Income Taxes in South Korea
Most Americans working in South Korea can expect to pay income taxes on their salaries to the Korean government. The tax year runs from May 31 to the following May 1; May income is estimated. Generally employers file the forms for their employees, but if not, individuals are required to submit their own. The tax attaché for the Embassy of Korea quoted the income tax scale below:
- 5% on earnings of W4,000,000 or less
- 10% on earnings between W4,000,000 and W10,000,000
- 20% on earnings between W10,000,000 and W40,000,000
- 30% on earnings between W40,000,000 and W80,000,000
- 40% on earnings over W80,000,000
Some Americans are exempt from paying Korean taxes according to the U.S.-Korea Tax Treaty. Those who qualify must reside in Korea for two years or less and must be there solely for research or teaching purposes at a university, research institution, or university-operated institute. The Korean Tax Office has a list of institutes that are tax exempt, and they also publish a free income tax guide in English for foreigners. The office can be reached at (02) 738-8481.
As an American working abroad, you will be exempt from U.S. income taxes as long as you make less than US$70,000 annually. You should still file a tax return with the Internal Revenue Service. Even though you may not owe any money, not filing can result in huge hassles years down the line when you have long forgotten your failure to file. The burden will be yours to prove to the IRS that you were actually overseas at the time and that you didn't make enough money to require any tax payment.
For complete information, the IRS publication "Tax Guide for U.S. Citizens Abroad," is available through the IRS and the various embassies. An IRS representative visits Korea each year and is available for individual tax consultations. The dates of the visit are advertised in the local English newspapers and on the radio station, AFKN. Alternatively, there is an IRS representative located year-round at the U.S. embassy in Tokyo, Japan, who is available for consultation:
U.S. Embassy, Tokyo
10-5, Asasaka 1-chome
(81) (3) 3224-5470
Fax: (81) (3) 3224-5274
To contact the IRS from the United States prior to your departure, dial (800) TAX-FORM to order tax forms or informational booklets or (800) TAX-1040 for assistance with preparing your taxes. To obtain a list of the regional U.S. tax offices, including numbers that can be dialed from overseas, request publication 910.