Moving abroad? Your RSUs have a "Long Memory" when it comes to taxes

In my last Linkedin Post I highlighted how US Multistate Sourcing can create a surprise tax bill if you move between states like California and New York. If you are moving internationally with the same US employer, that logic doesn't just apply—it intensifies.

For "Global Nomads" and tech/life sciences professionals transferring overseas, the biggest misconception is that moving to a new country "resets" your tax obligations. In reality, the taxman follows the work, not just your current zip code.

The Framework: Sourcing & Trailing Liability Just like state taxes, RSU income is generally sourced based on where you were physically working during the earning period (the time between grant and vest).

• Trailing Tax Liability: If you lived in the U.S. for 2 years of a 4-year vest before moving to London, the IRS considers 50% of that gain "U.S.-sourced." You will likely owe U.S. taxes on that portion, regardless of your new residency.

• The Double Withholding Trap: This is the "Cash Flow Crunch." Your employer’s global payroll may be legally required to withhold taxes for both countries at the moment of vesting. While tax treaties usually prevent "double taxation" via credits, your initial "sell-to-cover" percentage can be significantly higher than expected (sometimes 60%+).

• Totalization Agreements: Beyond income tax, Social Security (FICA) also has sourcing rules. Depending on the country, you might remain in the U.S. system or move to the local system, governed by bilateral Social Security agreements.

2026 Global Checklist:

• Verify Treaty Benefits: Does a Double Taxation Treaty exist between the U.S. and your new home?

• Check the 2025 FEIE: For 2025, the Foreign Earned Income Exclusion (FEIE) has increased to $130,000, but remember—this often does not apply to "U.S.-sourced" RSU income.

• Audit Your "Mobile Days": Ensure your company’s mobility team is tracking your workdays in each jurisdiction accurately.

• Prepare for "Shadow Payroll": Understand if your company uses a shadow payroll to manage your reporting obligations in two countries simultaneously.

Just like moving from SF to NYC, an international move requires a look-back at your grant schedule before you look forward to your first global vest.