Taxes, damage deposits, pensions, utilities and other deductions in South Korea may be completely new to you. We want to ensure that you have all the information you need so that you don’t run into any surprises.
We’re constantly working hard to keep our teachers up-to-date with information on any financial deductions that you may run into during your time in South Korea. If you have any questions or concerns that are financially-related before you go to Korea, you can count on us to help you as best as we can!
Taxes
All teachers working in Korea on an E-2 Visa pays Korean taxes. It is your employer’s responsibility to file your taxes on your behalf, and it will be automatically deducted from you monthly pay check. Even though you are paying Korean taxes, you are not exempt from filing taxes in your home country. There are specific policies on foreign-earned income which will discern whether or not you are required to pay tax in your home country on the income you earn in Korea. You’ll generally be exempt if you (1) spend a certain number of days in the year working abroad and (2) you are paying taxes in Korea (which you are). Each country uses different terminology, but the concept is more or less the same. Further information is available through the tax agency in your home country.
Pension
You and your employer must both pay into the national pension (retirement) plan. Each month, 4.5% of your salary is transferred to the National Pension Plan account, and your employer should match the same amount. Good news for Canadian and American employees: for the first 2 years, you can get then total 9% back at the end of your contract (amounts can add up to $2000-$4000!). For other teachers, employers may at times let you opt out of the pension plan. South Africans always have the right to opt out, but Australian, New Zealand, British and Irish employees are required to pay into the pension plan. some schools bypass this payment.
Utilities
Utilities are paid by the employee (that’s YOU) at the end of each month. This includes: gas and water, electricity, maintenance, and internet/cable TV. Monthly expenses will vary depending on the size and location of your apartment. If you have a studio apartment you can expect to pay between $150-$300 USD. For apartments with 1 bedroom, the cost is can be around $300-$600 USD. The utilities are non-negotiable, paid directly to the building management via ATM transfer.
Damage Deposits
After moving into your new apartment, you will be expected to give a damage deposit for any damage that may occurs while you’re living there. The deposit can vary with employers but usually is around $300 USD for the first 3 months of your occupancy. The deposit will be taken directly out of the your salary and will be given back to you upon the completion of your contract if there have be no significant damages done to the apartment. Normal wear and tear on an apartment will not be charged.
Check out our blog for more information on Costs of living in South Korea.