Question

Foreign income reported on W2

Forum|Forum|4 years ago
May 9, 2022
1 reply
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hi,

I was living in a different country until June 2020 at which time I moved to the US. I was employed by a US based employer throughout the period, which granted me RSUs while I was in foreign country but they vested when I moved to the US. As such a portion of the RSU vest (proportional to the time I was employed in foreign country between the grant date and vest date) was treated as foreign income and taxed in the foreign country. However the entire RSU has been reported in the W2 and I am not able to get the foreign tax credit for the taxes paid to foreign country for a portion of the income that is reported in the W2. Any clues on how I can get this done using turbo tax?

Thanks.

TurboTax Premier Online

Spino

Employee

Hey, Thad, that's a good question! You definitely have a special tax situation here, since it spans multiple years with varying residence. Also you're using TT online, which has some different limits than the downloaded version.

The bottom line is that you need to make corrections to the entries and document them in your return so that the IRS can put it all together if they investigate.

Here is a suggestion:

1) report the income according to the W2.

2) Make your necessary adjustments under "other income." You can include either positive or negative entries here. Provide enough detail that everything can be traced back if required.

3) Attach a statement if necessary to the entry under other income.

4) Keep all your documentation in case the IRS comes asking.

Here's why:

IRS computers tie all forms submitted by employers to forms submitted by employees, and corrects any errors, so they must match.

Other income doesn't have forms to tie together, so it has to be evaluated by a person. While the IRS is short people, if a person does evaluate it you want it to be so clear they don't write you a letter or inquire further.