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New H1B tax questions

New H1B tax questions

Old Dec 25th 2009, 5:48 am
  #1  
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Default New H1B tax questions

Hello all! I have been lurking here for a while - especially whilst I was going through my H1B process. Ok so here's my question(s) - I have searched all I can and still don't know my options. I do understand any answers are simply advice and guidance.

December 4th
Employment status: UK employee of start-up
My start-up was purchased by a large US company for cash. I had a number of shares that were hence bought by this company on this date.

December 5th
Employment status: US employee of US company
This is the official start date of the whole start-up in the new company.

So my shares have been transferred to a broker in the US and I tried to sell some as a UK resident (based on the sale taken place on December 4th). I have been told since that I will be taxed based on 'letter of execution' that is the date I sent a letter of transmittal to the broker. I find this odd but it is what it is - so I may be subject to US capital gains here. The amount is roughly $15k and these are on shares vested over the past 3 years.

I have been employed in the US since December 5th and hence received my first and only paycheck today with a healthy amount of withhelds based on a yearly average. My gross is less than $4k for that pay period.

So my questions really are - have I screwed up by missing out on UK capital gains tax or will I be classed under the US 10% bracket for my income this year and hence the 0% long-term capital gains for 2009?

Please let me know if I've missed anything out, it confuses me too.

P.s. I'm in San Francisco

Thanks!

Dan
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Old Feb 1st 2010, 6:18 am
  #2  
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Default Re: New H1B tax questions

Originally Posted by cudds View Post
Hello all! I have been lurking here for a while - especially whilst I was going through my H1B process. Ok so here's my question(s) - I have searched all I can and still don't know my options. I do understand any answers are simply advice and guidance.

December 4th
Employment status: UK employee of start-up
My start-up was purchased by a large US company for cash. I had a number of shares that were hence bought by this company on this date.

December 5th
Employment status: US employee of US company
This is the official start date of the whole start-up in the new company.

So my shares have been transferred to a broker in the US and I tried to sell some as a UK resident (based on the sale taken place on December 4th). I have been told since that I will be taxed based on 'letter of execution' that is the date I sent a letter of transmittal to the broker. I find this odd but it is what it is - so I may be subject to US capital gains here. The amount is roughly $15k and these are on shares vested over the past 3 years.

I have been employed in the US since December 5th and hence received my first and only paycheck today with a healthy amount of withhelds based on a yearly average. My gross is less than $4k for that pay period.

So my questions really are - have I screwed up by missing out on UK capital gains tax or will I be classed under the US 10% bracket for my income this year and hence the 0% long-term capital gains for 2009?

Please let me know if I've missed anything out, it confuses me too.

P.s. I'm in San Francisco

Thanks!

Dan
Hi Dan,

Your employment status as UK employee or US employee is irrelevant from the tax perspective. You will taxed as US resident (regardless of your immigrant status, with some exceptions) if you were in the USA more than certain amount of days. For detail, check Form 1040NR Instruction.

If you meet the requirement to be taxed as US residents, your short-term capital gain will be taxed as ordinary income (i.e. added to your wages). But if you are non-resident, it appears that US-UK Tax Treaty says the capital gain is 0%.

Reference: IRS Pub 519, IRS Pub 901.

Last edited by meauxna; Feb 1st 2010 at 7:27 am.
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Old Feb 1st 2010, 6:19 am
  #3  
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Default Re: New H1B tax questions

Originally Posted by armstrongsoo View Post
Hi Dan,

Your employment status as UK employee or US employee is irrelevant from the tax perspective. You will taxed as US resident (regardless of your immigrant status, with some exceptions) if you were in the USA more than certain amount of days. For detail, check Form 1040NR Instruction.

If you meet the requirement to be taxed as US residents, your short-term capital gain will be taxed as ordinary income (i.e. added to your wages). But if you are non-resident, it appears that US-UK Tax Treaty says the capital gain is 0%.

Reference: IRS Pub 519, IRS Pub 901.

---www.NoPainMuchGain.com
Oh one more thing, CA does not conform to US treaties. So everything is taxable for CA.
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