If you work for a company in South Korea, your Korean tax mostly takes care of itself. Payroll runs yeonmal jeongsan in January or February, you get a refund or a top-up, and that’s that. The IRS is a separate conversation, and for Americans in Korea the answer usually turns on how much Korean tax you actually paid, and that depends a lot on one election: the 19% flat rate for foreign employees.
Do I still file a US return while living in South Korea?
Yes, every year your gross worldwide income reaches the filing threshold. For 2025 that’s $15,750 if you’re single and under 65, $400 of net self-employment income if you freelance, and only $5 if you’re married to a Korean national and file separately. Income you later exclude still counts toward the threshold.
Both countries run on the calendar year, so the withholding receipt your employer gives you after year-end settlement lines up with the 1040. The deadlines are another matter:
- 1
February 2026: year-end settlement
Your employer settles your 2025 Korean tax through the February payroll and files with the National Tax Service by 10 March. Keep the withholding receipt; we need it.
- 2
15 April 2026: US tax payment due
From abroad you can file later, but you can’t pay later without interest. If you expect to owe, pay by this date.
- 3
1 June 2026: Korean return for 2025, if you need one
The jonghap sodeukse, Korea’s annual income tax return, is normally due 31 May. In 2026 that was a Sunday, so the deadline moved to 1 June.
- 4
15 June 2026: US return due for Americans abroad
Automatic if you live outside the US on 15 April. Attach a statement saying you qualify.
- 5
15 October 2026: extended US deadline, and the FBAR
File Form 4868 by 15 June to get here. The FBAR is due 15 April but extends automatically to the same date.
Our US expat tax guide covers the 1040 itself. The rest of this page is what’s specific to Korea.
When do I need to file a Korean income tax return myself?
If one employer pays you and settles your tax at year end, usually never. You file the May return when you have income the employer doesn’t know about: rent, freelance work, or interest and dividends above the separate-taxation threshold. People with two employers file too, as do people paid by an overseas employer with no Korean withholding.
Two cases come up again and again with Americans. Teachers picking up private lessons outside the contract, which on most visas is an immigration problem as well as a tax one. And assignees paid partly from the US, where nobody in Korea withheld on that slice.
How much tax does South Korea take?
National income tax runs from 6% to 45% on taxable income. Local income tax adds 10% of the national tax, so the top combined rate is 49.5%. The two are withheld together and both are creditable on your US return.
| Taxable income (2025) | National rate | With local tax |
|---|---|---|
| Up to ₩14 million | 6% | 6.6% |
| ₩14m to ₩50m | 15% | 16.5% |
| ₩50m to ₩88m | 24% | 26.4% |
| ₩88m to ₩150m | 35% | 38.5% |
| ₩150m to ₩300m | 38% | 41.8% |
| ₩300m to ₩500m | 40% | 44% |
| ₩500m to ₩1 billion | 42% | 46.2% |
| Over ₩1 billion | 45% | 49.5% |
Taxable income is what’s left after a generous employment income deduction, your NPS and health insurance contributions, and a ₩1.5 million personal deduction for you and each dependant. National Pension and health insurance aren’t creditable taxes, so they never reach Form 1116.
Should I take Korea’s 19% flat rate for foreign employees?
If you’re well paid, probably. A foreign employee who started working in Korea by 31 December 2026 can elect a flat 19% on total employment income instead of the progressive rates, for up to 20 years from their first day of work in Korea. Local income tax takes it to 20.9%. The trade is that you lose every deduction and credit, and the rate applies to gross pay, including allowances that would otherwise be tax-free.
For a teacher on ₩30 million it would be a disaster. Somewhere around ₩100 million it starts to win, and on a senior Seoul package it can save tens of millions of won. You can choose it at year-end settlement or on the May return, and it’s worth checking each year rather than setting it once.
The flat rate may change for 2027
Korea’s 2026 tax reform proposal, announced on 3 August 2026, would raise the flat rate to 21% (23.1% with local tax) from 1 January 2027 and extend the start-work deadline to the end of 2029. It still has to pass the National Assembly, and the published summaries don’t say whether people already on 19% keep it. Your 2025 and 2026 returns aren’t affected either way.
From the US side, a lower Korean bill isn’t free. Every won you save in Korea is a won less of credit against US tax. On a high salary that still usually leaves you at zero with the IRS, as the second example below shows, but at a middling salary the flat rate can take you from owing the US nothing to owing a little.
Foreign tax credit or FEIE: which works in South Korea?
Our default for anyone on a full Korean salary in Seoul is the foreign tax credit on Form 1116. Korean tax plus local income tax usually equals or beats the US tax on the same pay, the credit takes it to zero, and anything left over carries forward ten years. It also keeps IRA contributions and the refundable child tax credit open, which the exclusion shuts off.
The foreign earned income exclusion (Form 2555) lets you exclude up to $130,000 of 2025 foreign earnings if you pass the bona fide residence or physical presence test. It’s the right tool when Korean tax is small: English teachers, people in their first partial year, and public-school teachers using the treaty’s two-year teacher exemption, who pay no Korean income tax at all. The housing exclusion can add more for rent you pay yourself, on costs above the $20,800 base up to a Seoul limit of $44,500 under IRS Notice 2025-16. That limit fell by $4,700 from 2024. Suwon has the same $44,500 limit; elsewhere in Korea the default $39,000 applies.
Say you teach English at a hagwon in Busan on ₩30,000,000
Take Sarah, a single US citizen who has taught at a Busan hagwon since 2024. In 2025 she earns ₩30,000,000, about $21,100 at the IRS rate.
After the ₩9,750,000 employment income deduction, the ₩1.5 million personal deduction and roughly ₩2.55 million of NPS and health insurance, her taxable income is about ₩16.2 million. Tax on that is about ₩1,170,000, but the earned income tax credit and standard credit take most of it away. With local income tax she pays roughly ₩436,000, or $307, for the year. The flat rate would have cost her ₩6.27 million.
On the US side, $21,100 less the $15,750 standard deduction leaves $5,350 taxable and about $535 of tax. The credit covers $307 and she owes around $230. With the FEIE she owes $0. We’d file her on the exclusion and tell her to keep her NPS paperwork for the lump-sum refund when she leaves.
Illustrative, rounded figures. Social insurance is estimated.
Say you’re on ₩250,000,000 at a firm in Seoul
Take James, single, who moved to Seoul in 2023 and earns ₩250,000,000 in 2025, about $175,836. His employer provides his apartment, so there’s no housing exclusion to claim.
On the progressive rates his taxable income is about ₩215 million, and national plus local income tax comes to roughly ₩67.3 million ($47,330). On the flat rate it’s 20.9% of ₩250 million, or ₩52.25 million ($36,750). His employer applies the flat rate at year-end settlement and he saves about ₩15 million in Korea.
His US tax before credits is about $31,270. With the foreign tax credit, $36,750 of Korean tax wipes that out and he carries forward about $5,480. With the FEIE, $130,000 is excluded, but the remaining $45,836 is taxed at his top rates, about $7,220, and then needs a partial credit to reach zero. Same answer, two forms, and a smaller carryforward. We’d use the credit.
Illustrative, rounded figures. A real return starts from his withholding receipt, and the value of the apartment is US income too.
Korea’s five-years-in-ten rule for foreigners
Korea treats a foreign resident who has lived in Korea for five years or less out of the past ten as taxable on Korean-source income plus foreign income paid in or remitted to Korea. Leave your US dividends in a US account and Korea doesn’t tax them. After five years, Korea taxes your worldwide income, US brokerage account included, and that’s often the first year an American here needs a May return.
None of this changes your US return, which taxes worldwide income from day one. And a dual US–Korean citizen isn’t a foreigner in Korea, so the rule doesn’t apply to you at all.
On a base under SOFA? Different rules apply
Federal civilian employees, the civilian component and invited contractors working for US Forces Korea are generally exempt from Korean income tax on that pay under the Status of Forces Agreement. That sounds like good news until the US return. Pay from the US government can’t be excluded under the FEIE, so federal civilians in Pyeongtaek or Daegu are taxed in full with nothing to credit.
Contractors are different. Private-company pay can qualify for the exclusion, usually through the physical presence test, because the bona fide residence test is harder to meet when your status in Korea rests on the SOFA. We also check where your tax home is, since a contractor who rotates back to the US often fails that test. If you or your spouse work off base on the local economy, that pay is taxed by Korea as normal.
National Pension, US Social Security and the lump-sum refund
The US–Korea totalization agreement keeps you from paying into two systems on the same wages. Work for a Korean employer and you pay into the National Pension Service, not US Social Security. If a US employer sends you to Korea for five years or less, you can stay in US Social Security with a certificate of coverage.
Leave Korea for good and, as a US national, you can claim the NPS lump-sum refund of your contributions. Most teachers and short-term staff do. On the US side we treat the refund as taxable to the extent it exceeds contributions you already paid US tax on. The alternative is to let the totalization agreement count your Korean coverage toward a benefit later, but for someone with a few years of contributions the refund is usually the sensible choice.
Why your Korean ISA and funds cause trouble on a US return
Korea’s Individual Savings Account gives a Korean tax break that the US simply ignores. Interest, dividends and gains inside an ISA go on your 1040 like any brokerage account. The real problem is what people hold in it: Korean investment funds and Korean-listed ETFs such as the KODEX and TIGER ranges. For US tax those are Passive Foreign Investment Companies (PFICs). Each needs Form 8621 every year, and without an election a sale is taxed at the top US rate for each year you held it, plus interest.
Before you buy a Korean index fund
A KOSPI or S&P 500 ETF listed in Seoul is a sensible holding for a Korean investor and a bad one for an American. Individual Korean shares aren’t PFICs, and US-listed ETFs held in a US brokerage avoid the problem entirely. If you already own Korean funds, get them on Form 8621 now and decide on a mark-to-market election deliberately.
What about my severance and retirement pension account?
Korean employers owe severance, roughly a month’s pay for each year of service, and many fund it through a retirement pension plan (DB or DC) or pay it into an IRP account. The US treats severance paid to you as wages for the year you get it, earned in Korea, and Korea’s retirement income tax on it is creditable.
The accounts themselves are where the law is honestly unsettled. DC plans, IRPs and pension savings accounts aren’t US-qualified, and there’s no IRS guidance on any of them. Our lean is to treat an employer DC plan as a foreign pension, with employer contributions taxable once vested and growth deferred until withdrawal, while treating a pension savings account you fund yourself as an ordinary taxable account whose funds are likely PFICs. Either way, the accounts go on the FBAR and Form 8938.
What does the US–Korea tax treaty do for me?
Less than people hope. The treaty dates from 1976 and, like every US treaty, has a saving clause (Article 4(4)) that lets the US tax its citizens as though the treaty didn’t exist. Relief from double tax and the social security article survive it. Most of the rest doesn’t. So in practice you’re relying on credits rather than exemptions, and the treaty’s main job for an American in Korea is making sure the Korean tax counts. Green-card holders are the exception: the residence tie-breaker can help, but using it affects the green card, so talk to us first.
Reporting your Korean bank accounts
If your non-US accounts together topped $10,000 at any point in 2025, you file an FBAR. That catches almost everyone: the salary account at Shinhan or KB, a savings account, a brokerage or ISA account, and anything you can sign on. Korea has a FATCA agreement with the US, so Korean banks ask for your US tax status and report you. Korea also has its own report for residents’ accounts outside Korea.
| Form | Who files | Threshold |
|---|---|---|
| FBAR (FinCEN 114) | US citizens and green-card holders | Over $10,000 combined at any time in the year |
| Form 8938 | The same people, with the 1040 | $200,000 at year end or $300,000 at any time ($400,000 / $600,000 joint) |
| Korean overseas account report | Korean residents, except foreigners with 5 years or less of residence in the past 10 | Over ₩500 million outside Korea on any month-end; filed 1–30 June |
So after five years here, your US accounts can become reportable to the National Tax Service too. Our FBAR guide covers how to count balances. For the FBAR, convert won at the Treasury’s year-end rate, not the yearly average.
Behind on US filing from South Korea?
We see a lot of this from Korea, especially Korean-American dual citizens and teachers who came for a year and stayed for eight. If it wasn’t willful, the Streamlined Foreign Offshore Procedures let you file three years of returns and six years of FBARs with no penalty, and most people owe little once the exclusion or credits are applied. Our Streamlined guide explains who qualifies. If you’re moving back, read the state tax guide before you pick where to land.
What we’d do for you
We start from your Korean withholding receipt, check whether the flat rate was used and whether it should have been, and pick the credit or the exclusion on your real numbers. Every Korean account goes on the FBAR, and if there’s an ISA, fund or pension account, we’ll tell you plainly what it costs you to keep. See expat pricing for what’s included.