Many times, English teachers contacted me if I can help them out with unexpected tax bills. And how they can avoid this in the future. Whether you are starting a company in Korea, teaching English in Korea, or a freelancer, filing your taxes in Korea for foreigners is a complicated procedure, especially if you can’t speak Korean well. I have over 20 years of Korean tax accounting and management experience. In addition, I have worked closely with Seoul Global Center doing monthly tax seminars for foreigners in Korea through the OASIS (Overall Assistance for Startup Immigration System program).
My clients not only include some of the biggest multinational companies in Korea, but also SMEs and startups, freelancers, foreign English teachers, foreign YouTubers, and influencers. I am eager to help foreigners who find it difficult to file their taxes in Korea.
Will my school(Hagwon) take care of taxes
If you are a salaried employee in Korea, your company would file your taxes on your behalf. It might sound strange but it is true. Once a year (around February next year), the company asks you to submit your expense data and they handle the final tax returns for the employees. Therefore you need to find out if you are a salaried worker or a freelancer (independent contractor). There are many cases where English teachers who think they are salary employees were actually independent contractors. As they have a set working time, and they work under certain instructions, it is very likely that they consider themselves as employees. (Apparently, for school, hiring freelancers is much less expensive than hiring employees, because of severance pay and social insurances, etc.)
Anyway, if you are an employee, the school takes care of all your taxes(monthly taxes and yearend settlement), while if you worked as a freelancer (independent contractor) you (or your tax agent) need to settle your taxes. So many teachers miss reporting the yearly tax return and get surprising huge tax bills afterward. Please read this blogpost for further information.
Signs that I Need to Take Care of My Yearly Income Taxes
These are the signs that you are a freelance teacher and you need to file your yearly income tax.
- 3.3% tax is withheld from your paycheck
- Your school does not cover your health insurance,
- Your school will not pay your severance pay though you worked over a year.
If this is the case, you need to file your yearly income tax return on May next year.
By consulting with tax professions, you will be able to find the best way to file taxes and can even be eligible for tax refunds.
Oh by the way, if you want to know tax saving tips, do check out this blogpost.