US Expat Taxes Living in South Korea: FEIE (Form 2555), FTC (Form 1116) and FBAR Rules

01 US Worldwide Taxation & Korea Expat Obligations

The United States taxes its citizens and permanent residents on their worldwide income regardless of where they reside. Living in South Korea does not eliminate US tax filing obligations if your gross worldwide income exceeds the standard filing threshold.

However, tax treaty provisions and IRS exclusions ensure that double taxation is largely eliminated through the Foreign Earned Income Exclusion (FEIE) or the Foreign Tax Credit (FTC).

02 FEIE (Form 2555) vs Foreign Tax Credit (Form 1116)

Under the Foreign Earned Income Exclusion (Form 2555), eligible expats meeting the Physical Presence Test (330 full days outside the US in a 365-day period) or Bona Fide Residence Test can exclude up to the annual limit of foreign earned wages.

Alternatively, utilizing the Foreign Tax Credit (Form 1116) allows you to claim dollar-for-dollar tax credits for income taxes already paid to the Korean National Tax Service (NTS). Because Korean income tax rates are generally comparable to US brackets, FTC frequently eliminates US tax liability while preserving Roth IRA eligibility.

03 FinCEN Form 114 (FBAR) & Korean Bank Accounts

If the aggregate maximum balance of all your foreign (Korean) financial accounts—including checking, savings, brokerage, and Korean National Pension (NPS)—exceeds $10,000 USD at any point during the calendar year, you must file FinCEN Form 114 electronically.

FBAR is filed separately from your IRS 1040 federal tax return through the BSA E-Filing System by April 15 (with an automatic extension to October 15).

Detailed Information Matrix

Frequently Asked Questions (FAQ)