First-Year Assignee Tax Basics — FBAR & Form 8938

Why This Matters for Korean Assignees

If you have arrived in the United States on a Samsung Taylor assignment (or any other work assignment), you almost certainly still have bank accounts, savings accounts, investment accounts, and possibly pension accounts in South Korea. Most Korean assignees maintain their Korean banking relationships throughout their U.S. stay — salaries may be split between Korean and U.S. accounts, mortgages continue to be paid from Korean banks, and family finances remain tied to Korean institutions.

What many first-year assignees do not realize is that the U.S. government requires disclosure of these foreign financial accounts through two separate reporting mechanisms: FBAR and Form 8938. These are not optional, the thresholds are lower than most people expect, and the penalties for non-compliance are severe.

FBAR: FinCEN Form 114

FBAR stands for the Foreign Bank Account Report, officially known as FinCEN Form 114. It is filed with the Financial Crimes Enforcement Network (FinCEN), not the IRS, though the IRS administers the penalties.

Who Must File

You must file an FBAR if you are a U.S. person (which includes resident aliens — most assignees on multi-month stays who pass the substantial presence test) and the aggregate value of all your foreign financial accounts exceeded $10,000 at any point during the calendar year. This is the combined total across all accounts, not per account.

What Counts as a Foreign Account

• Korean bank accounts (checking, savings, CMA accounts)
• Korean brokerage and investment accounts
• Korean insurance policies with cash value
• Korean pension accounts, including NPS (National Pension Service)
• Accounts where you have signature authority, even if you are not the owner
• Joint accounts (the full value of the account is reportable, not just your share)

Deadline

The FBAR is due April 15, with an automatic extension to October 15. It is filed electronically through the BSA E-Filing System, not with your tax return. There is no cost to file.

Form 8938: FATCA Reporting

Form 8938, also known as the Statement of Specified Foreign Financial Assets, is filed under the Foreign Account Tax Compliance Act (FATCA). Unlike the FBAR, Form 8938 is filed with the IRS as part of your annual income tax return.

Thresholds

The filing thresholds for Form 8938 depend on your filing status and whether you live in the U.S.:

• Single, living in the U.S.: Total value of foreign assets exceeds $50,000 on the last day of the tax year, or exceeds $75,000 at any point during the year.
• Married filing jointly, living in the U.S.: Total value exceeds $100,000 on the last day of the tax year, or exceeds $150,000 at any point during the year.

For most Korean assignees who maintain Korean bank accounts, savings, and pension balances, these thresholds are easily met.

Key Differences Between FBAR and Form 8938

The two reporting requirements overlap significantly, which is a common source of confusion. Here are the important distinctions:

• Filing destination: FBAR goes to FinCEN (electronically). Form 8938 goes to the IRS (with your tax return).
• Threshold: FBAR triggers at $10,000 aggregate. Form 8938 triggers at $50,000-$200,000 depending on filing status and location.
• Scope: FBAR covers financial accounts only. Form 8938 covers a broader range of foreign financial assets, including accounts, stocks, interests in foreign entities, and financial instruments.
• Both may be required: If you meet the thresholds for both, you must file both. Filing one does not exempt you from the other.

Common Mistakes Korean Assignees Make

Based on common patterns seen among Korean expats, these are the mistakes that trip people up most often:

1. Forgetting NPS (National Pension Service): Your Korean national pension account is a foreign financial account for FBAR purposes. Many assignees overlook it because they think of it as a government program rather than a financial account. If your accumulated NPS balance contributes to pushing your aggregate over $10,000 (which it almost certainly does for anyone who has worked in Korea for several years), it must be reported.
2. Ignoring joint accounts: If you have a joint account with your spouse in Korea, the full balance of the account is reportable on your FBAR — not half. Both account holders may need to file separately.
3. Threshold math errors: The $10,000 FBAR threshold is based on the maximum aggregate value at any point during the year, not the year-end balance. If your combined Korean accounts briefly exceeded $10,000 in March but were below that amount for the rest of the year, you still must file.
4. Assuming your company handles it: Some assignees assume that because their company provides tax support, the FBAR is automatically taken care of. This is not always the case. Confirm with your tax preparer that FBAR filing is included in their scope of work.
5. Confusing residency status: Your U.S. tax residency status (determined by the substantial presence test or green card test) affects whether and when these obligations apply. The rules are complex and differ for the first year of arrival. This is one area where professional guidance is particularly important.

Penalties

The penalties for non-compliance with FBAR and Form 8938 are disproportionately severe compared to the filing effort required:

• FBAR non-willful penalty: Up to $10,000 per violation (per account, per year).
• FBAR willful penalty: The greater of $100,000 or 50% of the account balance per violation.
• Form 8938 penalty: $10,000 for failure to file, with additional penalties of up to $50,000 for continued non-filing after IRS notice.

The IRS has streamlined procedures for taxpayers who were unaware of their filing obligations. If you realize you should have filed in prior years, consult a tax professional about the Streamlined Filing Compliance Procedures before attempting to correct the situation on your own.

What to Do Now

If you are a first-year assignee, the most important step is to find a CPA or tax attorney who has experience with Korean expat tax situations. Many Korean assignees in the Austin area use CPAs who specialize in expat tax returns — your company's relocation coordinator or HR department may have recommendations. The Korean community in Austin also maintains informal referral networks for tax professionals.

Gather a list of all your Korean financial accounts, including bank accounts, brokerage accounts, insurance policies with cash value, and your NPS balance. Have the maximum balance for each account during the calendar year available. This information is what your tax preparer will need to determine your filing obligations and complete the necessary forms.