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  • I lived in the US from 2013 and 2016 on an E-3 nonimmigrant visa.

  • As part of my full-time employment contract, I was granted ISO shares in a pre-IPO company.

  • I exercised most of the vested shares in 2015 and 2016. For these years, I paid AMT due to the exercise events.

  • In 2016, I filed my last US tax return and left the US permanently to return to Australia.

  • The company went public early in 2019

  • In late 2019, I began selling some of my shares. I understand this is a "qualified" ISO sale, and long-term capital gains tax rules apply.

I'm now attempting to file my US tax for 2019 and have tried to work with multiple tax agents. Each have tried to do my tax return but all have provided wildly varying figures for how much I owe the IRS. One of them even did a $0 return... which didn't add up. I suspect the challenge is due to the added complexity at the cross-section of ISO deferral items (AMT) with the change-of-residency issue.

Can anyone help me understand how to calculate my 2019 tax return, or provide advice for how I can find an accountant who can give me confidence that they know what they're doing? How do I ensure my AMT credits are properly used and carried forward? I just want to pay the right amount to the IRS - no more, no less. The only idea I have is to get the tax agents to talk to each other and peer-review each others returns... but I feel like this is an unnecessarily expensive exercise.

Bonus question - in the future if I make capital gains over the threshold, will I be subject to the Net Investment Income Tax (NIIT)?

Thanks!

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  • What a difficult question! TBTH if it is not a huge amount of $ involved I would go for the $0 option :/
    – Fattie
    Jul 20 '20 at 12:15
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    This is too technical a question for me to answer at the moment, but in general capital gains are considered attributable to the country of residence at the time of the gain. This means it is quite likely that Australia has the full right to tax your gain, and the US, given you neither live there nor are a citizen, has no right to tax it. The complication is I'm not sure if the gain here is considered directly attributable to your original employment income, in which case the US may have the right to tax it. Go to an actual large accounting practice, like a KPMG, EY, Deloitte, or PwC. Jul 20 '20 at 12:39
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    Any small firm / mom & pop type shop will be too small to deal with this. You want someone who has an entire foreign tax department with consistent US clients, not someone who files an FBAR every couple of years. You should expect this to cost you at least 1k, probably 2k these days. But the first consult to see if you want to go with them should be free, so ask around to fine someone you feel comfortable with, with a brand name that allows them to take liability for their advice if it is wrong. Jul 20 '20 at 12:41
  • Thanks @Grade'Eh'Bacon - I've just started talking with KPMG. You're right - definitely not cheap ;) but will be glad to get a definitive answer from them. On another note - I think I'm a little shocked at how many tax agents told me they could handle this tax problem, and then once they collected payment it became clear that they couldn't & had no prior experience. I guess I'll be less trustful on things like this going forward! Would much rather spend a bit more and get quality output.
    – Matty F
    Jul 25 '20 at 3:11
  • @MattyF If you get a good answer and are willing to share it, consider coming back and adding it here, to enlighten others with your problem. Good luck! Jul 27 '20 at 13:00

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