3

I competed in topcoder and got some money around ~500 $ and may get more If I'm really lucky in not yet reviewed submissions. But I found out that 30% of that money will be withheld as tax. I didn't mean to be a millionaire to compete in top coder. In my country (South Korea), tax rate on income around ~500 $ in KRW equivalent is around 3~4%.

I've glimpsed over Korean-American tax treaty, and it seems Article 18 is related to my situation:

ARTICLE 18
Independent Personal Services
 (1) Income derived by an individual who is a resident of one of the Contracting States from the
performance of personal services in an independent capacity, may be taxed by that Contracting State.
Except as provided in paragraph (2), such income shall be exempt from tax by the other Contracting
State.
 (2) Income derived by an individual who is a resident of one of the Contracting States from the
performance of personal services in an independent capacity in the other Contracting State may be
taxed by that other Contracting State, if:
(a) The individual is present in that other Contracting State for a period or periods
aggregating 183 days or more in the taxable year;
(b) Such income exceeds 3,000 United States dollars or its equivalent in Korean won in
a taxable year; or
(c) The individual maintains a fixed base in that other Contracting State for a period or
periods aggregating 183 days or more in the taxable year, but only so much of his income as is
attributable to such fixed base.

may I interpret above document like below?:

  1. I'm a Korean who offered services for TopCoder (and their clients) and made income less than 3,000$
  2. TopCoder is an American company, and since I'm Korean, so in this case South Korea and America are contracting states
  3. My income is less than 3,000$, and I'd like to be taxed in South Korea.
  4. even the technical explanation says:

    (1), income derived by an individual resident of one Contracting State from the performance of personal services in an independent capacity may be taxed by that Contracting State.

    (with exceptions in (2), which doesn't apply since I've never spent a minute in the United States, and my prize is less than 3000$)

  • 4
    essentially when dealing with a company X in the US, there's a "form you fill in" (likely "W8 BEN E") which basically means company X does not have to withhold tax, rather "you will take care of it". since half the winners of "topcoder" are from overseas, it is surely the case that "topcoder" deal with this all the time. they should have you "fill in some forms" so that (basically) you get all the $ and you take care of the tax issues. – Fattie May 3 '16 at 15:07
  • 3
    Joe: You should add this as an answer, since I think you did an admirable job of doing so. – Daniel Anderson Jul 4 '16 at 12:12
-4

I'm a freelance programmer, reverse-engineer, and network engineer. I do quarterly 1099 filings using a cheap local accounting firm. I did them on my own at first; not that hard.. You deduct from sum the percentage for that earning-tier issued by the IRS..

$500.00 for writing algorithms on a timer? Yikes.. I did topcoder once but it didn't pay much then it was only good for portfolio.. No way I would race to do algorithms for third-world-rate capital..

  • The one person with actual experience got down-votes.. – user1276423 Jul 6 '17 at 11:56
  • 1
    This answer makes no reference to the fact that the OP is not a resident of the US, which is the real issue of why the withholdings are done. Whether/how the OP can get a refund for some or all of these withholding taxes by claiming foreign tax treaty benefits is the real question. – Grade 'Eh' Bacon Jul 18 '17 at 13:15

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.