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jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3159
Experience:  I've prepared all types of taxes since 1987.
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I was awarded options when I joined my new company in 2009

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I was awarded options when I joined my new company in 2009 I also participated in an employee stock purchase plan (ESPP). I transacted some of those options in 2010 more than one year after I was awarded them, I also transacted some of the (ESPP stocks). However when I joined the company I was an H1-B visa holder and thus not a US person, so my broker (E-Trade) withheld taxes as part of the transaction. I am now filling my 2010 taxes (I got an extension) am I right that I should be able to claim part of the withheld taxes in my 2010 return? If so how? I wound up spending more than 183 days in the US so I guess I am supposed to file as a US person, as of March 2011 I now have a green card.

The only tax form I got from my broker (E=trade) is a 1042-S form from Etrade that shows a gross income of 1.38. The records of the transaction show:

Options transaction:

Gross Proceeds: $49,727.60
Total Price: $27,862.64
Commission: $113.88
SEC fee: $0.85
Broker Assist Fee: $0.00
Disbursement Fee: $0.00
Taxes Withheld: $8,020.07
Net Proceeds: $13,730.16 (USD)


ESPP transaction:

Gross Proceeds: $12,522.42
Commission: $28.59
SEC fee: $0.22
Broker Assist Fee: $0.00
Disbursement Fee: $0.00
Net Proceeds: $12,493.61 (USD)
Submitted: 5 years ago.
Category: Tax
Expert:  jgordosea replied 5 years ago.

Greetings,

 

Please confirm my reading of the facts:

 

The taxes were withheld for tax year 2009.

You have not filed a tax return for 2009.

In 2009 you were a nonresident alien for income tax purposes.

You were present in the United states for less than 183 days in 2009 and more than 183 days in 2010.

All of the stock sales were in 2010.

 

Thank you for the information.

 

 

 

Customer: replied 5 years ago.
Not quite.

The options were awarded in 2009.

The options were exercised in 2010.

The taxes were withheld in 2010.

I have not filed a tax return for 2010.

I was in the US for more than 183 days in 2010.

I was in the US for more than 183 days in 2009 however in previous years I filled for having closer connection status with HK on the basis of material facts (e.g. didn't have a house in the US, didn't have a car in the US, etc)
Expert:  jgordosea replied 5 years ago.

Hello again,

 

Thank you for the clarification.

 

Yes, you will include the taxes withheld in 2010 on your 2010 tax return.

You will use Form 1040 unless you continue to claim closer connection status in 2010 and use Form 1040NR. Both forms have a line for taxes withheld.

 

We have not yet talked about the type of stock options, so you will need to check if the withholding was included on the W-2 added to the withholding from your paychecks.

 

Guide to Compensation in Stock and Options is a free online guide to nonqualified options, incentive stock options and other forms
of equity compensation.

Please ask if you need more information.

Thank you.

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Customer: replied 5 years ago.
Thanks for your help on this one. I just filed my return a few mins ago.

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