[quote=“shini”]My only concern re: the lack of labor insurance messing up my chance at what should’ve been a 6 month paid maternity leave. It’s hard to let go of the fact tht I should have a secure 6 months off with about 42000 a month.[/quote]Yes, you’re probably screwed out of the 6 month maternity leave money. There’s really no way for your school to make back payments on something they should have been deducting from your pay and paying the government since from the beginning. It really wouldn’t be believable to say, “Woops, made a mistake. For the past five years I “forgot” to pay the labor insurance on all of my employees, so I’d like to make it up today”. Or, “I wasn’t aware that an English buxiban was considered an actual business that needed to deduct and pay labor insurance for the employees”. [quote=“shini”]I’m not really sure how or what she submits for my tax withholding but if she reports my income correctly, and reports the taxes I’ve paid correctly (which of course is not enough) then should I just be able to pay the difference when I file my taxes next year. I realize this might mean I owe a lot but no one would get in trouble for this right? I hope the question is clear.[/quote]Sorry. I don’t get this. Your employer absolutely isn’t reporting your income correctly and she’s not withholding the correct amount of tax based on the false income that she’s reporting for you. I don’t know how you could make anything up later and not make it look suspicious. I’m a very simple person and I can’t see all the ins and outs of sneaky sneaky income and taxes and tax evasion. See below.[quote=“shini”]What I’m saying is every month I make a different amount depending on how many hours I’m working. Last year I hit the 80s some months but this year I’d say I’m around 66,000 a month because I asked for less hours. So if she’s paying me 66 per month but has been taxing me at 6% (except for those first few months where it seemed the gov’t changed things again and was charging everyone 21%) then she could just report that on the tax withholding and I pay the difference at the tax office… right?[/quote]I’m not sure you really understand the relationship between income, withholding, and taxes paid. I see how your employer could be benefiting from misreporting your taxes. Here’s an example. Sorry, this is so long winded.
For simplicity let’s just say that you actually make $80,000 per month every month without variance before deductions.
Your employer tells the government that you only make $30,000 per month every month without variance before deductions.
Your employer is required to withhold a certain portion of your income and pay it to the government in order to satisfy your tax liability a the end of the year. This amount doesn’t necessarily end up being your true tax liability.
a. From January to June your employer is supposed to withhold 20% of your income to be applied toward your tax liability.
b. From July to December your employer is supposed to withhold 10% of your income to be applied toward your tax liability.
- At the end of the year, you would file your income taxes and find out how much you overpaid or underpaid to satisfy your actual tax liability. In Taiwan, money withheld doesn’t equal your tax liability.
If your employer was doing the right thing, she would report that your gross income was $80,000/month and they would need to withhold $16,000/month from your paychecks for the months of January through June, and from the months July through December they would withhold $8,000/month. That works out to a grand total of $144,000 withheld for the entire year. This isn’t your tax liability! You don’t need to pay this amount! Because you make so little for the whole year, $960,000, you are in the lowest tax bracket. Your tax liability is only 6% of your total $960,000 gross income. That’s $57,600 that you owe and are actually required to pay the government. But your company withheld $144,000, so you overpaid. Therefore after you file your tax return, you actually get back $86,400 in a refund! Why doesn’t the government allow us to be withheld at 6%? Why do they gouge us at 20% for six months and then 10% for the last six months? Because they want our money and they want to be able to make the huge interest off of it for a whole year and half before they give our refunds back to us. Also, if a foreigner leaves before July and/or doesn’t stay in Taiwan to file their taxes to get the refund, the government just keeps the 20% for the first six months and also the 10% for the last six months. It’s a great scam and the foreigner population can be used to pay for cool programs like the shopping vouchers, etc. Billions of dollars per year!
What your employer is actually doing is reporting that you make $30,000/month. For the first six months they pay the government $6,000/month which would be 20% in withholding based on the your faked monthly income. Then they withhold $3,000/month for the last six months. The grand total of withholding for the year works out to $54,000. Your tax liability in this faked case is 6% of your faked gross income for the year, $360,000, which would be a tax liability of $21,600. So, your company withholds $54,000 and your actual tax liability is $21,600 and you get a refund of $32,400. Is this how your taxes for the past five years have worked out, basically?
Now, if your company is withholding 20% based on your actual income of $80,000 for the first six months and 10% for the last six months, she’s just pocketing the difference. Based on this model she would be able to withhold from your pay $96,000 for the first six months and then $48,000 for the last six months for a grand total of $144,000 for the year under the ruse that it’s the law and she’s required to withhold it. Then based on her faked reporting of your $30,000/month income she deducts the $54,000 and pays this to the tax office which is needed to satisfy the withholding requirements and keeps the remaining $90,000 in her pocket. I’ve seen this model quite a few times, really! My employer tried to pull this scam on me for the first two months I was waiting for my ARC to be approved, but was still working illegally. For those two months before my ARC was approved, they deducted 20% to satisfy “legal requirements”. However, at the end of the year my official income statement didn’t include the income for the first two months I worked, and the 20% deducted wasn’t added into my total tax withholdings for the year. I went to accounting and showed them the “oversight”. They told me that they couldn’t include my first two months of actual income on the annual income statement because my ARC hadn’t been approved at that time. I asked them if it had been illegal for me to have been working at that time and they said no, but they couldn’t add the money into my total income because of the ARC approval date. I then asked about the 20% that they deducted for the first two months I worked without the ARC that wasn’t being reported to the tax authority. They told me that everyone has to be deducted at 20% regardless of whether or not the income earned was reported to the tax authority. I smelled a rat and told them that I wanted the 20% deducted for those first two months refunded to me in cash by the end of the day. If they weren’t reporting my income to the government, then they were just pocketing the 20% for themselves and I would be going to the tax authority the next morning to consult with them to ensure that I hadn’t broken any laws. Scared the shit out of them and I received my 20% salary deduction for the first two months at the end of the day in a nice red envelope! ha It turned out to be about $30,000! Now, if they were doing that for the first two months on all newby employees that would turn into a really big chunk of change.
So, when your employer deducts money from your real,real monthly income,does she scam you or does she keep it honest with you and she only deducts money based on the fake $30,000/month income? If she’s a “partner in crime” and she’s being honest, she should be only deducting $6,000/month for the first six months and then only $3,000/month for the last six months from your $80,000 true income!