Different agreements, different jobs
The United States has income tax treaties with many countries, including Korea, that allocate taxing rights over different kinds of income and set reduced withholding rates on items such as dividends, interest, and royalties. Separate totalization agreements coordinate social security taxes for people who work in more than one country, so the same wages are not subject to social security tax in both. Intergovernmental agreements under FATCA govern how foreign banks report US account holders. Each type of agreement is distinct, and one does not answer questions covered by another. The text of the specific treaty, and the technical explanation that often accompanies it, matter more than general descriptions.
What treaties usually do not do
Most US income tax treaties contain a saving clause that preserves the US right to tax its own citizens and residents as if the treaty did not exist, subject to specific exceptions. That means a US citizen living in New York usually cannot rely on a treaty to avoid US tax on foreign income, although foreign tax credits may prevent double taxation. Treaty benefits also tend to depend on residence under the treaty's own rules and, for companies, on provisions designed to stop residents of other countries from borrowing a treaty. Taking a treaty position that reduces US tax often has to be disclosed on the return. State income taxes, including New York's, generally are not governed by the income tax treaty in the same way.
Applying a treaty to your situation
We begin with your residence status in each country, the type of income involved, and how each country classifies the payment, since a pension, a scholarship, or a business profit can be treated differently under the same treaty. For tax withheld by a payer, we look at whether the right certification was given and whether a refund can be claimed from the foreign or US authority. For businesses, we look at whether activities in the other country create a taxable presence there. If both countries claim the same income, the treaty's procedure for resolving disputes between governments may come into play. The aim is to tell you what the agreement actually changes for you.
