Taxation when RSU and ESPP were awarded/vested in one country and sold in USA?

[someone-somewhere]

I got some RSU and had ESPP which I got when I was India. RSUs were vested as well when I was in India. Now I have been in USA for few years and finally decided to sell these stocks.
I didn't get a 1099-B for selling these stocks. How to report stock sell for taxation in IRS. Also can we do this using TurboTax?

[TomYoung]

Can you explain why you didn't get a 1099-B?  It sounds like this was a publicly traded company.  Did you sell the stocks through a broker?  The sale of stocks acquired through an ESPP creates compensation.  Was that compensation reported to you on a W-2 or 1099-MISC?

Yes, you can report these sales using TurboTax but exactly how depends on answers to the above questions.

[someone-somewhere]

yes this is well known publicly traded company and I sold stocks using well known broker. But broker didn't give 1099-B as my account was created when I was in India and I didn't know that I had to update account for my residency to USA.

Now I have done that but still didn't get 1099-B for last year. I am talking to broker for that but it doesn't seem that I will get 1099-B.

And these stocks were given to me when I was working in India so I don't think these will be reported on W-2.

[TomYoung]

You will use the "Stocks, Mutual Funds, Bonds, Other" interview and tell TurboTax that you didn't get a 1099-B.

Dealing with the stock acquired via the RSU:

Your per share basis in the stock is:

           (compensation created by the vesting) divided by (GROSS number of shares that vested)

If the compensation was reported to you in rupees then translate that to US dollars as of the date of vesting.

https://www.fiscal.treasury.gov/fsreports/rpt/treasRptRateExch/treasRptRateExch_home.htm

Although you can select an "RSU" step by step interview here, if you know your basis then I'd say simply tell TurboTax you are selling "Stocks."  After entering the "Basis Info About This Sale" tell TurboTax you "bought" the stock "one time", enter the vesting date, and then either the entire basis (# of shares sold x per share basis) or you "purchase price", (per share basis).

Dealing with the stock acquired via the ESPP:

Same process as before except this time you would tell TurboTax that you're selling ESPP shares.   TurboTax will ask for Form 3922 information which I assume you have and you'll enter that information to determine the basis to use in the sale.  There's a question as to whether you translate rupees on the Form 3922 as of the date the stock was purchased or as of the date the stock was sold and I don't know the answer to that.  But I'd probably opt for the sale date here. 

Continue working through the "Stocks, Mutual Funds, Bonds, Other" interview to the very end.  Don't stop when you're simply done entering the sales.  TurboTax will eventually tell you how much compensation it has calculated, (and added to your out of pocket cost), and ask if that amount has been reported on your W-2.  You'll answer "No" and TurboTax will include that amount in line 7 of your Form 1040.

Tom Young

[Mohit]

Hi,

I'm in same situation.

How did you finally declared gains on espp and rsu?

Thanks,

Mohit

[AmyC]

Please see the post right above yours for the full explanation for declaring the non US RSU and ESPP income.

@TomYoung did an excellent job and is correct that for the ESPP you want to use the sale date for the 3922.

@Mohit

[Mohit]

Thank you Amy for replying.

My main concern is with " and ask if that amount has been reported on your W-2.  You'll answer "No" and TurboTax will include that amount in line 7 of your Form 1040."

I've already paid tax on this amount when i was in India. Do i need to pay tax on this amount again?

Regards,

Mohit

[AmyC]

No, you do not want to pay tax on the same income twice, In that case, you would need to include the foreign tax credit form 116 for the tax already paid on that income.

[sangi]

Hi Amy

I am in the same boat. My shares were granted in India while I was on a temporary assignment. Some of them vested while I was there and was taxed in India. Some got vested after I moved back to US. For shares vested in India, I have already paid taxes in India. However it has been included on my W-2 now. Can I claim foreign tax credit on W-2 income or can it be claimed only on income from foreign sources? I have seen that usually not all foreign tax credit is applied in the same year and gets carried forward and I end up paying more taxes.

Thanks

[ThomasM125]

You would have to have income from foreign sources in the current year to receive credit for foreign taxes paid in the current year. However, you could report the foreign tax paid in the current year to set up a carry over of the credit in case you had foreign income in future years.

I am led to understand that the foreign income and tax was paid in a previous period though. In that case, the proper thing to do would be to amend the return for the year the foreign tax was paid, and then carry over the unused credit from that year on.

[ssatagop]

I am in a similar situation. RSU granted in India & vested during 2019 were taxed in India. However, the company reports that as W-2 income in US since we moved mid-year. Can I claim foreign tax credit on this i.e. Foreign tax credit on W-2 income reported in US? We did have Foreign income for 6 months of the year and the other half of the year the income was from US. 

[tadaba]

I had paid taxes on compensation income for ESPP in 2018 in India. Can you please confirm if I can still claim that as foreign tax credit since I sold those ESPP stocks in 2020 while in the USA? 

[tadaba]

@AmyC @TomYoung I had paid taxes on compensation income for ESPP in 2018 in India. Can you please confirm if I can still claim that as foreign tax credit since I sold those ESPP stocks in 2020 while in the USA? 

[MarilynG1]

@tadaba  You could add the amount you paid as compensation in 2018 to India to the corrected Cost Basis when entering your Stock Sale to reduce capital gains (screenshot). 

You can't claim a Foreign Tax Credit for taxes paid on income in a prior year.

Click this link for more info on Stock Options.

. 

[tadaba]

@MarilynG1  Thank you for your reply. Where do I need to enter my corrected Cost Basis? Should it be in       box 1e "cost or other basis", or do I need to select "I found my adjusted cost basis" and enter it under "Adjusted Cost basis" on the next window (by hitting continue as shown in your screenshot)?

I tried both ways, still, in the "Review your sales" window,  I see both -- Cost Basis and Adjustment set as $0.0 and Gain set exactly equal to my Proceeds. Seems something is wrong with TurboTax or am I missing something?

Please help.

Can you try these values and let me know what you see? -- 

- Long Term did not receive 1099-B

- ESPP

- 1 share of xyz company

- acquired date - 03/18/2017

- disposed date - 01/15/2020

- proceeds - 240

- cost basis - 179.31