I have RSU granted in Canada, and vested in the US.
I internal transferred to US within the same company in 2023. I lived in US less than 183 days (due to vacation and weekends abroad) during 2023, and I didn't live in the US in the years before. I'm also not a citizen or green card holder, so based on the definition I should be considered as non-resident alien for the year of 2023. On the other hand, my wife is still in Canada so I'm a Canadian resident.
For the RSU granted in Canada and vested in the US: Canada considers partial of the RSU as Canadian-sourced income (based on the length I spent in Canada and US), so this partial of the RSU value is considered as taxable income and tax withheld by Canada. On the other side, US considers full RSU as taxable income and withhold tax based on the full RSU value. These values are shown on my W2 (US) and T4 (Canada).
For example, for a RSU vested with market value $1000, Canada sees $400 as taxable income (as I lived in Canada for 40% of the time between grant and veset) and withhold tax $400 * 52%, and US sees $1000 as taxable income and withhold tax $1000 * %22 (plus medicare and social security).
I looked at other articles of the simliar issue (like this one: https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/rsu-vesting-pe[produc...), they are all the cases for a US person, so the solution is to report the foreign tax credit (e.g. $400 * 52%) on Form 1116.
However, for me as a non-resident alien in 2023, I cannot file Form 1116, as a non-resident alient do not need to pay tax for foreign-sourced income. In my specific example, the $400 is a Canadian-sourced income, so I should only pay US tax on the $600, instead of $1000.
I wonder if anyone could help me with the solution. Should I deduct the Canadian-sourced income (e.g. $400) from the total income reported on W2? Is there any other form (e.g. Form 8833) or letter I should include in the tax filing to explain my situation? Thank you in advance for the help!
