Comments on: RSU Sell To Cover Deconstructed

By: Coco

Coco — Tue, 07 Feb 2012 06:58:50 +0000

Thank you again for this wonderful site and your time answering questions. I have been receiving RSUs for a few years and can now follow and understand them in the 3 places they appear on my paystub — in the earnings section, in the taxes section, and in the after-tax deductions section, where the RSU offset shows up.

This month, for the first time, I noticed something called an “RSU refund” in the after-tax deductions section of my paystub. This refund figure is a negative number (unlike the RSU offset figure, which is always a positive number). The other odd thing about this RSU refund line is that it has an entry in both the “current period” and the “YTD” column, whereas all my prior paystubs that show RSU activity have entries ONLY as YTD figures, never as a “current period” figure, whether in the earnings, taxes, or (for the offset) in the after-tax deductions section of the paystub.

I do not find anything about “RSU refund” on your site or searching online generally. Can you tell me what this is? What does it mean in terms of tax treatment when (1) the RSUs vest and (2) I later sell the shares that actually come to me? (My employer does a sell-to-cover whenever RSUs vest, and I get a reduced number of shares from what the grant was.) Thank you so much.

By: CelinaS

CelinaS — Mon, 05 Dec 2011 21:59:35 +0000

Another tricky RSU question.

I was issued 1,063 shares in September 2010. My employer was supposed to do the “net of tax” and reduce my shares but they forgot to. As such I was issued all my shares. The total FMV of shares was included in my taxes. FMV was $6.85 at date of issuance.

Subsequent to this, another set of RSUs vested in March 2011. My employer reduced my shares by the number of shares I owed previously for the September 2010 issuance for taxes plus the shares for taxes in in the current year. There was no brokage firm involved, and it was a net issuance. I was supposed to receive 3,187 shares but my shares were reduced to 1,928 (282 for first issuance, 977 for second). FMV was $11 at date of issuance.

How do I determine my basis and are there any 2010 tax consequences for the employer error?

By: KevinS

KevinS — Mon, 11 Apr 2011 01:29:17 +0000

Hi TFB;
I have tried your suggestion above i..e. only stating the RSUs SOLD I put the same number as TTax2010. In doing so the Taxes increases. Since the total W2 wages are higher – I have already paid tax through my employer”sell to cover’ option.
In summary:
On the worksheet: Part II column d on TTAX2010: If the computed amount is less than column f W2 total RSU wages then you get TTAX error during final check. – If you state only the RSU sold.
On TAX2009 there was an option for adding RSU vesting only and I did not have the issue then; only in TTAX2010 they have made this change, hence this error.

I can use HRBlock deluxe to do the same. is there a step by step instuctions you can provide for ISO/NQSO and RSU? Thanks.

By: TFB

TFB — Thu, 07 Apr 2011 01:42:03 +0000

@Kevin – I played with TurboTax online. If you sold some and kept some, when it comes to the page where it asks you how much was included in the W-2, just type the same number TurboTax has. It’s asking with regard to those shares sold, how much income was included. Your answer: all of it. The additional income for the unsold shares is not related to the sale. Therefore don’t include it in your answer.

By: Kevin

Kevin — Wed, 06 Apr 2011 00:34:38 +0000

Hi TFB;
I just saw your previous comment to PatelA on April 5th I will try out the spreadsheet method ( vs EasyGuide) for RSU if I can find it in the TTAX2010 premier…. will update you in 24 hours. There are atleast a dozen other users who are facing similar issues for Vested but unsold RSU with TTAX2010 on thier Live Community knowledge base.
KevinS

By: Kevin

Kevin — Wed, 06 Apr 2011 00:23:45 +0000

Hi TFB Great site.
I have been following your articles since last year on RSU- decompiled…etc.
Have you used TTAX2010 premier to enter the VESTED but unSOLD RSU stocks?
My employer sells some RSU to cover for taxes. I sold some and held on to others. All RSU are accounted for in my W2 income.

However TTAx2010 errors out during the final checks of T TAX 2010 returns – as my totals of RSU sold vs reported in W2 are not equal.

Any suggestions how to input RSU received but not sold in T TAX 2010 premier?

Thanks you.

By: TFB

TFB — Tue, 05 Apr 2011 19:35:31 +0000

@patela6 – It sounds like TurboTax assumes you sold all vested shares if you use its friendly step-by-step help. So just use the spreadsheet method and don’t bother with the extra help it’s trying to give you which actually messes things up.

My TurboTax Basic doesn’t have the extra help for RSUs. It handles the RSUs just fine. If someone gifts me a copy of TurboTax Premier, I will figure out how to please it in the step-by-step interview.

By: patela6

patela6 — Tue, 05 Apr 2011 19:11:01 +0000

Hi TFB,

I have a similar issue to others. I get an error during final review because my W2 number for RSU doesnt match the vested (and sold) shares. This is because there are vested and UNSOLD RSU’s that I have not included in my return.

How do I rectify this?
a. somehow include the vested, but unsold RSU’s in Turbotax? This increases my taxes!
b. use the spreadsheet method of reporting in Turbotax? have they not addressed this yet?

Thanks!

By: mj

mj — Sun, 03 Apr 2011 23:24:42 +0000

Please help -my situation is slightly different

167 shares vested in 2010 @ $55/sh
107 sh x $55 = $5,885 income shown on subsequent pay stub, but not identified specifically identified on 2010 W2, although W2 income increased accordingly, while 67 shares withheld for taxes

Sold 107 a month later for $50/sh (for a $5/share loss)

My question is – I’ve recorded the sale transaction (loss) on Schedule D, how do I show the vesting event – 67 shares on Schedule D, so I’m not taxed twice?

By: TFB

TFB — Fri, 11 Mar 2011 18:38:02 +0000

@tea4two – It depends on which shares you are talking about. “Same Day Sale” in the previous article “Restricted Stock Units (RSU) Sales and Tax Reporting” means selling all shares. In that case the cost basis is $5,000. This article talks about “Sell to Cover” which means selling only enough shares to cover the withholding and keeping the rest. For the shares sold for tax withholding, the cost basis is $2,000; for the shares you keep, the cost basis is $3,000.