ESPP Taxation for US Emigrant

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canadiandeserter
Posts: 58
Joined: Sun Mar 01, 2015 10:52 pm

ESPP Taxation for US Emigrant

Post by canadiandeserter »

US ESPP grants are not taxed until sold, at which point the discount portion is taxed as income and the earnings portion is taxed as capital gains.

If a California and US tax resident emigrates to Canada, how are the different portions taxed by the different jurisdictions? Assuming the ESPP shares are granted while resident of California and the US but non-resident of Canada, and sold while resident of Canada but non-resident of California and the US.
nelsona
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Re: ESPP Taxation for US Emigrant

Post by nelsona »

The income portion is considered wages, so will be taxable both Federally and in Cali (as well as Canada)You would be issued a W-2.
The gains would only be taxable in Canada, if no longer resident of citizen of US.
The gains would be based on the value when you moved, so you would track that until your shares are depleted.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
canadiandeserter
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Joined: Sun Mar 01, 2015 10:52 pm

Re: ESPP Taxation for US Emigrant

Post by canadiandeserter »

Thanks nelsona for the quick response!

Would Canada follow the same qualifying and disqualifying disposition rules as the US in determining how much is apportioned to income?
nelsona
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Re: ESPP Taxation for US Emigrant

Post by nelsona »

The income portion will be what the company says on the W-2, and will be accepted by CRA.
Then the gains will be taxed using Cdn rules after you move.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
canadiandeserter
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Re: ESPP Taxation for US Emigrant

Post by canadiandeserter »

Thanks nelsona! So I would pay slightly higher Canadian taxes on the income portion to escape all tax on the gains portion, assuming I sell right after emigrating.
nelsona
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Re: ESPP Taxation for US Emigrant

Post by nelsona »

Yes, assuming you don't chose to file full year 1040 when you leave. Otherwise, wait until the next tax year to sell
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
canadiandeserter
Posts: 58
Joined: Sun Mar 01, 2015 10:52 pm

Re: ESPP Taxation for US Emigrant

Post by canadiandeserter »

Thanks nelsona! Very helpful!
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