Hi,
I am an L1 visa holder who was in US from Jan 2007 to September 2009. I am back in India since September 2009 (so am a resident from tax purposes).

I was granted 400 NASDAQ listed stock options@ USD 31 in Oct 2007 as an ESOP with 100 stocks vesting each year (2008 onwards). Now, in Nov 2009, I exercised my grant of 100 Stocks while I was in India (However at the time of vesting of these Stocks in Oct 2008, I was in US). The price at the time of vesting was USD 45 per share. So, my gross is earning approx. USD 1400 from that sale. However, my net earnings is close to USD 350 as there was a deduction of USD 600 as US taxes and USD 440 as India taxes.”

My questions are:

I know that there is Double taxation avoidance treaty and so I should be taxed only in 1 place and can claim credits at another place. I am assuming that while Filing US returns, I can claim tax credit for tax deducted in India.
• Is that a correct Assumption?
• If so, what is the process for claiming US credits (ie where on US returns self-filing (Taxact) should I place this as a tax credit)?

Also, the other question is can I claim tax deducted in India in US tax return as credit via Form 1116?

Regards,
Kunal

Kunal:

You can claim the credit for foreign taxes paid on EITHER the Indian tax return or the U.S. tax return, but NOT both.