Tax on shares received as bonus

[peterwilson]

Hi
My wife got some shares from her a American company.

She has got a certain amount of shares but appears to have 60% less in her investment account.

Would she have been taxed at the higher rate when those shares vested?

She was also asked to fill in a 1042S form.

Thanks
P

Further detail: 62400USD 56500EUR vested and assigned
Current fidelity account
25500EUR

 

[ClubMan]

Assuming that she received the shares for free then the market value at the time of vesting would have been assessable for income tax (at her marginal rate), PRSI and USC. The default option is usually to sell enough on vesting to cover these deductions. If she still holds some or all of the shares in question then they will be assessable for CGT on the selling price minus the market price on the date of vesting when they are eventually sold.

Who asked her to file a 1042S? The sounds odd to me based on my own experiences (as an Irish national not subject to US taxation) of US multinational share incentive schemes.

Unless she is a US citizen or subject to US taxes I would have expected that she should file a W-8 BEN form to avoid US taxes.

About Form W-8 BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) | Internal Revenue Service

Information about Form W-8 BEN, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities), including recent updates, related forms and instructions on how to file. Submit Form W-8 BEN when requested by the withholding agent or payer.

www.irs.gov

Her employer really should be explaining the basics of the tax issues in relation to stock incentive schemes that they operate.

 

[Towger]

She should have a payslip showing the Tax, USC and PRSI paid the shares. This is very important as Revenue consider being paid in shares the same as cash, and many a person had have gotten a very expensive shock when the letter arrived from Revenue a few years later.

 

[ClubMan]

Further detail: 62400USD 56500EUR vested and assigned
Current fidelity account
25500EUR

This doesn't really make much sense without further explanation.

How many shares did she receive?
Were they free?
What was the share price on the date of vesting?

 

[Henning G]

Exactly They could even be RSU shares so if cashed in when vesting the tax would be deducted thought payroll automatically.