Master Your U.S. Investment Taxes
A practical guide for Korean residents earning passive income from the U.S. This interactive tool helps you understand tax rates, compare strategies, and manage compliance for dividends, rent, and real estate sales.
Income Tax Simulator
Choose an income type to see how different tax strategies compare.
Dividend & Interest Withholding
By default, the U.S. imposes a 30% tax on dividends paid to foreign investors. However, the U.S.-Korea Tax Treaty allows you to significantly reduce this rate by proving your Korean residency.
Key Action: File Form W-8BEN
Submit this form to your U.S. broker to claim the reduced treaty rates. This is the single most important step for portfolio investors.
Rental Income: A Critical Choice
U.S. rental income has two very different tax treatments. The default method is extremely costly, while a strategic election can save you thousands.
Enter Your Property's Financials
Includes mortgage interest, taxes, insurance, repairs, depreciation, etc.
Key Action: The ECI Election
You must formally elect to treat rental income as "Effectively Connected Income" (ECI). This is done by filing a Form 1040-NR tax return and providing a Form W-8ECI to your property manager.
Real Estate Sale (FIRPTA)
The U.S. requires a mandatory 15% tax prepayment on the gross sales price, known as FIRPTA. This is not your final tax. Your actual tax is on the net profit.
Enter Your Sale Details
Cost + Improvements - Depreciation
Broker commissions, legal fees, etc.
Key Action: Reconcile and Claim Refund
You must file a Form 1040-NR to report the sale, calculate the actual capital gains tax, and claim a refund for the excess amount withheld under FIRPTA. You can also apply to reduce withholding beforehand with Form 8288-B.
Compliance Hub
Key forms, deadlines, and risks at a glance.
Key Forms
-
Form W-8BEN
For individuals. Claims treaty benefits to lower tax on dividends/interest.
-
Form W-8ECI
Claims exemption from withholding on rental income by declaring it ECI.
-
Form 1040-NR
The annual U.S. tax return for non-resident aliens. Required for ECI and FIRPTA refunds.
-
Form 8288-B
Application to reduce or eliminate FIRPTA withholding before a property sale.
Deadlines & Risks
For Form 1040-NR, if you don't receive U.S. wages. An extension to Dec 15 is possible.
5% of unpaid tax per month (up to 25%). Can invalidate ECI election.
20% of tax underpayment for negligence or substantial understatement.
A U.S. Individual Taxpayer ID Number is required to file Form 1040-NR and W-8ECI.
Audit Preparedness Checklist
Official Resources
For detailed official guidance, refer to these primary sources from the U.S. Internal Revenue Service (IRS) and the Department of the Treasury.
