Q&A

Find your answers from what people frequently ask.

Q: I live in the States. My parents in Korea plan to send money to me. I heard if the funds are above $10,000, it is automatically reported to the IRS. When receiving money from abroad, should I report to the IRS or should I pay the tax for the money I receive?

A: It is correct that funds above a certain amount is reported to the U.S. government. Depending on the purpose of the funds, how you file your tax will vary. If the funds are considered income, you should file an income tax or if is a gift, you should file a gift tax. For later filing, you should hold on to any proof of receipt.  

Q: I have resided in the United States for 10 years. I have Korean bank accounts under my name but haven’t used it for ten years. Nevertheless, should I report them?

A: If the maximum account value of a single account or aggregate of the maximum account values of multiple accounts exceeds $10,000, you should file FBAR or FATCA.  

Q: I plan to purchase a house in the United States. I heard buying is no problem, but when I sell it, I should pay a large sum of tax. How much or what percentage should I pay when selling a house?

A: You can deduct tax associated with selling the house up to 250K for an individual to 500K for a couple if you (and your spouse) truly reside in the house two out of five years since the purchase. States may impose a different capital gain tax. If the house is for rental purpose, you should file capital gain tax with other incomes.  

Q: I am a Korean resident. I have some capital gains from US stocks I sold last year. Do I have to file a tax to US? And if I have a capital loss, will this amount be deductible when filing?

A: Generally, you do not need to file a tax to the IRS if you’re a non-resident of USA living in Korea. However, if you have other incomes related to the United States or have other types of income associated to the stock market, you should file to the IRS. Most US trading platforms provide a FORM 1099 that can be used to file your capital gains/loss to the IRS.  

Q: I am a US citizen in Korea but I do not have any family or relatives, and I do not have any income related to the U.S. Do I have to file the tax in this case?

A: A U.S. citizen and a permanent resident (A Greencard holder) are considered residents of the United States; therefore, they are responsible for filing their taxes to the IRS. Regardless of where the person lives, he/she should file and report his/her income even earned in Korea. However, the incomes earned in foreign countries are categorized as foreign income which can be exempted.  

Q: When is the deadline of tax filing? Is it possible to file a tax later than the deadline?

A: Generally, April 15th is the deadline. For example, the deadline of 2019 tax is April 15th, 2020. If you reside outside of the United States, your deadline is 2 months later on June 15th. If you file an extension before April 15, your extension is effective for 6 months, which is October 15. This is only the due date for filing taxes. You should pay the estimated tax by April 15th. It is possible to file after the deadline, but doing so you will have to pay late fees and other potential penalties.  

Q: I am a US citizen living in Korea. I only have income made in Korea and didn’t know I had to file a tax to the IRS. Is it okay?

A: There is a Streamline Foreign Offshore Procedure for those who unintentionally missed to file taxes in their previous years. If you have filed for the last three years and report six years of foreign bank accounts, late fees and penalties can be exempted for the missing years. If you reside in Korea, you can be exempted from other penalties, but if you live in the United States, you may be under different conditions and a penalty of 5% assets on your foreign bank accounts may be imposed.  

Q: I am planning to open a business in the United States and hope to launch in U.S. market. Is it possible to open a U.S. business while I live in Korea?

A: Yes, you can open a U.S corporation in Korea. However, you need to assure the business address is located in the United States, the category of business, the likelihood to hire a local employee. Also, the VISA status of the officer may bring different procedures of business establishment. The general procedure involves from applying for COI, obtaining EIN and applying for SS4 and being approved, to registering the state business license and opening the bank account. Once the business is established, we perform all kinds of operating business consulting services including business tax, bookkeeping, employee tax, sales tax, managing accounts, etc. so you can manage and supervise your U.S. corporation while in Korea.