How to report RSU that was granted before relocation and vested after relocation

[kir1]

Hello,

I was granted RSU abroad that was vested this year in US.

- if the RSU grant of 1000 USD was 3 years before relocation to US, and all 1000 USD was vested 2023, one year after relocation. How should I report it turboatax? Is it full amount or relative to time in US? In which section I need to report it?

If I pay foreign tax on some of those sold RSU, e.g. sold 200 USD and paid 10 USD foreign income tax and 20 USD foreign capital tax, how exactly I am reporting this in turbotax to produce form 116?

[RobertB4444]

You'll need to report the full amount of the RSU as it is received and vested on your US tax return.  However, since your employer will report the earnings to your foreign country prior to vesting you will be required to pay foreign taxes on that income.  Any foreign taxes paid on income also declared on your US tax return incurs a foreign tax credit.

To enter the foreign tax credit into TurboTax go to the 'Deductions and Credits' section and scroll down to 'Estimates and Other Taxes Paid'.  Click on start next to 'Foreign Taxes' and enter the information there.

@kir1 

[chenm003]

Hi,

I also meets similar issue.

The Form 1116 need fill foreign income and U.S. income, how to get these amount?

For example, the RSU grant at 06/20/2022 at foreign and Vest at 06/19/2023 at U.S., relocate to U.S. at 01/01/2023.

How to decide foreign income and U.S. income, is it prorated or other calculate methods? thanks.

[RobertB4444]

The US expects you to report all income earned while on US soil.  Since the RSUs didn't vest until you were here and you weren't taxed on them previously then you should report them all on the 2023 US return.  If you have any foreign taxes paid on the amounts you can also report them on your 2023 return and you will receive credit for them so that you don't pay taxes on the same money twice.

@chenm003 

[chenm003]

@RobertB4444 

Thank you for your comments.

I understand I need report all of vested RSU into U.S. 2023 tax return.

However, Form 1116 may not deductible all of foreign taxes, it need separate amount in between foreign source and U.S. source.

The W2 report all of vested RSU, Turbotax will treament it as U.S. income by default, so no tax credit available from Form 1116.

My RSU grant at 2021 and vest in future 4 years, the RSU grant at 06/20/2021 Taiwan, relocate to same company US office at 01/01/2023, previous vest at 06/20/2022 is no problem since I am not live in the U.S., but the recently vested RSU at 06/20/2023, I am U.S. RA in 2023. 

My question is, how to determination amount in between U.S. sources and foreign sources in 2023 tax return.

[RobertB4444]

What the form is looking for is what I mentioned before - it doesn't want you to pay taxes twice.  You paid taxes on the amounts that vested in Taiwan in 2021.  The amounts that vest in the US in 2023 you haven't been taxed on by Taiwan.  So the US wants you to pay all your taxes to them.  

IF I'M WRONG and you did pay taxes to Taiwan on any of the amounts that are vesting in the US in 2023 then that is exactly the type of foreign taxes you are supposed to deduct.  That is what form 1116 is for.  But if you didn't pay taxes anywhere else for the money then the US is expecting you to pay it to them.

@chenm003 

[chenm003]

@RobertB4444 

Thank you for update.

Sorry, I am not make question clear enough.

For the vested RSU 2022, I can't deduct all of paid Taiwan taxes on Form 1116 because U.S. source income (1099-DIV, 1099-B), so I have some Form 1116 carryover balances.

For 2023 vested RSU, I don't paid Taiwan tax, does this RSU deduct with Form 1116 carryover?

[MarilynG1]

Yes, you can report Carryover Foreign Tax Credit you were not able to take this year on Form 1116.

For US RSU's vested, you are taxed on your W-2 for the ownership income when vesting occurs. 

Here's more info on Reporting RSU's and Currency Exchange Rates. 

@chenm003 

[chenm003]

@MarilynG1 

Thanks your reply.

However, the link just for case that RSU from single country, it does not for across boundary during grant and vested. So, I still confused.

In my case,

The vested 2023 RSU related in both 2022 and 2023, I don't payment 2023 foreign taxes, but I have Carryover Foreign Tax Credit  from Form 1116 (2022), that made from 2021-2022 vested RSU.

My question is, does my 2023 vested RSU eligible deduct from Carryover Foreign Tax Credit  from Form 1116 (2022)?

If eligible, how to calculate foreign source related 2022 unvested RSU (06/20/2022-12/31/2022), because Turbotax can't calculate it automatic.

[RobertB4444]

If you are trying to calculate the amount of the RSUs that are foreign source income then you have to be able to decide how much of them were issued from a foreign source.

It sounds simple but the answer to your question really isn't.  Your RSUs were issued to you in Taiwan from an American company.  If that American company issued you a US W2 then that makes them US source income.  And the only deduction you receive is for taxes that you paid to Taiwan.  And if the RSUs are all US source income then your foreign tax carryover applies but only to the US source for which it was taxed.

In your position - as complex as your situation is - I would recommend sitting down with a tax professional and letting them take a look at all of your paperwork.  Your problem may really be beyond the scope of this forum.

@chenm003