Visa holders · From South Korea
Your monthly National Pension stays with Korea after moving to the US from South Korea: taxes on it go to Korea alone.
Monthly National Pension benefits are exempt from US tax under Article 24 of the US-Korea treaty, even for US citizens. The US usually treats Korean funds and Korea-listed ETFs as passive foreign investment companies (PFICs). Large shareholders leaving Korea in 2026 may owe its exit tax, at 20% to 25%, on unrealized gains in Korean shares.
Updated · Sources
What Korea keeps after you move
- 10 years
- of National Pension coverage earns a monthly old-age pension for life, starting between ages 60 and 65 by birth year. With less coverage, you get a lump-sum refund at 60.
- 5 years
- is the usual limit on a posting that keeps you in Korea’s National Pension instead of US Social Security.
- 183 days
- in Korea in one year lets Korea tax that year’s gains on your shares, though you live in the US.
A lump-sum refund on emigrating may not get the US exemption that monthly benefits get, and no IRS guidance settles it.
What must you report from Korea as a US resident?
A green card or enough US days makes you a resident
Once you hold a green card or pass the substantial presence test, your Korean income belongs on your US return. In your arrival year, the return covers Korean income only from your residency start date. Any part of a day in the US counts toward the test. Days as an exempt student or teacher, such as on an F-1 or J-1 visa, are left out.
You hold Korean funds or Korea-listed ETFs
A separate Form 8621 is generally due for every Korean fund, each year you own it. Unless you make an election, the default PFIC rules tax a gain more heavily than a capital gain and its dividends at ordinary rates.
Korean bank and brokerage accounts together top $10,000
Deposit, savings and securities accounts in Korea all count toward the FBAR, each at its peak value for the year. Once your Korean accounts pass $10,000 combined at any point in the year, each one goes on the FBAR. You file the FBAR with FinCEN by April 15, or by October 15 without asking for more time. Your Korean deposits and funds also count toward Form 8938. It goes with your return above $50,000 at year end or $75,000 at any time, twice that for joint filers.
You keep a Korean pension savings account, IRP or ISA
The treaty gives no US tax deferral to a Korean pension savings account, individual retirement pension (IRP) or individual savings account (ISA). The treaty’s pension article covers pensions only once they are paid. No IRS guidance says how the US classifies such accounts, and the funds inside may count as PFICs.
Gifts from family in Korea pass $100,000 in a year
The US never taxes a gift from your family in Korea as income, however large. Gifts from both parents and grandparents are added into one total, and Form 3520 is due once it passes $100,000 in a year.
On a KRW 500 million tax base, Korea’s exit tax comes to KRW 110 million.
For departures in 2026, Korea’s exit tax applies only if you lived in Korea for at least 5 of the 10 years before leaving. Large-shareholder status is judged at the end of the year before you go.
Up to KRW 300M
KRW 60M
The first KRW 300 million of the tax base is taxed at 20%.
Above KRW 300M
KRW 50M
The other KRW 200 million is taxed at 25%.
Total exit tax
KRW 110M
Payment is due within 3 months of the end of the month you leave. If you name a tax administrator, someone in Korea who handles your Korean tax, it is due in the regular filing period instead.
Paid on leaving, if deferred
KRW 0
If you name a tax administrator and post security, payment can wait until you sell. If you still hold the shares after 5 years, or 10 for study abroad, the tax falls due.
The rates are Korea’s for departures from January 1, 2019. The example starts from the tax base Korea computes, not the raw gain. These figures are Korea’s national tax, and Korea’s local income tax may be due on top. Amounts stay in Korean won, and no US tax is shown.
Korea may still tax some Korean income, within the treaty’s limits.
Each row assumes you are a US resident and no longer a resident of Korea.
| Korea | US | |
|---|---|---|
| Dividends from Korean companies | Up to 15% Article 12(2), national tax | Taxed |
| Interest from a Korean bank | Up to 12% Article 13(2), national tax | Taxed |
| Gains on Korean shares | Not taxed Unless you are in Korea 183 days that year | Taxed |
| Rent from, or a sale of, Korean property | May tax it Articles 15 and 16(1) | Taxed |
| National Pension benefits | Only Korea may tax them Article 24 | Exempt Outside the saving clause |
| A periodic pension from a past private Korean employer | Not taxed Article 23(1) | Taxed |
When the US taxes the same income, Korea’s tax can be credited on Form 1116, within US limits.
Each of these mistakes costs Korean arrivals money or a treaty benefit.
Missing the holdings report before you leave
A departing large shareholder must report their Korean shareholdings, and name a tax administrator, by the day before departure. A missing or understated report costs 2% of the shares’ par value, the face value stated for each share.
Relying on Article 21 once you hold a green card
A green card ends the treaty’s student exemption. For up to 5 years, Article 21 exempts a Korean student’s grants, money from home and $2,000 a year of US pay. The saving clause keeps the exemption only for people who are neither US citizens nor immigrants, and a green card makes you an immigrant. The 2-year exemption for invited teachers ends the same way.
Leaving your children off a nonresident return
Most nonresident aliens cannot claim dependents on Form 1040-NR, but residents of South Korea are among the few exceptions. A child who lived with you in the US at some point in the year can count. The child tax credit or the credit for other dependents may then apply, with limits.
Starting a US posting without a Korean certificate of coverage
If your Korean employer sends you here on a temporary posting, a certificate of coverage can generally keep you in the National Pension. Korea issues it under the US-Korea totalization agreement, in force since April 1, 2001. You give it to your US employer. Without one, US Social Security and Medicare tax apply from your first paycheck.
Who files your US returns after you leave Korea?
Valim’s CPAs take on your US filings from the year you arrive. Any Korean return stays with your accountant in Korea.
- We file your first US return, dual-status if your residency starts mid-year, and each later federal and state return. We leave monthly National Pension benefits out of your US income under Article 24. We claim the tax Korea withholds on your dividends and interest as a foreign tax credit, within the treaty caps.
- We list each Korean account on your FBAR and, where it applies, Form 8938. We also prepare Form 8621 for any Korean ETF or fund that requires one. The instant quote asks how many accounts and funds you hold, and the fee includes each one.
- We review a National Pension lump-sum refund before you claim it.
- We set quarterly estimated payments to cover Korean interest and rent.
- Your fee covers our reply to any IRS or state notice about a return we prepared, even one challenging Article 24.
- Individual return
- from $195
- Business return
- from $495
We quote a flat fee before work starts. We do not bill hourly.
Koreans heading to the US often ask these tax questions.
Does South Korea have a tax treaty with the US?
Yes, the US and South Korea signed their income tax convention on June 4, 1976. It has applied since January 1, 1980, with no later protocol. The treaty caps Korea’s national income tax on a US resident’s Korean dividends at 15% and on interest at 12%. Under Article 24, National Pension benefits are taxable only in Korea. The saving clause lets the US tax its residents as if the treaty did not exist, except under listed articles such as Article 24.
How long can a Korean citizen stay in the USA?
With an approved ESTA, a Korean citizen can stay up to 90 days per visit without a visa, for business or tourism. The rule comes from the Visa Waiver Program, which South Korea joined on November 17, 2008. A longer stay needs a visa or a green card. Visa-free visits count toward the substantial presence test, as most days in the US do. Spend 122 days in each of three years and the weighted count reaches 183, making you a US resident unless an exception applies.
Is my Korean National Pension taxed in the US?
No, the US does not tax Korean National Pension benefits paid to a US resident. Article 24 of the treaty leaves them to Korea, and the saving clause does not override it. A periodic pension from a past private Korean employer works the other way: once you live here, the US alone taxes it. A pension for Korean government service follows a separate rule, in Article 22. Whether a lump-sum refund on emigrating counts as an exempt benefit is unsettled.
Who owes Korean gift tax when my parents give me money?
Korean gift tax is normally paid by the person who receives the gift. After you stop being a Korean resident, you owe it on property located in Korea, and your parents are jointly liable. For property located abroad, a parent who lives in Korea owes the tax instead. The US does not tax the gift itself, though a year’s gifts above $100,000 must be reported on Form 3520.
Sources
- US-Korea income tax convention (IRS text)
- National Tax Service (Korea), capital gains tax on shares held by emigrants
- National Tax Service (Korea), gift tax
- National Pension Service (Korea), National Pension benefits
- Social Security Administration, totalization agreements overview
- Department of Homeland Security, Visa Waiver Program
- IRS, Publication 519 (2025), U.S. Tax Guide for Aliens
- IRS, Instructions for Form 1040-NR (2025)
- 26 U.S.C. § 1297, Passive foreign investment company
- IRS, Instructions for Form 8621 (Rev. December 2025)
- 31 C.F.R. § 1010.350, Reports of foreign financial accounts
- IRS, Instructions for Form 3520 (Rev. December 2025)
Reviewed and updated September 2026. General information, not advice for your situation.