🇺🇸🇰🇷 Sending Money from the US to Korea — Gift Tax, Form 3520 & FBAR Rules You Still Can’t Ignore (2025–2026)
The new 1% remittance tax has grabbed all the headlines, but the truth is:
even before OBBBA, sending money from the U.S. to Korea was never a “tax-free black box.”
For Korean families, the real traps often come from gift tax limits, foreign gift reporting (Form 3520), and foreign account rules like FBAR and FATCA.
- 1️⃣ First Principle — Moving Money ≠ New Income
- 2️⃣ Your US Account → Your Korean Account (FBAR Risk, Not Gift Tax)
- 3️⃣ Supporting Family in Korea — When a Transfer Becomes a “Gift”
- 4️⃣ Big Money Coming into the US from Korea — Form 3520 Basics
- 5️⃣ How These Rules Overlap with the 1% Remittance Tax
- 6️⃣ Case Studies: Real-Life Scenarios for Korean Families
- 7️⃣ EA Checklist Before Sending (or Receiving) Large Amounts
1️⃣ First Principle — Moving Money ≠ New Income
When you move money between countries, it often feels like something big and taxable is happening.
But under U.S. law, simply transferring your existing after-tax money from the U.S. to Korea does not create new income.
Tax law cares about:
- How the money was earned (wages, business income, investment income, etc.), and
- Whether you are giving it away, inheriting it, or just relocating it between your own accounts.
Once the income itself has been taxed in the U.S., changing the location of the funds does not usually create additional U.S. income tax. However, it can absolutely trigger gift tax rules, foreign gift reporting, or foreign account reporting, which is where many people get into trouble.
2️⃣ Your US Account → Your Korean Account (FBAR Risk, Not Gift Tax)
A very common pattern for Korean Americans is to move money from a U.S. bank or brokerage account into a personal account in Korea under the same name.
In this situation, you are not “giving” money to someone else, so U.S. gift tax is not involved.
However, two important reporting rules still apply:
- FBAR (FinCEN Form 114):
- Required if the total value of your foreign financial accounts exceeds $10,000 at any time during the year.
- “At any time” means even a one-day spike counts.
- Form 8938 (FATCA):
- Applies for larger foreign asset balances, with thresholds depending on filing status and residency.
- Filed with your Form 1040; different from FBAR, which goes to FinCEN.
FBAR is based on the highest aggregate balance at any point in the year.
If you briefly parked $60,000 in a Korean account before bringing it back down, you may still have an FBAR filing obligation.
3️⃣ Supporting Family in Korea — When a Transfer Becomes a “Gift”
When you send money from the U.S. to your parents, siblings, or other family in Korea with no expectation of repayment, the IRS treats that as a gift.
- Annual gift tax exclusion:
- For 2025 (and expected to remain the same for 2026), you can give up to $19,000 per recipient per year without gift tax or a gift-tax return.
- Married couples can “split” gifts and effectively give $38,000 per recipient in a calendar year.
- Lifetime estate and gift exemption:
- Roughly $13.99 million per person in 2025, rising to about $15 million in 2026.
- Gifts above the annual exclusion generally require Form 709, but they usually do not generate an immediate tax bill — they just use up part of your lifetime exemption.
Example: In 2025 you wire $30,000 to your mother in Korea.
- The first $19,000 is covered by the annual exclusion.
- The remaining $11,000 is reported on Form 709.
- For most taxpayers, no actual gift tax is due; the $11,000 simply reduces your lifetime exemption.
3️⃣ Related EA Tax Guide Mini-Books
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4️⃣ Big Money Coming into the US from Korea — Form 3520 Basics
Now flip the direction.
Suppose you are in the U.S. and receive a large amount from parents or relatives in Korea.
In that case, U.S. law may require you to report the gift or inheritance on Form 3520.
- Who files? The U.S. recipient (you), not the Korean sender.
- Threshold:
- If you receive more than $100,000 during the year from foreign individuals and estates in total, Form 3520 is generally required.
- For foreign corporations or partnerships, lower thresholds apply.
- Tax vs reporting:
- Often no U.S. income tax on the foreign gift or inheritance itself.
- The risk is in non-filing penalties if Form 3520 is required but not filed.
The IRS cares that large foreign gifts are disclosed.
If you receive a large sum from family in Korea, talk with a professional before assuming “there is no tax, so there is no paperwork.”
5️⃣ How These Rules Overlap with the 1% Remittance Tax
Starting in 2026, you may need to think about two very different layers when moving money between the U.S. and Korea:
- Layer 1: Transfer method (cash vs account-funded) → determines whether the 1% remittance tax applies.
- Layer 2: Amount and ownership → determines whether gift rules, Form 3520, FBAR, Form 8938 apply.
In 2026 you send $80,000 to parents in Korea:
- If funded with cash at a remittance shop: you could face
a 1% remittance tax ($800) plus the need to file Form 709 for the portion above the $19,000 annual exclusion. - If funded directly from a U.S. bank account: no 1% tax under the current statute, but Form 709 is still required for the gift amount above $19,000.
6️⃣ Case Studies: Real-Life Scenarios for Korean Families
- You send $15,000 to your parents in Korea in 2025.
- Amount is under the $19,000 annual exclusion → no Form 709 required.
- Because it’s 2025, there is no remittance excise tax yet.
- If the money goes to your parents’ accounts, you personally do not have FBAR for their accounts.
- Total transfer: $30,000 from your U.S. bank to your parents’ bank in Korea.
- Gift treatment:
- $19,000 covered by annual exclusion.
- $11,000 reported on Form 709, using part of your lifetime exemption.
- Because the money is sent directly from your U.S. account, the transfer should not fall under the 1% remittance tax as currently written.
- Your parents in Korea send you $120,000 to help with a house purchase.
- From a U.S. perspective, this is a foreign gift to you.
- Because it exceeds $100,000, you likely need to file Form 3520.
- There is typically no U.S. income tax on the gift, but penalties for failing to file Form 3520 can be severe.
- You wire $60,000 from your U.S. account to a Korean account under your name.
- This is not a gift — just moving your own money.
- However, if your foreign accounts exceed $10,000 at any point, you must file an FBAR.
- If total foreign assets are high enough, you may also need to file Form 8938 with your 1040.
7️⃣ EA Checklist Before Sending (or Receiving) Large Amounts
- Is this money going to your own account or to someone else’s account?
- If it’s a gift:
- How much are you giving this person in total this year?
- Will you exceed the $19,000 annual exclusion (or $38,000 for a couple)?
- Do you need to plan for Form 709?
- Will the transfer method expose you to the new 1% remittance tax (cash vs account-funded)?
- Will your own Korean accounts go over $10,000 at any time in the year (FBAR)?
- Are you receiving funds from individuals or estates in Korea?
- Will the total for the year exceed $100,000?
- If yes, discuss Form 3520 reporting with a professional.
- Are any of the funds going into foreign accounts you still own or control?
- Will those foreign accounts ever exceed $10,000 during the year (FBAR)?
State tax law and Korean tax rules may be different and may change in the future.
The information here is for general education and does not replace personalized advice.
For large or complex transfers, always consult directly with an Enrolled Agent (EA), CPA, or qualified tax attorney who can review your full situation.