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Hello, I'm hoping someone can help me with this: I am an India citizen, who was working in India for a US company till July 2009. I was granted stock options in the US company. I am no longer an Indian tax-resident since I have been outside India for more than 3 years at this point. I will be moving to the US in Oct 2013 and there is a good chance that I will be able to sell off my stock options in the following year or so, after moving to the US. Please note that these options were granted to me between 2008 and July 2009 when I was working in India and I purchased those options at that time. Questions: 1. If I sell these options while I am in the US (after Oct 2013), am I liable to pay capital gains tax on them in the US? 2. If the answer is no, but the brokerage account withholds taxes on the sale of this stock, then what is the process of reclaiming the witholdings?
3. Does the outcome of question 1 change depending on whether or not I am a US tax resident at that point (based on the Substantial Presence test)?
Hello and thank you for using Just Answer,In answer to your 3rd and 1st questions, yes, all is dependent on your US status. As a resident alien you will be taxed on worldwide income. If you exercise your options when a resident alien of the US you will be taxed on the gain. Question 2, anytime you have withholding form a US source you would need to file a US tax return to request any withholding be made in the form of a refund. A nonresident alien would file the form 1040NR.
Robin, hi. I think I'll need some more clarification on this. On the first question, you are saying that yes, I will be taxed on my worldwide income as a US resident alien even if the income is for years when I was not in the US. Please re-confirm that this is correct because I have heard mixed opinions on whether I'll have to pay capital gains on stock options that were granted prior to my stay in the US, but which were sold during my stay there.But what if I'm working in the US on a work visa but I dont pass the Substantial Presence Test. Wont that make me a Non-resident for tax purposes, and therefore not require me to pay capital gains on them?
You would not pay capital gains on a sale of stock if you are not a resident alien. If your options were nonstatutory or statutory determine when you were liable for taxation. If they were not taxed when vested then you will be taxed when exercised. If you are a resident alien at that time you will be taxed.
Got it, thanks
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