I had an internal transfer with my company and relocated to the UK in June 2015. I had restricted stock award from my company in Mar 2015, some of which vested in Mar 2016. The plan administrator reported income on the basis of proportion of time spent in the two jurisdictions (Mar 15 -June 15 as US income and June 15 -Mar 16 as UK income) and deducted tax accordingly from sale of stock and paid to the IRS/US state and HMRC respectively.
Accordingly, I am getting a US payslip from the US branch of the employer. However, it is reporting the full vested income as US income. I contacted them to make correction but as a preliminary reply, got told that they have to report it as as such because of IRS guidelines (not sure if this is factually correct).
My issue is that if the full amount goes on as a W2 income for 2016, I would not be able to use the tax paid to HMRC as foreign tax credit (since reported US income should be offset by actual taxes to the US). I would only end up reporting lower UK income instead and proportionally higher tax (because of amount paid to HMRC). So net result is the UK income tax paid will be left unused and just taken as foreign tax credit carryover.
Any thoughts?
Thanks