Restricted Stock Units double-taxed by Canada and US

[squirrelbat]

I was working in Canada until Sep 2020 before transferring to the US (same company) on a L1 visa. I have Restricted Stock Units (RSUs) that were granted while I was employed in Canada. They were vested after my transfer to the US. According to my employer's payroll department, the US tax law is the full vested amount is subject to US tax deduction on the vesting date. And the Canadian tax law is to withhold tax on the portion between the grant and transfer dates. So essentially I was double taxed on the latter amount.

The amount of days I spend in the US is substantially less than 6 months in the last 3 years. So I am a non-resident alien as far as the US tax law goes. Should I file Foreign Tax Credit along with a 1040-NR? Obviously, I want to get back the amount that I was double-taxed.

[squirrelbat]

Looks like the situation I am in is very similar to this other post: https://ttlc.intuit.com/community/taxes/discussion/canada-to-us-rsus-dual-taxation/01/2952717#M10780...

Difference is since I am not a US tax resident, I am filing 1040-NR rather than 1040.

[GeorgeM777]

Yes.  You will probably file Form 1116 along with Form 1040-NR.  However, TurboTax does not support IRS Form 1040-NR (U.S. Nonresident Alien Income Tax Return).  TurboTax has partnered with Sprintax to offer both federal and state tax preparation for international students, scholars, and nonresident foreign professionals.  Please visit the TurboTax/Sprintax site for more info.

Just an fyi, in most cases taking a foreign tax credit on Form 1116 gives you a lower tax bill than if you deduct any foreign taxes paid as itemized deductions. Here's why: when you itemize deductions on Schedule A, each dollar of deduction reduces your taxable income. When you take a foreign tax credit, each dollar of tax paid reduces your income tax.  Thus, when you are preparing your Form 1040-NR, you might want to consider whether the foreign tax credit is the better option versus including your foreign taxes as itemized deductions.