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Equity Compensation Abroad

RSUs, ISOs, NSOs, and ESPP for US expats — dual-country taxation, FEIE interaction, sourcing rules, and optimal exercise/sell strategy.

Equity Type

RSU

NSO

ISO

ESPP

Grant Value at Vest/Exercise ($)

Cost Basis (if applicable)

Days Worked in US During Vest Period

Total Days in Vest Period

Your US Marginal Rate (%)

Host Country Rate (%)

Key Rules

Sourcing Rules: Equity compensation is sourced based on where you worked during the vesting period. If you worked 1 year in the US and 2 years abroad during a 3-year vest, 1/3 is US-source and 2/3 is foreign-source.

FEIE & Equity: RSU income at vesting is earned income eligible for FEIE (for the foreign-source portion). But it adds to your W-2 and may push you over the $130k limit. Exercise income on NSOs is also earned income.

Double Tax Risk: Both the US and host country may tax the full amount at vesting/exercise. FTC is your relief — claim credit for foreign tax on the foreign-source portion.