Q: What is something that you wish you knew before moving to Korea?
There are certain things that I’ve come to find out during my short duration of living here that would’ve been highly beneficial to know before, necessary even. I’m not the most resourceful person, and frankly, this first thing that I’m going to talk about in this post I could’ve solved if I had been more mindful and resourceful before living moving here. Thankfully, however, while I’m working on this deficiency of mine, I’ve got a couple of resourceful people in my life who have been a great source of assistance in helping me get through the more “technical” aspects of living abroad. So, I decided to designate a section of my blog to talk about the things that I wish I were aware of sooner to help those who plan on moving here in the future.
SO, what is this important but rarely talked about aspect of living in Korea, you ask? Let me start by saying that this won’t apply to you if you are not currently living, moving, or considering living in Korea, but if you fall in one of these categories, READ ON.
(FYI, this is just going to be the basics. If you need some more information, you’re going to need to do some personal research, my guy. This post is to help you be aware and get the ball rolling for you.)
[I made a quick video highlighting all the important information you need to know but if you want more detailed information, please read the rest of this post. ]
First Thing You Should Know:
BE SURE TO CONTINUE TO FILE YOUR TAXES BACK HOME.
I think many new expats have no idea that this is something they need to do, and some have made the mistake of living here for years, never filing their taxes, and when they wish to return to their home country, all sorts of issues arise. Luckily, one of my friends told me about this during this year’s tax season, so I don’t have to worry about making this same mistake, but I thought it was insane that I didn’t know about this before. So, if you find yourself in a similar predicament as me, I decided to make a list of things that you need to know on this subject. (Did you file yours yet?)
(PLEASE NOTE: I’m American, so I can only speak for other American expats. If you’re from another country, you may want to check your country’s requirements for foreign expats.)
# 1: Find a Tax service provider.
I personally went with TurboTax because that’s the one my friend recommended, and since I knew I was going to need help, I didn’t want to go with a provider that she couldn’t help me figure out. Now, you could do it straight through the TurboTax website, but if you want to file your taxes for free (like my broke self), I suggest you go through the link found on the IRS website. I went through the TurboTax website first, and they kept trying to get me to upgrade to file my taxes 🙄. Maybe that doesn’t matter to you, but I thought I share how I avoided that in case it does. I told you, I gotcha, my guy. 😉
TurboTax, thankfully, speaks in layman’s terms, so you can pretty much figure things out on your own. However, be sure that as you are filing, make sure you remember that since you don’t have a W2, you need to make sure you let the IRS know that you live in a foreign country and earn foreign income. You can do this by filing under FORM 2555: Foreign Earned Income. This form allows you to let the government know that you live in a foreign country. You enter how much you earn in American dollars and other things like that.
# 2: EXPOSE YOURSELF
https://www.korvia.com/filing-us-taxes-from-korea/.Okay, I’m a bit dramatic. You’re just filing your taxes and plugging in your information. Check to see if you qualify for any deductions and do your thing! Now, if there is one thing that you need to be mindful of, it is that if you want to do the most straightforward tax return, make sure your foreign bank account never maintains the equivalent of $10,000 in your foreign currency at one time. Keep sending your money home if you don’t want to go through a more complicated tax return process. However, if you do end up saving more than $10,000 in your foreign bank account at one time, you will have to file another form separately from your tax return. However, this doesn’t apply to me, so if you’d like more information on this aspect, check out the Korvia website for more information foreigners should know before moving to Korea. The Investopedia site as well can give you more information on reporting your money if you have more than $10,000 in your foreign bank account.
#3: Save some $$
(for the first two years at least)
You can surprisingly avoid paying taxes in Korea. This piece of information is something my wise, resourceful friend found out and took advantage of before moving here and one that I missed out on, sadly.
Naturally, there are a few stipulations and requirements that you need to be aware of to receive this exemption. Even though I didn’t know about this beforehand, I don’t qualify for this exemption which is unfortunate, but you might, so here’s what I know.
To get this exemption, you need to:
- Be a citizen from 6 specific countries. If you are a citizen from the United States, United Kingdom, South Africa, New Zealand, Australia, or the Republic of Ireland, you can apply for this resident tax exemption and avoid being double-taxed while living here.
- Work as a teacher in a public school in South Korea. So, this is where my qualification ends 😂😭. Hagwons are considered private institutions in South Korea, and therefore those who work there are not included in this exemption. If you work as an after-school teacher, you don’t qualify for this exemption as well. I, unfortunately, don’t work at a public school, so there goes my opportunity😭. ALSO: Please note that if you are from the Republic of Ireland, this exemption only works if you are working at a university!
- This exemption is only suitable for two years. I don’t know how long you are planning on living in Korea if you move here, but if it’s only for two years, then this exemption is perfect for you. If you don’t work at a public school your first year in Korea but then change schools while living here and start working at one, then that exemption is still good for you! However, instead of two years, you can only be exempt for one year. After living in Korea for more than two years, this exemption is no longer something you qualify for, sadly. So, that’s why I thought it’d be best to share this information with anyone planning on moving here so that you can make the most of your money while you’re here.
The average tax deductions are about 3.3% of your salary. That’s a bit extra spending or saving money for you 😉. For more information, feel free to check out the Korvia website. It has other great information about living abroad in Korea and other countries for foreigners.
I know this wasn’t the usual my usual post but I thought the sharing some of the more personal/ technical aspect of living in Korea that I come across. Daily living in a foreign country isn’t the most simple, but being knowledge will help take away some of the pressure of living alone abroad. Hopefully this information helps someone out there.
Well, that’s all I have for now!
Until next time,
See ya around, friend~