Korean Income Tax on Military Retired Pay and Social Security

Military retired pay. Article 22 of the 1976 U.S.-Korea income tax convention exempts from tax in the other country pensions and similar benefits paid from one country's public funds to its own citizen for services performed as its employee in the discharge of governmental functions. That covers U.S. military retired pay paid to a U.S. citizen. But the saving clause in Article 4(4) lets each country tax its own residents and citizens as if there were no treaty, and Article 4(5)(b) keeps the Article 22 exemption only for people who are neither citizens of, nor have immigrant status in, the country doing the taxing. A U.S. retiree living in Korea on a non-immigrant visa keeps the exemption; one who is a Korean citizen or holds Korean permanent residence does not, and then Korean law decides. U.S. Social Security. Article 24 makes social security payments and other public pensions paid by one country to a resident of the other taxable only in the paying country, and Article 4(5)(a) protects that from the saving clause for everyone. Korea may not tax U.S. Social Security paid to a Korean resident, whatever their citizenship; it stays taxable in the United States. Article 24 does not apply to government service pensions covered by Article 22. The source rule backs this up: Article 6 treats government service remuneration under Article 22 and payments under Article 24 as income from the paying country only. VA disability compensation is not named in the treaty, and Korea's own treatment of it was not researched for this entry. It is exempt from U.S. tax under 38 U.S.C. 5301.