3 ms·

I have a loosely related question, which I hope you might consider as well. I am a startup employee in the US with stock options on a standard 4 year vesting s

by ma2rten 13y ago

I have a loosely related question, which I hope you might consider as well. I am a startup employee in the US with stock options on a standard 4 year vesting schedule. I am not an American citizen. In my home country, if I exercise the stock options I would not be liable for taxes. Can I avoid paying taxes, if I move outside of the US for that tax year where I excise my startup options?

philiphodgen 13y ago
Generally the U.S. tax system likes to tax options based on whatever makes the most money for the U.S. tax system. :-) Until I know more about the specific stock option program you have, you should assume that the U.S. will want to tax you if (1) the option grant occurred while you were employed in the USA; or (2) the options vested while you were employed in the USA; or (3) both; or (4) you saw a picture of a U.S. tourist landmark on television when you were 8 years old. I'm just kidding about #4. The date of exercise of options -- and where you are living when you exercise the options -- is usually unimportant. Meta point. The people who REALLY care about taxation of options are the people who run the company you work for. Your employer is going to bend over backwards to sacrifice you to the Almighty Tax Gods if it is going to protect the company from potential tax liability, even if it costs you money. Just sayin'. This is what I've seen.
- ma2rten 13y ago
  Thanks, I guess in the back of my mind, I knew already it wouldn't be so easy.
acchow 13y ago
Most countries (the U.S. included) follow fairly similar standards when it comes to taxation of stock options - if they have a vesting period, taxation is proportioned accordingly with where you spent that vesting period. So, if they vested over 4 years and you spent 2.5 years of that in the U.S., it doesn't matter that you moved back home for a year to exercise. 2.5-years worth of stock options are considered U.S.-sourced and you owe taxes to USA when exercising them.

by ma2rten 13y ago

philiphodgen 13y ago

Generally the U.S. tax system likes to tax options based on whatever makes the most money for the U.S. tax system. :-) Until I know more about the specific stock option program you have, you should assume that the U.S. will want to tax you if (1) the option grant occurred while you were employed in the USA; or (2) the options vested while you were employed in the USA; or (3) both; or (4) you saw a picture of a U.S. tourist landmark on television when you were 8 years old. I'm just kidding about #4. The date of exercise of options -- and where you are living when you exercise the options -- is usually unimportant. Meta point. The people who REALLY care about taxation of options are the people who run the company you work for. Your employer is going to bend over backwards to sacrifice you to the Almighty Tax Gods if it is going to protect the company from potential tax liability, even if it costs you money. Just sayin'. This is what I've seen.

ma2rten 13y ago
Thanks, I guess in the back of my mind, I knew already it wouldn't be so easy.

acchow 13y ago

Most countries (the U.S. included) follow fairly similar standards when it comes to taxation of stock options - if they have a vesting period, taxation is proportioned accordingly with where you spent that vesting period. So, if they vested over 4 years and you spent 2.5 years of that in the U.S., it doesn't matter that you moved back home for a year to exercise. 2.5-years worth of stock options are considered U.S.-sourced and you owe taxes to USA when exercising them.