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Level 2
March 9, 2022
Solved

NQSO Withholding

  • March 9, 2022
  • 1 reply
  • 18 views

I just filed, but fear I may have made a mistake.

 

In 2012, I received a grant for some NQSOs. Those were vested (or became available) 1-2 years later. This was while I worked and lived in Colorado.

 

In 2018, I moved to Indiana where I now reside. Last year I exercised and sold some NQSOs. When I did, taxes were deducted for Colorado withholding and Indiana Withholding. On my W2, it reported income earned for both Colorado and Indiana, so when I filed, I entered the amount as shown on the W2 for Colorado as a non-resident.

 

My question though is: should I have reported $0 for Colorado to receive a refund for that income? I had just transcribed what was on the W-2 thinking that I needed to since I was given the grant while in Colorado. However, now that I think about it, since I haven't actually lived there for a few years and since, though I received the grant while in Colorado, I didn't actually exercise that grant until after leaving the state. Both states share withholdings, so I'm receiving a refund from Indiana, but lower since the state tax is lower than what it is in Colorado.

 

If I did it incorrectly, should I amend for both states after receiving my refund? It means a larger return for me, but really just want to make sure it's done correctly and not be audited.

    Best answer by RobertB4444

    The most important question is whether the employer who gave you the NQSOs is a Colorado employer?  Because Colorado taxes Colorado source income so if they are then you did everything just right and you don't need to change a thing.

     

    If they are not a Colorado employer and your NQSOs did not come from a Colorado source then you should re-file and claim zero tax due on zero Colorado income.  (With holding done in error).

    1 reply

    Level 15
    March 9, 2022

    The most important question is whether the employer who gave you the NQSOs is a Colorado employer?  Because Colorado taxes Colorado source income so if they are then you did everything just right and you don't need to change a thing.

     

    If they are not a Colorado employer and your NQSOs did not come from a Colorado source then you should re-file and claim zero tax due on zero Colorado income.  (With holding done in error).

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