Foreign tax credit in the UK or the US?
Super quick question re: US and UK tax returns and foreign tax credits.
Long story short, first year doing US return myself, put everything from W2 into TurboTax and boom, told I owe a huge amount of money. After some digging around I realised it's mostly due to shares I have vesting being taxed at the flat 22% rate, which has resulted in a fairly big under withholding. Then I realised these shares have also been taxed as income in the UK, so there is potential to claim back foreign tax credit on them, and reduce the overall amount I owe the IRS. However, the amount I have been double taxed on exceeds my foreign tax credit limit for this year. I can obviously carry forward if I want, though I'm worried I'll never be able to fully reclaim the excess within the 10 year period, as my UK income shrinks to 0. So the question was - is it possible to claim a refund for the full amount in the UK instead of the US, and whether people have any advice on what the best approach is re: dealing with US/UK double taxation of share vestings in general. |
Re: Foreign tax credit in the UK or the US?
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Re: Foreign tax credit in the UK or the US?
My understanding is the 22% is mandated - either way, the end result is the same.
Thanks for the link - this confirms my understanding of the US side of the equation. My broader question is whether or not there is a way to claim the remainder back in the UK, where the shares actually vested, despite not being resident there currently? Update re: 22% - "RSUs are treated as supplemental income. Many companies withhold federal income taxes on RSUs at a flat rate of 22% (37% for amount over $1 million). If your marginal tax bracket is higher than 22% excluding RSUs, you are most likely not withholding enough." - Source |
Re: Foreign tax credit in the UK or the US?
Since you're tax resident in the US and not the UK I don't think so.
However someone else may have more knowledge of this. 'My understanding is the 22% is mandated' I don't see where this comes from though...:unsure: |
Re: Foreign tax credit in the UK or the US?
Originally Posted by pauldunlop
(Post 12647329)
My understanding is the 22% is mandated - either way, the end result is the same.
Thanks for the link - this confirms my understanding of the US side of the equation. My broader question is whether or not there is a way to claim the remainder back in the UK, where the shares actually vested, despite not being resident there currently? Update re: 22% - "RSUs are treated as supplemental income. Many companies withhold federal income taxes on RSUs at a flat rate of 22% (37% for amount over $1 million). If your marginal tax bracket is higher than 22% excluding RSUs, you are most likely not withholding enough." - Source |
Re: Foreign tax credit in the UK or the US?
Originally Posted by Giantaxe
(Post 12647412)
What is withheld is not necessarily what your tax liability on the RSUs will be.
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