I've paid foreign taxes on RSU income already includes in my W2. How do i claim a foreign tax credit for this.

[taxnewbie5]

Thanks, for calculating the % of foreign income, do I need to get the percentage on the total W2 income(ie foreign vested rsu + us income) or just the foreign vested RSU income

[KarenJ]

No you would calculate foreign workdays on all your RSU income.  If 240 workdays during the year and 120 of the workdays were foreign you would calculate 120/240 * RSU income = foreign income from RSU.  If you were working overseas in 2017, then your base salary can be allocated by workdays as well (but only on 2017workdays) Bonus would usually be allocated using prior year workdays if some of it was earned overseas.

[TomYoung]

@TurboTaxKarenJ

Do you have a cite for that percentage allocation treatment?  I'd like to read it.

Thanks.

[KarenJ]

Hi Tom... closing shop for the day.. will look for it.

[KarenJ]

Sourcing rules are contained largely in IRC 861-
863 and 865. The statutory rules cover interest, dividends, compensation for services,
rents and royalties, gains from sales of property and social security benefits

[liviu]

Edit: I found the answer later in the thread. Thanks

[maheshr3]

Hi There,

Need help on this.

When I got transferred from Singapore to US in 2018 June, as part of final settlement, I was taxed on all non vested RSU's left with me by Singapore govt. Those RSU's are getting vested from 2019 and I am taxed in US as well.

Q1: Can I claim the foreign tax credit for the tax I paid in Singapore 2018 as part of my 2019 filing this year?

Q2: If so, can I do it as a one time credit for the entire taxes i paid in Singapore for the portion of RSU's vested this year (I will have some vesting in next two years as well) or I need to claim only the tax relevant to the stocks vested and taxed so far in US?

Q3 : How do I apply for the tax credit in my filing (I am looking for the process, forms etc)

Thanks

Mahesh

[MarilynG1]

Generally, you can't claim foreign tax you paid in 2018 on your 2019 return. You would need to go back and Amend your 2018 Return to claim the Foreign Tax Credit for tax you paid in 2018. 

However, since you paid tax in 2018 for RSUs vesting in 2019, you can claim the entire amount of the Foreign Tax you paid in 2018 by indicating 'accrued' on the Foreign Tax Entry screen, as long as the tax credit is not greater than the income realized in 2019.

Or, as you mentioned, claim the Foreign Tax Credit in 2019 only for stock vested in 2019, etc. 

Type 'foreign tax credit' in the Search window, and 'Jump to foreign tax credit' to get to the entry area.

Click the link for detailed IRS info on the  Foreign Tax Credit.

[maheshr3]

Hi Marlyn,

Thanks for the response and options. I haven't added the foreign tax credit in 2018 returns due to two reasons(based on the tax consultant's input)

1. I have filed a dual status return as i was becoming a non resident to resident alien in 2018, since i moved on June 28th. This was useful to avoid paying tax in US for the global income for the full year.

2. The RSU's were not vested to my account in 2018.

So looks like i will have to go with the option 2 given by you to apply for tax credit for the vested RSU's in 2019?

Mahesh

[balrajvishnu]

Hi Karen,  I am in the same situation and getting double taxed.

This is excellent and this is the answer i was looking for, In summary:

-> You are excluding the income for the which the foreign Govt has taxed for the RSU's from the W2 Declared income

-> You are also including the foreign taxes that was paid 

Is this correct, Did you check this is what needs to be done?

Thx,
Vishnu

[bsingh101]

Is excluding the RSU income (which is paid to other country) by adding -ve value in misc income is correct way. Has anyone did this?