Do FICA taxes cover RSUs earned abroad?
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I accumulated RSUs internationally, yet they will vest in my home country. Is it true that Social Security and Medicare taxes apply to 100% of that equity, despite being earned internationally?
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I have one question regarding this as well:
If RSUs were granted while I was working overseas but vest after returning to the U.S., how does the IRS determine which portion is subject to FICA? Is the entire vesting value taxed, or only the part tied to my U.S. service period?
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@Orion_Leif said in Do FICA taxes cover RSUs earned abroad?:
I accumulated RSUs internationally, yet they will vest in my home country. Is it true that Social Security and Medicare taxes apply to 100% of that equity, despite being earned internationally?
Generally, yes. RSUs are usually taxed where you live when they vest, not where you earned them. In the U.S., you'll likely face Social Security and Medicare taxes unless a specific treaty applies. Definitely, check with a cross-border tax professional first.
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@MarianaV said in Do FICA taxes cover RSUs earned abroad?:
I have one question regarding this as well:
If RSUs were granted while I was working overseas but vest after returning to the U.S., how does the IRS determine which portion is subject to FICA? Is the entire vesting value taxed, or only the part tied to my U.S. service period?
That’s a very valid concern. In the U.S., the IRS generally applies FICA on a prorated basis, taxing only the portion of RSU income tied to your U.S. workdays during the vesting period, not the entire grant value. Employer payroll reporting and tax treaties can impact how grants are handled, so it's essential to review your grant timeline closely.