Korean Social Security taxable?

[mactoolsix]

Is it a social security type retirement payment, or is it a government pension? Someone who retired that is receiving social security doesn't need to have worked for the government - it's not based on them having been a government employee. I would see article 24 as covering that type of retirement income. If on the other hand, it is in fact a government pension because they were an employee of the government I would see article 22 as covering that type of retirement income.

Thanks David - after a nights sleep, I come up with the same conclusion.
mike

[David1980]

Is it a social security type retirement payment, or is it a government pension? Someone who retired that is receiving social security doesn't need to have worked for the government - it's not based on them having been a government employee. I would see article 24 as covering that type of retirement income. If on the other hand, it is in fact a government pension because they were an employee of the government I would see article 22 as covering that type of retirement income.

[mactoolsix]

We have a couple that immigrated to the USA in May 2013. They receive Social Security Retirement Benefits from Korea (government pension). I have read the technical explanation of the treaty, but one article seems to contradict the other. Maybe I'm just too tired . . . .

ARTICLE 24
Social Security Payments
This Article provides that social security payments and other public pensions, e.g., railroad retirement benefits, paid by one Contracting State to an individual who is a resident of the other Contracting State (or in the case of such payments by Korea, to an individual who is a citizen of the United States, i.e., such payments by Korea to United States citizens or residents will be exempt from tax by the United States) will be taxable only in the first-mentioned Contracting State. Payments described in Article 22 (Governmental Functions) are not covered by this Article

ARTICLE 22
Governmental Functions
Under this Article, wages, salaries, and similar remuneration, including pensions or similar benefits, paid from public funds of one Contracting State to a citizen of that Contracting State for labor or personal services performed as an employee of that Contracting State or instrumentality thereof in the discharge of governmental functions will be exempt from tax by the other Contracting State.

If the citizen becomes a citizen of, or acquires immigrant status in, the other Contracting State, that other Contracting State may tax the individual without regard to this Article. See paragraphs (4) and (5)(b) of Article 4 (General Rules of Taxation)


So, I was all set to say they are exempt in the US, but then I read that last section about acquiring immigrant status (which they have). So, now I'm thinking the benefits received are taxable (and not subject to the 85% US maximum on US SS).

Any thoughts. Maybe someone has more experience with this tax treaty stuff.

Thanks for your time,
Mike