see about that angle. 

Ah, thanks.  They already did my taxes here and are trying not to charge me tax on the stipend.  If it runs into problems I'll have to see about that angle.

All tax documents I have seen say the housing allowance should be taxed. The new monthly rent credit doesn't make the allowance non-taxable, it makes a small portion of it tax free. It doesn't actually save that much. For anyone making under 55m it is 12% that should be deducted. So you're essentially saving the 15% tax on that.

As I remember it though, my first few years, they never asked about my debit card usage. 

Money that you spend via your debit card will give you a tax deduction of around 1%. If you give them that info, you get the deduction, if not, then not.

I don't believe that you're required to give them your card information if you want to keep it "confidential". (lol, because I wouldn't be surprised that the majority of those "security breaches" that result in your purchase history information being put up for auction probably originate with the bank as a matter of unacknowledged policy).