@mxxjoko , I looked at US-South Korea tax treaty, form 1042-S instructions, and a May 13th 1964 opinion of the IRS OGC concerning US sourced interest/dividend etc. type of Chapter income, website of the OFC ( that deals special tax benefits -- Card -- for diplomatic staff of foreign countries ). My conclusion is that even though you are diplomatic staff, living in the US as NRA, you are not immune from paying US taxes for income under section 861. While NRA not living in the US are exempt from having to pay taxes on US sourced interest income ( because generally interest earning is deemed to be sourced at the taxhome of the recipient), there is no such exclusion for diplomatic NRAs. Generally , NRAs living in the US are subject to flat 30% tax on interest income from US sources.
However, and even though your form 1042-S Box 3b quotes a 30% tax, article 13 of the US-S. Korea tax treaty clearly states that the tax by the US cannot be more than 12% :
Article 13 --
(2) The rate of tax imposed by one of the Contracting States on interest derived from sources within
that Contracting State by a resident of the other Contracting State shall not exceed 12 percent of the
gross amount thereof.
The above conclusion does mean that you have to file a 1040-NR return for both 2023 and 2024 tax years. Note that TurboTax does not support this form. Perhaps, your consulate/embassy can help you here -- they must have some tax professionals they work with.
Is there more I can do for you ?
