Question

Living Abroad - Sold US Stock Options, paid tax in China - How to put in tax return?

Forum|Forum|6 years ago
March 7, 2020
1 reply
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Hello,

I am living and working abroad in China for a Chinese company. I have received stock options that I needed to exercise in 2019. Since I was working in China, the stock was sold and then transferred to my Chinese US dollar account. The taxes for the selling of the stock was deducted in China.

I have received a 1099-B from the stock broker and shows that I did not pay anything to the US government in taxes (because I paid in China).

How do I represent this in Turbotax that I paid taxes in China for this?

Will I be double taxed because of this?

Need immediate help!

RobertG

You should go ahead and report the 1099-B. You may be eligible for the Foreign Tax Credit for the tax you paid to China.

Credit can be claimed for tax paid to a foreign country on income that is also taxed by the United States.

Here is how to claim the Foreign Tax Credit in TurboTax.

Make sure you've entered all your foreign income.
From within your return, search for foreign tax credit and select the Jump to link in the search results.
Answer Yes to Did you pay foreign taxes in 2019 or have credits to use from a prior year?
Follow the instructions to get the credit or deduction.

In most cases, taking the credit works out better than the deduction. We'll help you decide which one's best for you when you go through this section.

If you choose to take the credit (most people do), we'll attach Form 1116, Foreign Tax Credit if your situation requires it.

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D

DTaxGuyAuthor

Thanks for the quick reply.

I do not have a 1099-DIV for this part, do I need to have it in order to do this? Or perhaps do I just do the Simplified Limitation for AMT (Simplified Method)? I have done this in the past for 2018.

Where exactly would I enter the tax paid for the taxes that I paid for the stock?

And what type of Income is this for the Form 1116? Is it Passive Income?