I am a U.S. citizen that worked in Canada from 2008-2013. I was awarded stock options in 2007 and 2008 that vested during my time in Canada. In 2017, I exercised and sold these options. My company withheld taxes for both U.S. and Canada. My W2 accounted for this income from the sale, as does the T4 that Canada sent. As I prepare my U.S. tax return, do I need to enter the income from the T4 as foreign earned income, even though it is already captured on the U.S. W2? When I enter, I feel like I am duplicating the income. Do I have to enter this income to get the foreign tax credit on the U.S. return? I am also planning to file a Canadian return.
Please advise how to handle this situation. I am leaning toward not capturing on the U.S. return.
Thank you in advance!
Tax/Income on sale of stock options - both U.S./CAN claim?
Moderator: Mark T Serbinski CA CPA
You always do need to report ALL world income on your 1040, including this income.
On your T1 Cdn non-resident return, you would report the T4. Note that if the T4 income is less than $10 CAD, you can claim a full exemption of this income, making your Cdn tax zero Line 256 I believe.
Otherwise, report the income and Cdn tax withheld on your T1, and determine final tax, and any refund, or tax owing.
Report the W-2 income and withholding on your 1040. Use the final Cdn tax as a credit using 1116.
Any cap gains would only be reported on your US return, since you are not a Cdn resident.
On your T1 Cdn non-resident return, you would report the T4. Note that if the T4 income is less than $10 CAD, you can claim a full exemption of this income, making your Cdn tax zero Line 256 I believe.
Otherwise, report the income and Cdn tax withheld on your T1, and determine final tax, and any refund, or tax owing.
Report the W-2 income and withholding on your 1040. Use the final Cdn tax as a credit using 1116.
Any cap gains would only be reported on your US return, since you are not a Cdn resident.
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