Comments on: Restricted Stock Units (RSU) Sales and Tax Reporting

By: John

John — Thu, 19 Apr 2012 14:25:56 +0000

Ok – you may have answered this – but I am still bit confused! I had a grant of 400shares…it lapsed on 1/22/2008 – they took out 150 units to cover tax – so i have 250 units left at $16.96 a piece. Several years later, on 7/23/10 I sell them for $14.27. Since they lapsed in 2008, and i had then in shares…this is a regular stock sale…correct? Where the cost is the $16.96 a piece (plus commission) and the income is $14.27? So in this case I actually have a loss of almost $2.70 per share…is that correct? And then what is the determination in Schedule D of Short Term? I had shares lapse as late as 1/22/2010 and 3/5/2010 and sold them on 7/23/10 – are they short term because I only held them for no more than 6 months? Yes – this is from 2010! I didn’t know about your site, or what I needed to file – and the IRS sent me a nice reminder letter (and a not so nice bill!) because I didn’t provide the cost basis – I assumed the sale (which was all captured in my W-2) ws all taxed at the full amount it should as a benefit…oops!

By: TFB

TFB — Mon, 16 Apr 2012 14:29:48 +0000

Bala – Sorry I have no idea how you are supposed to report taxes withheld and paid to India.

By: Bala

Bala — Mon, 16 Apr 2012 13:27:34 +0000

Few additional information. I understand the 30.9% is the India tax. So the RSU during vesting was taxed for India FBT. Since I did not receive any income in this do I report this vesting in my Schedule D?

By: Bala

Bala — Mon, 16 Apr 2012 09:28:50 +0000

I am US citizen, working in India and earn wages in India. My company has given me RSU’s (listed in US) and they use “Sell to Cover” option at the time of vesting. Since I do not receive any wages in US I do not have a W-2. I did not receive a 1099 from the brokerage firm as well. But I did receive the RSU release and the tax withholding details. It indicates that there is a 30.9% of tax withholding for Local tax. Now I am not sure whether the tax withholding is for US or for India. I am planning to report the “Sell to Cover” in my “Schedule D”. Please let me know if my reporting is correct. Also does 30.9% withholding looks little high and I am not sure it was paid to India or US – any comments?

By: KenK

KenK — Thu, 12 Apr 2012 05:10:11 +0000

Hi TFB – I was issued 709 RSU shares that vested 6/1/11. From the 709 shares, 264 share were sold to cover taxes. I sold the remaining 445 (3 lots) on the same day,6/6/11. In Box 1 on my W2, I see an RSU entry of $13,825 as taxable income. My 1099 shows 445 RSUs sold at a gro proceed of about $8200. When I enter the RSU information into Turbo Tax (separating everything by lots) everything seems fine, until I get to the “Employee Stock Plan Results” page where TT comes up with $6932 and ask me if that number appears in Box 1 of the W2. My W2 shows $13,825…or twice what TT calculated. If i enter the actual amount that appears on my W2, TT throws an error stating that I can’t post anything more than their calculation.

Have you encountered this scenario? It’s confusing to enter everything it asks for and then not have a clue how they came up with the $6932 number.

By: TFB

TFB — Tue, 03 Apr 2012 03:17:48 +0000

Siva – Nothing special to do. The 40 shares worth of withholding is already reflected on your W-2. If you paid too much, you will naturally get the difference back. Think when you get a cash bonus, which the employer is required to withhold at a higher rate. If it turns out to be too high, you get the difference back when you file your taxes.

By: Siva

Siva — Tue, 03 Apr 2012 01:21:46 +0000

To add further I have not sold any RSU’ s in that tax year and I have not received any tax document from my brokerage account.

By: Siva

Siva — Tue, 03 Apr 2012 00:21:44 +0000

Thanks for detailed explanation . Lets say company granted 400 RSU to be vested over 4 years .
In 1st Year I got 100 shares out of which I see only 60 (sellable ) shares in the trading account and remaining 40 were sold for covering taxes .

If my tax bracket is at 20%. However for this RSU’s I have payed at 40% . when I file taxes for that year I should get the 20 shares price refunded to me when I file taxes. How will I claim the 20 shares amount in refund.

Does the RSU’s mean that they are to be taxed at 40% .

By: Belinda

Belinda — Sat, 31 Mar 2012 18:56:57 +0000

Thank you so much for the SPEEDY answer!

By: TFB

TFB — Sat, 31 Mar 2012 18:09:32 +0000

Belinda – The extra bit of $$ you paid out of pocket has nothing to do with the cost basis of either the shares sold or the shares remaining. Think of it as just extra withholding from your regular paycheck. You will get it back as tax refund if it turns out you paid too much tax.