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I'm a US citizen working in the US. My company is a

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I'm a US citizen working...
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: 1 year ago.Category: Tax
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9/2/2016
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 1 year ago
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
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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?

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Customer reply replied 1 year ago
The 10% is what I'm being told now (ITEPA Act of 2003). Enterprise Management Incentive stock (EMI).
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 1 year ago

Ok please give me a moment to prepare your response.

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Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 1 year 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?

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Customer reply replied 1 year ago
I know they are taxed when sold. Hence my question. I'm selling the stock.These should be qualified stock options.
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 1 year 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?

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Customer reply replied 1 year ago
I haven't exercised yet. About to. The ISO was granted over two years ago.
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 1 year 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.

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