Special Scenario: RSUs and Taxes When Leaving and Returning to the U.S.
If you started a job, got RSUs, had to leave the U.S. because your initial work permission wasn’t extended, and later came back with new authorization, your tax situation depends on timing and residency.
1. Your Tax Residency at Each Step
Early Work Period: You are likely a non-resident for tax purposes unless you have been here long enough to trigger residency (183 days over a 3-year lookback).
While Abroad: If you are out of the U.S. and don’t meet the day-count test, you are a non-resident—unless you kept strong U.S. ties (like a home), which might keep you taxable here.
After Returning: Once back and staying 183+ days in a year, you are a resident, taxed on all income, including RSUs.
2. RSU Taxation Based on Vesting
Vesting While Abroad:
Non-Resident: Only the portion of RSU value tied to your U.S. workdays is taxed here. Your home country might tax the rest.
Still a U.S. Resident: If you didn’t fully cut U.S. tax ties, the full value could still be taxable here.
Vesting After Returning: If RSUs vest after you are back and a tax resident, the entire value is U.S. taxable income.
3. Extra Factors
Double Taxation Rules: Some countries have agreements with the U.S. to avoid taxing the same income twice—check if yours does.
State Taxes: States like California might tax RSUs based on where you are when they vest, even if you were abroad earlier.
Reporting Assets: Holding RSUs or cash abroad might mean extra U.S. tax forms if values exceed thresholds (e.g., $10,000).
4. Action Steps
Confirm Residency: Track your days in the U.S. and get advice to nail down your status each year.
Know Vesting Dates: Match RSU vesting to your location and tax residency—your employer’s stock plan team can help.
Seek Help: This mix of moves and equity needs a pro who understands cross-border taxes.
3. What Happens When I Sell RSUs?
Q: How are RSU sales taxed?
After vesting, selling RSUs triggers capital gains or losses. The clock starts at vesting:
Held less than a year? Taxed like regular income.
Held over a year? Lower capital gains rate.
4. How Do I File Taxes Across These Shifts?
Q: What’s my filing option in a transition year?
If you become a tax resident mid-year:
Split-Year Filing: Treat part of the year as non-resident, part as resident. Fewer deductions, though.
Full-Year Resident: Opt for this if it unlocks tax breaks like the standard deduction.
Q: Do I need special forms for my early time?
You might need a form (like a statement of exempt days) to show you weren’t a resident early on—attach it to your return if splitting the year.
5. What About State Taxes?
Q: Do states follow the same rules?
Not always. Some states tax you as a resident all year if you live there, even if the U.S. says you are part-year.
Example: RSUs vest after moving to New York? The state taxes it all, even if granted earlier.
Key Takeaways
Residency: It flips based on days here—183+ in a year makes you a tax resident.
RSUs: Taxed at vesting, fully in the U.S. if you are a resident then.
Filing: Split-year or full-year filing depends on your goals.
Leaving and Returning: Where you are when RSUs vest drives the tax hit.
Got RSUs vesting soon or filing taxes after moving in and out of the U.S.? Save this, and if it’s overwhelming, ping a tax expert who gets these twists.
Disclaimer: This blog provides general information and is not a substitute for personalized tax advice.
