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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 577
Experience:  10 years experience
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I'm a US citizen working in the US. My company is a

Customer Question

I'm a US citizen working in the US. My company is a subsidiary of a UK company. I have options (EMI share) in the UK company which I can now exercise. How will I be taxed on this money? From what I'm being told now it will be 10% UK tax (because of the year they were offered), but bringing that back to the US I'm not sure what the tax liability will be.
Submitted: 3 months ago.
Category: Tax
Expert:  Mark Taylor replied 3 months ago.

Hi, my name is Mark. I will be happy to help you wit your questions. You mentioned that you will pay tax in the UK (10%). What kind of options were these?

Customer: replied 3 months ago.
The 10% is what I'm being told now (ITEPA Act of 2003). Enterprise Management Incentive stock (EMI).
Expert:  Mark Taylor replied 3 months ago.

Ok please give me a moment to prepare your response.

Expert:  Mark Taylor replied 3 months ago.

Sorry for the delay. I needed to step away from the computer. With an incentive stock option there is no taxes when the options are granted or exercised. The taxes come into play when the stock is sold.

Do you know if this is a non-qualified stock option?

Customer: replied 3 months ago.
I know they are taxed when sold. Hence my question. I'm selling the stock.These should be qualified stock options.
Expert:  Mark Taylor replied 3 months ago.

There are different types of options I just wanted to make sure that I was giving you the correct answer based on your situation.

How long has it been since you exercised the option? How long has it been since the ISO was granted?

Customer: replied 3 months ago.
I haven't exercised yet. About to. The ISO was granted over two years ago.
Expert:  Mark Taylor replied 3 months ago.

Ok when you exercise the option the difference between the current price and the option price would be treated as ordinary income. This will most likely be added to your total wages. The would be eligible to claim a Foreign Tax Credit on the UK taxes.