International Tax Services

International tax compliance is one of the most complex — and most penalized — areas of US tax law. If you have financial ties to Korea or another country, whether through bank accounts, investments, business interests, or family gifts, the IRS requires detailed disclosure that goes far beyond what most tax software handles correctly. Myung Keon Kim CPA works specifically with Korean-Americans, Korean nationals on US visas, and dual-status filers who need someone who understands both systems.

FBAR — FinCEN Form 114

If you had a foreign bank account — at KB Kookmin, Shinhan, Woori, or any other non-US financial institution — with a combined balance exceeding $10,000 at any point during the year, you are required to file FinCEN Form 114 electronically through the BSA E-Filing system. This is separate from your tax return. The annual deadline is April 15, with an automatic extension to October 15. Missing this filing, even inadvertently, can trigger penalties starting at $10,000 per account per year for non-willful violations.

FATCA — Form 8938

Form 8938 must be attached to your federal tax return if you hold specified foreign financial assets above threshold amounts. Unlike FBAR, which covers financial accounts, Form 8938 also requires disclosure of foreign stocks, partnership interests, foreign-issued notes, and interests in foreign entities. For a single filer living in the US, the threshold is $50,000 at year-end or $75,000 at any point in the year. These thresholds are higher for married filers and for taxpayers living abroad.

Form 5471 — Foreign Corporations

US shareholders who own 10% or more of a foreign corporation — including Korean corporations (주식회사) — must file Form 5471 with their tax return. This is an informational return disclosing the corporation's income, balance sheet, and US-to-foreign transactions. If you are a 10% US shareholder of a controlled foreign corporation (CFC), you may also owe tax on Subpart F income and GILTI (Global Intangible Low-Taxed Income) regardless of whether the corporation distributed any dividends. Penalties for failure to file Form 5471 start at $10,000 per form per year and can reach $50,000 if the failure continues after IRS notice.

Form 3520 — Foreign Trusts and Gifts

Receiving money from family in Korea? If you receive more than $100,000 from a foreign person during the year, you must report it on Form 3520. This is true even if the money is a gift. The form does not create a tax liability on gifts, but failure to file results in a penalty of 5% of the gift amount per month, up to 25%. If the transfer involves a foreign trust, additional disclosure requirements apply and penalties are more severe.

Foreign Tax Credits — Form 1116

If you paid taxes to Korea on income that is also taxable in the US, you can claim a foreign tax credit on Form 1116 to offset your US tax liability dollar-for-dollar. The credit is limited to the US tax attributable to the foreign income, and separate limitation baskets apply to different categories of income (passive, general, etc.). Proper allocation of foreign taxes is critical — overstating or misapplying the credit is an audit trigger. The Korea-US tax treaty also provides reduced withholding rates that interact with the credit calculation.

Streamlined Filing Compliance Procedures

If you have years of unfiled FBARs or unreported foreign income and your failure was non-willful, the IRS Streamlined Filing Compliance Procedures provide a path to compliance with significantly reduced penalties. The Streamlined Domestic Offshore Procedures require amending three years of returns and filing six years of FBARs, plus a 5% miscellaneous offshore penalty on the highest aggregate balance. Compared to the full penalty exposure for non-compliance, this program can save tens of thousands of dollars. Timing matters — this program is only available before the IRS opens an examination.

Dual-Status Returns

If you changed your US residency status during the year — arriving on a visa that makes you a resident alien under the substantial presence test, or obtaining or abandoning a green card — you may be required to file a dual-status return. The year is split: the portion when you were a nonresident is taxed only on US-source income, while the resident period subjects you to worldwide income taxation. Dual-status returns cannot use the standard deduction and have restrictions on filing status that require careful planning.

Frequently Asked Questions

What is FBAR and who has to file it?

FBAR stands for FinCEN Form 114, Report of Foreign Bank and Financial Accounts. You must file if you are a US person (citizen, green card holder, or resident alien) and you had a financial interest in or signature authority over one or more foreign financial accounts with an aggregate value exceeding $10,000 at any point during the calendar year. The deadline is April 15, with an automatic extension to October 15. Penalties for willful failure to file can reach the greater of a statutory amount adjusted annually for inflation or 50% of the account balance, per violation.

Do I need to file FATCA (Form 8938)?

Form 8938, Statement of Specified Foreign Financial Assets, is required under FATCA if you hold specified foreign financial assets above certain thresholds. For a single taxpayer living in the US, the threshold is $50,000 on the last day of the year or $75,000 at any point during the year. For married filing jointly, the thresholds double. FATCA covers more asset types than FBAR, including foreign stocks, partnership interests, and foreign accounts. Both FBAR and Form 8938 may be required for the same year — they are not duplicative filings.

What is the Korea-US tax treaty and how does it benefit me?

The United States-Korea Income Tax Treaty (1979, as amended) reduces or eliminates double taxation on income earned in both countries. Key provisions include reduced withholding rates on dividends (10-15%), interest (12%), and royalties (10-15%), as well as provisions for pensions, social security equivalents, and business profits. The treaty also includes a savings clause, which means the US can still tax its citizens and residents on worldwide income despite treaty benefits — but you can claim certain treaty positions to reduce your US tax liability. Proper treaty position elections must be reported on Form 8833.

What are the penalties for not reporting foreign accounts?

The penalties are severe. For non-willful FBAR violations, the IRS can impose a penalty of up to $10,000 per violation per year. For willful violations, penalties can be the greater of a civil penalty adjusted annually for inflation or 50% of the account balance — per year. Criminal prosecution is also possible for willful violations. FATCA (Form 8938) penalties start at $10,000 for failure to disclose, with an additional $10,000 for each 30-day period after IRS notice, up to $50,000. If you have unreported foreign accounts, the Streamlined Filing Compliance Procedures can significantly reduce your exposure.