# US based stock grants foe US expats



## Linuxpro (Jan 28, 2013)

I was awarded a nearly worthless stock grant. I milked it for what I could, by selling all my vested shares (at less than $15 each). I have more that will vest, but not very many. The amount is not worth the additional paperwork.

It is depressing, because they have the stupid ticker posted in the canteen to remind us how worthless out stock grants are.

In the interest of saving myself needless paperwork, I asked if I can opt out of the program, and cancel the remainder of the grant. HR says there is no precedence. Nomally this is only done at the time of resignation.

Next year when I return to the USA, my taxes will be complicated enough. I want to terminate the program ASAP, before three more shares vest in July. 

Any thoughts?


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## BBCWatcher (Dec 28, 2012)

You can check whether you can designate an IRS 501(c)(3) charity as the recipient of that grant. If that option is available then you won't have U.S. reportable income associated with the grant (or Singapore reportable income either, probably), but you will have a U.S. charitable deduction available.


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## Linuxpro (Jan 28, 2013)

My Singapore taxes are pretty much automatic, and the shares did not show up in the mix.

In the last two years I sold them the same year that they vested, so I just claimed the proceeds. I suppose Merrill reports the grant to the IRS based on the market value at the time it vested. The difference would be small enough to go under the RADAR as the IRS does not bother with small discrepencies in my experience.

So if they cannot cancel by July, I can donate the three shares? That is an interesting idea. So if I donate them to Kwan Yin, I wonder what the accountants at the temple will think of thst.

There are a lot of expats in our office. It seems like nobody is Singaporean. I have not asked the others what they do.


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## BBCWatcher (Dec 28, 2012)

Linuxpro said:


> My Singapore taxes are pretty much automatic, and the shares did not show up in the mix.


Share grants are generally taxable in Singapore if the grant relates to any time spent working in Singapore. You might want to have a look at that. If the grants are already reflected in what your employer reported to IRAS, fine, but if not you might have some repair work to do. But read on....



> In the last two years I sold them the same year that they vested, so I just claimed the proceeds. I suppose Merrill reports the grant to the IRS based on the market value at the time it vested.


....Since you mention "Merrill" it's possible that U.S. income tax (and FICA) was withheld already. The withholding might be in the form of shares, rounded up to the nearest whole share. For example, if the grant was for 5 shares (let's suppose), and tax withholding amounted to 1.7 shares, then the value of 2 shares would be withheld as tax, and the proceeds of 3 shares would be remitted to you. Check your records to see what actually happened.



> So if they cannot cancel by July, I can donate the three shares?


You can donate the shares as shares any time you wish. But it must be a U.S. IRS 501(c)(3) charity for U.S. tax purposes. There's not any charity that I'm aware of that is both U.S. and Singapore tax advantaged.


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## Linuxpro (Jan 28, 2013)

I do not really know the answers to those questions. I never recieved any info to that effect. 

I had a simular problem with E*Trade. They did not withold anything. Thanx E*Trade.

Back in the day, Merrill was great. But anymore they are not all that helpful. All of the brokers that manage RSU plans are pretty much the same.

I will press them to opt me out before July. I really do not need the headache. The vesting due in July is only $44! Gee what a windfall, NOT!

I also have 180k in Fidelity. They never give my any problems.


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## BBCWatcher (Dec 28, 2012)

Well, from the U.S. point of view if it's Merrill Lynch they should be cutting all the necessary reporting forms for you. So it's not that much of a hassle. You just plug the numbers into the right spots in TurboTax, TaxAct, H&R Block, or whatever other tax preparation software (free or fee) you're using during your annual ritual.

On the Singapore side just read up on what IRAS requires, at that link I provided upthread.

It's not clear to me whether these grants relate purely to your Singapore-based employment, to your U.S.-based employment, or to a mix. In any event, one of the two countries gets to tax that income first, and then you'll take a foreign tax credit in the other country. It's easier if the U.S. taxes first since the U.S. rate could be higher, and then the income is (most likely) Singapore tax free. If it's the other way then Singapore collects its tax on that income then you take a Foreign Tax Credit (IRS Form 1116) on the U.S. side, then "top up" the difference.

Yes, I know what you mean -- it's a hassle for $44. But it shouldn't be too bad, and I don't think there's an easy way to avoid it. Maybe you can ask Merrill to assign the grant to a 501(c)(3) charity directly, and that might work (if they can do it). Something like the New York office of Doctors without Borders, for example.


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## Linuxpro (Jan 28, 2013)

I will make a phone call on Monday night and see how they are handling this. 

The grant was issued a year after I re-located to Singapore. I was listed as "temprarily relocated" at the time. I am now listed as "permanent party" in Singapore.


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## BBCWatcher (Dec 28, 2012)

It sure seems like it'd be Singapore taxable compensation, then. Take another look at your IR8A to see if it's there.


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## Linuxpro (Jan 28, 2013)

I will look.

I have a habit of favoring the IRS (shifting errors toward the side of safety rather than getting an extra $50 back). I figure it is safer to do that. I likely paid Singapore tax on that money, then proceeded to report it again to the IRS as taxable. That being said, it made no difference because my recent tax liability in the USA is typically minimal due to the form 2555.

Back in 2004, I was audited. The IRS was professional, and cordial I was impressed. But then again, I rather not repeat it.


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