Hello,
I'm a foreign resident filing both foreign earned income exclusion and the foreign tax credit. Normally I owe almost no tax in the US. Last year I exercised an NQ stock option granted to me back during residing in the US. I still work for the affiliate of the same US employer and our american HQ sent me a 1099-Misc for the full amount of the gain. I understand that only a portion of the NQSO gain is taxable in the USA as regular income and must be excluded from the foregn tax credit. I have two questions:
- How do I calculate this portion? I have seen two calculations: the ratio (move date - grant date)/(total vesting period) OR the ratio (move date - grant date) /(exercise date - grant date))
- Do I have to only pay the income tax or must I also add social security and the medicare taxes on it (Form 8919)?
Thank you in advance. Misha
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