How to Report Korean Salary While Living in the U.S.
미국 거주 중 한국 급여 신고 방법 — 2026

Overview — Korean Salary Is Worldwide Income 한국 급여는 전세계 소득에 포함

Once a person becomes a U.S. tax resident, all worldwide income must be reported — including salary from a Korean employer, paid in Korean won, deposited into a Korean bank account, for work physically performed in Korea. None of these facts change the U.S. reporting obligation. The only thing that matters for the timing of taxability is the U.S. residency start date.

Residency Start Date — Apply It Correctly 거주자 시작일 — 정확한 적용

The single fact that determines whether Korean salary is taxable in the U.S. is the exact residency start date — not simply "the date I moved" or "the date I got my visa." Getting this date wrong is the most consequential error in reporting Korean salary.

Where Korean Salary Is Reported 한국 급여 신고 위치

• Form 1040, Line 1a (Wages): Korean salary is reported as wage income on Line 1a, the same line used for U.S. W-2 wages. There is no separate line for "foreign wages" — it is combined with any U.S. wages into the total.
• No W-2 from a Korean employer: Since Korean employers do not issue U.S. Form W-2, the taxpayer reports the USD-converted amount directly. Some preparers attach a statement or use Form 2555 (if also claiming FEIE) showing the foreign employer's name and the calculation, but no W-2 substitute form is required for the wage itself.
• Schedule 1 — only if adjustments are needed: Schedule 1 (Additional Income and Adjustments) is used to report certain Korean income types that don't fit cleanly into Line 1a (e.g., if structured as self-employment, or for reporting other income adjustments) — but standard Korean employee wages typically go directly on Line 1a, not Schedule 1.
• Currency conversion: Use the IRS yearly average exchange rate (consistently applied) or actual transaction-date rates. Convert the gross Korean salary, not the net amount after Korean withholding.

Foreign Tax Credit — General Basket 외국납부세액공제 — 일반 바스켓

Korean income tax withheld on salary (소득세 + 지방소득세) is creditable on Form 1116 — specifically in the general income basket, not the passive basket. This matters because the general basket FTC is calculated and limited separately from the passive basket (which covers Korean interest, dividends, rental income, and capital gains).

• Creditable: Korean national income tax (소득세) and local income tax (지방소득세) withheld from salary — both qualify as legally imposed foreign income taxes.
• NOT creditable: Korean national health insurance (건강보험) and national pension (국민연금) employee contributions withheld from pay. These are social insurance payments, not income taxes, and cannot be claimed as FTC regardless of how they appear on the pay stub.
• FTC limitation: The credit is capped at the U.S. tax attributable to the Korean salary (general basket limitation formula). Excess Korean tax becomes a carryover (1 year back, 10 years forward, general basket only).

Treaty Rule — Article 15 조세조약 제15조 — 근로소득

Korean Bonus — Same Timing Rule 한국 보너스 — 동일한 시점 규칙 적용

Korean bonuses follow the same residency-start-date rule as regular salary — the determining factor is whether the bonus is received during the resident period, not when the underlying work was performed.

• Bonus for work performed in Korea, paid after U.S. residency begins: Fully taxable in the U.S. as worldwide income, even though the work that generated the bonus was performed entirely in Korea before the move. The payment date — not the work date — generally controls for cash-basis taxpayers (the standard method for most individuals).
• Bonus paid before the residency start date: Not taxable in the U.S. — Korean-source income of a non-resident alien.
• Korean tax withheld on the bonus: Creditable via Form 1116 (general basket), same as regular salary withholding.

Korean Severance (퇴직금) 한국 퇴직금

Korean Pension Contributions — Precise Treatment 한국 연금 기여금 — 정확한 처리

Employer contributions to Korean pension and retirement plans require more careful analysis than a simple "may be taxable depending on structure." Each plan type has a distinct U.S. tax character.

Documentation Checklist 필요 서류 체크리스트

• 근로소득 원천징수영수증 — Annual wage and withholding certificate from the Korean employer, showing gross salary and Korean tax withheld for the full year.
• Monthly pay stubs (월급여명세서) — to verify the timing of each payment relative to the residency start date, particularly important in a dual-status arrival or departure year.
• Employment contract (근로계약서) — supports the nature and source of the income if IRS requests verification.
• Bonus payment records — separate documentation if bonuses were paid at different times than regular salary, especially around the residency start date.
• 퇴직소득 원천징수영수증 — if severance was received, this is critical FTC documentation; request before leaving the Korean employer.
• Pension plan summary documents — for IRP, 연금저축, or DC 퇴직연금 plans, to support the CPA's analysis of employer contribution taxability.
• Exchange rate documentation — IRS yearly average rate printout or transaction-date rate sources used for KRW-to-USD conversion.
• Proof of residency start date — passport stamps, I-94 records, or visa approval documents establishing the exact date used for the pre/post-residency income split.

Step-by-Step Filing Process 단계별 신고 절차

5 Fully Computed Examples 실제 계산 사례 5개

Common Mistakes 자주 발생하는 오류

• 1 Treating the SPT-formula-reaching-183 date as the residency start date. The residency start date under SPT is the first day of U.S. physical presence in the calendar year SPT is met — not the day the weighted formula mathematically crosses 183. This error can misallocate months of Korean salary into the wrong reporting period.
• 2 Assuming a "move date" is automatically the residency start date without applying a formal test. The residency start date must be derived from the Green Card Test, SPT, or First-Year Election — not simply assumed from when the taxpayer felt they relocated. Confirm which test applies and apply its specific start-date rule.
• 3 Reporting Korean salary deposited into Korean accounts as somehow exempt because "the money stayed in Korea." The location of the funds after payment has no bearing on U.S. taxability. Korean salary deposited into a Korean bank account is just as taxable as if it were deposited into a U.S. account — the only separate consequence is the potential FBAR/FATCA obligation on the account itself.
• 4 Crediting Korean social insurance (건강보험, 국민연금 employee contribution) as Foreign Tax Credit. Only Korean income taxes (소득세, 지방소득세) are creditable. Social insurance premiums withheld from the same pay stub are not income taxes and cannot be included in the Form 1116 calculation.
• 5 Assuming all Korean pension contributions (IRP, 연금저축, DC plans) are automatically not currently taxable, the same as 국민연금. Korean National Pension (국민연금) employer contributions are generally not currently taxable to the employee. IRP, 연금저축, and DC-type 퇴직연금 contributions are a separate and more complex analysis — they may be treated as current taxable compensation under U.S. nonqualified deferred compensation principles, depending on the plan's specific structure and vesting terms.
• 6 Treating bonus and severance timing the same as the date the underlying work was performed. For cash-basis taxpayers, the payment date — not the work performance date — generally determines whether a bonus or severance is taxable in the U.S. A bonus for work performed entirely before the move, but paid after the residency start date, is fully taxable.
• 7 Not requesting 퇴직소득 원천징수영수증 before leaving the Korean employer. This document is the primary support for the FTC claim on Korean severance. It becomes significantly harder to obtain after the employment relationship and physical presence in Korea have ended.
• 8 Mixing Korean salary FTC (general basket) with Korean investment income FTC (passive basket) on a single Form 1116 calculation. These require separate limitation calculations. Combining them produces an incorrect credit computation and risks IRS adjustment upon review.

Hanmi CPA Insight