Understanding Dual Contributions: Korean National Pension vs. U.S. FICA

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Understanding Dual Contributions: Korean National Pension vs. U.S. FICA Navigating social security systems across borders can be confusing—especially for employees working between Korea and the U.S. A recurring question is: Can someone pay into both Korea’s National Pension and U.S. FICA (Social Security and Medicare taxes) at the same time—and what happens if they do? This post breaks down how the Korea–U.S. Totalization Agreement works, what “coverage” means, and the consequences of dual contributions. 1. The Totalization Agreement at a Glance πŸ‡°πŸ‡·πŸ‡ΊπŸ‡Έ Since 2001, the Korea–U.S. Totalization Agreement has coordinated social security coverage between the two countries. Its primary goal is to: Prevent double taxation of social security contributions on the same income during the same time period Protect future benefit rights for cross-border workers Key principles: At any given time, only one country’s social security system applies to your wages C...
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Should You Elect PTET for Your S-Corp?

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πŸ’‘ Should You Elect PTET for Your S-Corp?

Pass-Through Entity Tax (PTET) is a strategic state-level workaround to bypass the $10,000 SALT deduction cap on your federal return. It lets your S-Corp pay state income tax at the entity level, turning a limited personal deduction into a full business expense. Here's how to evaluate if it’s right for you:

✅ Step-by-Step PTET Decision Checklist

❓ Question

✔️ Consider This

Does your state allow PTET?

Over 30 states offer PTET elections—check your state rules.

Do you owe significant state income taxes?

PTET is most valuable if your state tax exceeds $10,000.

Are all shareholders residents of the state?

Nonresident shareholders may disqualify or complicate election.

Does your business qualify (not SSTB)?

Some states or new laws may exclude service-based entities.

Are you set up for entity-level payments?

You must file, pay, and record PTET correctly through the S-Corp.

Are you ready to track PTET credits?

Owners receive credits or deductions on personal returns.

🧾 PTET Election Process

Here’s how to initiate PTET if it fits your strategy:

  1. Review State PTET Guidelines
    Find your state's election forms and filing deadlines.
  2. File the Election on Time
    Some states require it before year-end; others allow it on tax returns.
  3. Make Estimated PTET Payments
    States often require quarterly estimated tax payments under PTET.
  4. Record the Payment as an Expense
    Use an account like “State Income Tax Expense – PTET” on your books.
  5. Report Pass-Through Income After PTET
    Shareholders get K-1s with adjusted net income.
  6. Claim PTET Credit Personally
    Owners may need to file a state credit form to recoup tax paid on their behalf.

✨ Pro Tips for CPAs and Planners

  • Pair this checklist with a journal entry cheat sheet.
  • Track deadlines across states in a monthly tax calendar.
  • Include PTET in year-end tax strategy sessions with clients.

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