(코리아타운뉴스) Residents in South Korea to be Taxed When Sending Money
The population of people collecting Social Security in South Korea has now surpassed 5,400. The figure has been on the rise every year.
Collecting Social Security in Korea
Collecting Social Security in Korea
30% will be imposed on 85% of Social Security
The rise shows that the “reverse immigration” has become something of a trend among retired Korean-Americans. That is why the interest in how to collect Social Security benefits in South Korea has been on an upward spiral as well. Direct bank transfer of Social Security benefits has been made possible since 2015. The Korea Daily explained how the regulations have changed in recent years.
◇Strengths and weaknesses depending on how the money is sent
The Social Security Administration (SSA) encourages recipients to use electronic wire transfer to send and receive money. That means Social Security benefits can be made available not only in the U.S., but also in foreign countries as well. Checks are also issued to this day, even though the demand continues to dwindle. That means even those in Korea can receive checks by mail to receive their Social Security benefits.
As of today, 1,589 Korean-Americans residing in South Korea are collecting their Social Security benefits via checks. That marks about 30 percent of those who are currently collecting Social Security benefits in South Korea. About 26 percent of them are receiving the benefits directly into their bank accounts after the funds are sent to their American banks. In that particular case, the recipient must be making payments in the U.S.
American banks are offering services that sends a specific amount of money to foreign bank accounts to accommodate their customers. Fees vary depending on the amount of the fund.
◇Tax imposed on residents in South Korea
The amount of tax is different for Social Security beneficiaries who reside in South Korea with South Korean citizenship. That is because the income tax is imposed on those who reside in the U.S. For those who reside in South Korea, 30 percent tax rate among the 85 percent of one’s total Social Security is imposed.
To provide an example, a monthly earner of $1,000 in South Korea would be imposed with $255 tax. This is also one of the reasons why the average Social Security benefits earners in South Korea collect less than the ones residing in the U.S. Those who are 65 or older with dual citizenships must submit a proof of their nationality according to the tax laws. If the taxpayer is making payments to the Korean government, that person is categorized as a Korean citizen under the tax law. However, those who reside in Korea but pay taxes to the U.S. government for personal reasons is considered an American citizen.
◇Eligibility to receive both Korean and American Social Security benefits
Korean and American governments agreed in 2001 to make their Social Security programs compatible with one another. Hence, citizens of either country are eligible to earn the benefits as long as they hold credit in those countries. However, the U.S. government requires its Social Security recipients to report their benefits in other countries every year.
Corporations which have not made Social Security taxes or individuals who have been employed in government agencies could collect less Social Security if they are earning other benefits.
Hence, recipients of the U.S. Social Security benefits are required by law to report changes regarding their income, marital status, employment and disability. More information is available on https://www.ssa.gov/pubs/EN-05-10045.pdf
◇Making inquiries and confirmation
There is a separate Social Security office to handle tasks regarding recipients based outside of the U.S. The department in charge of recipients in South Korea is the Philippines’ embassy. The address is American Embassy 1201 Roxas Boulevard Ermita, Manila 0930 Philippines. The phone number is 63-632-301-2000, while the tax number is 63-632-708-9714. Email is also available at FBU.Manila@ssa.gov.
Questions regarding sending money could be made by calling 800-333-1795 or visiting www.GoDirect.gov. Also, www.ssa.gov provides a settings option for sending money outside of the country. Access codes must be entered regularly via text message or email to log in.
By Brian Choi