RSU stands for Restricted Stock Units. It’s the new form of stock-based compensation that has gained popularity after the employers are required to expense employee stock options. The biggest difference between RSUs and employee stock options is that RSUs are taxed at the time of vesting while stock options are usually taxed at the time of option exercise. The employer is required to withhold taxes as soon as the RSUs become vested.
In a previous post, Restricted Stock Units (RSU) Tax Withholding Choices, I wrote about what I chose among the three tax withholding choices — same day sale, sell to cover, and cash transfer — and why. This time I’m writing about how to account for taxes on the tax return, especially if you use tax software like TurboTax or H&R Block At Home.
I’m going to use this simple example:
Suppose you had 100 RSUs vested on October 31. The closing price of the stock on that day is $50, and the tax withholding rate is 40%.
Regardless of which choice you made for tax withholding — some employers don’t give you a choice — your employer will include on your W-2 as wages the total value of the vested RSUs. In our example, it’s $50 * 100 = $5,000. They will also withhold the same amount of taxes regardless of your choice. In this example it’s $5,000 * 40% = $2,000. They will also include the taxes withheld on your W-2. How you account for taxes on your tax return for the rest will depend on your tax withholding choice.
1. Net Issuance. In net issuance, you don’t have a choice about tax withholding. The employer will deduct a number of shares from your vested shares and give you the rest. You do not receive a 1099-B from a broker for the shares you didn’t receive. In our example, although your employer says you have 100 shares vested, you actually only receive 60 shares.
You don’t have to report anything for the vesting event. Use the numbers on your W-2 as-is.
Make a note of the closing price on the vesting date. You have to remember the date and this number until you sell the remaining shares. In our example, that’s $50 per share. If you sell the 60 shares for more than $50 per share, you will have a capital gain. If you sell them for less, you will have a capital loss. You report the capital gain or loss in the year you sell the remaining shares. For a step-by-step guide on how to report the sale in TurboTax, see Restricted Stock Units (RSU) and TurboTax: Net Issuance.
2. Same Day Sale. If you make this choice, you sell everything. Let’s say on the day after the vesting date the shares are sold for a total of $4,989. The employer withholds $2,000. You are left with $2,989. At tax time, you will receive a 1099-B from your broker listing the stock sale proceed of $4,989. You enter in TurboTax or H&R Block At Home, or on Schedule D of Form 1040:
Description: 100 shares XYZ, Inc.
Net Proceeds: 4,989
Date of Sale: 11/01/20xx
Cost Basis: 5,000
Date Acquired: 10/31/20xx
Your cost basis is the amount your employer included on your W-2, which is the closing price on the vesting date times the number of shares vested. In this example, you will show a short-term loss of $11 on your tax return because of the brokerage commission and the SEC fee. The income and the associated tax withholdings are already included on your W-2. Use those numbers as-is.
3. Sell to Cover. [Update on April 9, 2008: I wrote a follow-up post RSU Sell To Cover Deconstructed to clarify this option. Jump ahead to that post if you’d like.] If you make this choice, or if you don’t have a choice, your employer sells just enough shares to cover the tax withholding. The key difference between Sell to Cover and Net Issuance is that the employer uses a broker in Sell to Cover but doesn’t use a broker in Net Issuance. Suppose 41 shares are sold for $2,030. The employer takes away $2,000 for tax withholding. You are left with $30 in cash and the remaining 59 shares. At tax time, you will receive a 1099-B from your broker listing the stock sale proceed of $2,030. You enter in TurboTax, H&R Block At Home, or on Schedule D of Form 1040:
Description: 41 shares XYZ, Inc.
Net Proceeds: 2,030
Date of Sale: 11/01/20xx
Cost Basis: 2,050
Date Acquired: 10/31/20xx
Once again, your cost basis for the shares you sold is the amount your employer included on your W-2 for those shares, which is the closing price on the vesting date times the number of shares you sold for tax withholding ($50 * 41 = $2,050). After the sale, you show a short-term loss of $2,050 – $2,030 = $20 because of the brokerage commission and the SEC fee. Again, the income and the associated tax withholdings are already included on your W-2; you just use those numbers as-is.
For the remaining 59 shares, you keep a cost basis of $50 per share ($50 * 59 = $2,950). You have to remember the date and this number until you sell the remaining shares. Whenever you sell them, you enter in TurboTax, H&R Block At Home, or on Schedule D of Form 1040:
Description: 59 shares XYZ, Inc.
Net Proceeds: whatever you sell them for, copy from 1099-B
Date of Sale: your date of sale
Cost Basis: 2,950
Date Acquired: 10/31/20xx
You will show a short-term or long-term gain or loss for these remaining shares depending on your date of sale and the sale price.
4. Cash Transfer. If you make this choice, you give your employer cash for the tax withholding. They don’t sell any of your shares. You can sell the shares either immediately or keep them for however long you like. The tax accounting is the same as if you bought the shares at the closing price on the vesting date. Whenever you sell them, you enter in TurboTax, H&R Block At Home, or on Schedule D of Form 1040:
Description: 100 shares XYZ, Inc.
Net Proceeds: whatever you sell them for, copy from 1099-B
Date of Sale: your date of sale
Cost Basis: 5,000
Date Acquired: 10/31/20xx
You will show a short-term or long-term gain or loss for these shares depending on your date of sale and the sale price. The income from RSU vesting and the associated tax withholdings are already included on your W-2, and you just use those numbers as-is.
That’s all. Hope this is helpful to someone looking for info on the tax treatment and implications of RSU sales.
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Harry Sit says
@Riz – Yes, on Schedule D. Same as other trades.
G says
TFB,
I have a same day cash sale RSU. Turbo Tax Premier is subtracting the value of shares with held to pay taxes from my cost basis (in my case reported W2 income).
Details (Same Day Cash Sale)
RSU Grant: 166 Shares vested on 8/17/09 @ $10.86
Shares held for taxes: 71
W2 Income: 166 * $10.86 = $1802.76
I assume my cost basis is $1802.76, ie what is on my W2.
However, TT is saying my cost basis is $1031.70, or $1802.76 – (71*$10.86).
So it looks like TT (using easy guide) is subtracting the value of taxes paid (ie 71 shares @ $10.86) from my total cost basis. Is this correct? From all of the examples, I should not have to subtract this and my cost basis should just be the W2 income reported.
Thanks!
G
Riz says
TFB,
In reference to my question(150), is there a specific/exclusive column on the W-2 where witholding taxes are exclusively reported/specified? If not which column has that info?
Thanks in advance.
Harry Sit says
@G – See comment #137.
@Riz – No specific columns. They are lumped together with other withholding from your salary: federal, state, FICA.
To all who want me to work their TurboTax issues: I will do my best to help you, but I can’t be doing free tech support for TurboTax. If you need one-on-one help, deposit what you think the help is worth in my tip jar.
G says
Thanks TFB, that post made it clear. My cost basis is only on the 95 shares sold, or 95 * $10.86 = $1031.70, exactly what TT reports.
Now I just have to figure out some non-qual Stock Appreciation Rights (SARs). I wish you had a blog on that 🙂
Thanks!
G
Deepak says
Great article! Got a few questions though.
Background:
Release history for 12-SEP-2010 shows “Released Quantity”=104 and “Net shares released”=62 at FMV 10.8150 Per share
The W-2 Box-12 says V-Nonstatutory stock options 1,124.76 (confirmed w/ payroll this is for RSU)
Also recd 1099-B from Broker, showing trade date 13-SEP-2010, shares sold 42 at Price 11.1267 and Gross proceeds (less fee) of $442.31
My confusion is regd Cost Basis. Should it be 1,124.76 (as in W-2) or $454.23 (42*10.8150) ?
Does the below look correct (if I used 42 * 10.8150 as Cost Basis) for Sch-D?
Shares Sold Net Proceeds Sale Date Cost Basis Gain/Loss
42 442.31 9/13/2010 454.23 -11.92
AT says
I don’t see any response to TaxBozo’s question on 2/25/10 about the situation where the shares that were sold to cover are allocated with a cost basis FIFO, not from the lot that just vested.
To complicate matters further, I just followed the method outlined on this site last year, when I had a lot fewer/less complicated RSU transactions. So now if I switch to FIFO, everything’s all messed up. (Of course, if I don’t, then I’d have to go through and calculate what lots the RSUs I sold myself came from and all my records would conflict with my brokerage’s records.)
I am surprised more people haven’t encountered this and would be interested in any insight you have.
(My current plan is to correct everything to FIFO now and not think about last year unless I get audited.)
BFL says
My question relates to wash sale rules. On 2/20/09 we sold 504 shares of stock at a loss (RSU’s from 2006) and on 3/4/09 we sold 382 shares of stock (RSU’s from 2007) also at a loss. However, 547 new shares were vested through the RSU program on 2/15/09 and 36 shares on 3/6/09. I did not recognize the losses in 2009, because I thought the wash sale rules disallowed them. My questions are:
1)Which stock basis is increased due to the disallowed losses? Do I add it all to the 547 shares received 2/15/09 (chronological) or do I prorate between the 547 and the 36? Does it matter that the number of shares I acquired is less than the number of shares I sold at a loss?
2)On 11/22/10, we sold the 547 shares acquired 2/15/09. The broker statement shows a gain, because it does not reflect an increased basis due to the wash sale disallowed loss. When Turbo Tax asks me for the basis of the shares I sold, do I just enter the basis including the disallowed loss, even though that won’t agree to the 1099 from the broker?
3)If I increase the basis of the 547 shares for the disallowed loss, it will make the 11/22/10 sale of stock a loss rather than a gain. I got new shares vested 11/15/10. So under the wash sale rules, would I not recognize the loss on the 11/22/10 sale, but increase the basis of the stock received 11/15/10?
Any help would be appreciated. Is there separate software just to handle wash sales, because Turbo Tax Deluxe doesn’t seem to give extensive guidance on the subject.
TFB-Reader says
Hello, great post and comments I should say firstly.
I wanted to ask about my situation which seems a bit more peculiar:
I had a grant of 50 RSUs on 05/06/2008. They vested on 05/06/2009. At that time they were automatically “sold to cover”, going down to 28 (22 sold). I saw the withheld-for-tax money, as well as the “earnings” (FMV*50) show up on my company’s gross/net pay 2009 report (however it’s not clear if this money is in the 2009 W-2 – arggg, why is it all lumped together? it’s so easy to print a breakdown in this day and age of computers…). However, I didn’t touch said 28 RSUs until 12/31/2010, at which time I sold them, and by which time I had left the company (after vest).
How do I calculate the cost basis on the 2010 return? Do I have to report that 22*FMV was withheld for taxes again for 2010? I’m guessing no.
And another question: as I was going through my 2009 W-2, my calculations showed that it (the W-2) reported less than I got in 2009 (it seems to not include the last lump payment which included unused vacation time). Is it possible? I quadruple-checked my math (and I’m good with math). I was never sent an updated W-2. It’s a big company, I don’t think they’d make mistakes on their W-2s…
Thanks in advance and keep up the good work!
TFB-Reader says
A quick follow up to my original question:
I guess these shares are NOT RSUs anymore after the vesting date. Therefore I would not enter them into my tax software as RSUs, but as normal stocks. Does this make sense?
As for the cost basis, someone explained it like this:
” let’s say you were awarded 150 shares valued at $20/sh
– your company reports $3000 of income for you (in addition to salary, bonuses, etc.)
– the stock program administrator grabbed 60 of the shares to pay taxes assessed at a fairly high rate, so your company has also reported $1200 of federal withholding, social security, medicare, state tax, etc.)
– You now own 90 shares that “cost” $3000, so your basis is ~$32/sh. which was certainly more than market value on purchase date since RSUs are issues at fair market value or $20.
– if you haven’t sold any shares, TT shouldn’t report anything.
– If you sold some of the shares for more than $32, then you’d have a capital gain to report, a nice thing in this day and age, but unlikely in 2008 when most stocks went down…not up by 40%
– if you sold shares for less than $32, you might generate a capital loss.”
Is it correct to assume the basis is:
A) 90 * $3000/90 = $3000
or
B) 90 * $20 = $1800
I would say B, but the comment above hints to A (“basis is ~$32/sh. which was certainly more than market value on purchase date”, FMV=$20).
Thanks in advance
Harry Sit says
@TFB-Reader – Answer is B. Cost basis is tied to the number of shares. Your cost basis for the 150 shares is $3,000. $1,200 of that went with the 60 shares to the company. They go together. You are left with $1,800 of basis and 90 shares.
Mark says
Great information about RSUs and the tax treatment thereof! My question stems from the way the value of the stock I received is reported on my W-2. The value of the shares I received (gross value before “sell to cover”) was reported as part of my “gross pay” and not part of my reported wages.
I think I need to add the total value of my RSUs into my reported wages. Can you verify?
Thanks in advance.
Mark
Harry Sit says
@Mark – Do you mean W-2 Box 1 when you say “reported wages”? Yes the value of vested RSUs should be in Box 1. However, the Box 1 number is after 401k and other pretax deductions. It may give you the impression it didn’t include the RSUs but the difference between Box 1 and gross pay is really 401k and other pretax deductions, not the value of RSUs.
Mark says
TFB-thanks for your response.
You are right! In my case the value of my RSUs equals my 401k contributions +life insurance premiums+ Sec. 125 contributions almost to the penny:)
LAB says
TFB –
Been reading through all of your articles and comments … I am on the Employer side, small company, trying to figure out how to represent all of this in our books and on the Employee’s W-2s. We use Intuit payroll so I’ll have to set up something there but can you walk me through conceptually?
We granted restricted stock 1,000 shares several years ago but they will vest this year @ $10/share.
I report $10,000 extra income on W-2.
Additional tax burden created will include Fed/State/SS/Med so, “sale to cover” would include those totals, right?
Help!
Harry Sit says
@LAB – Sorry I have zero experience on the employer side. From my observation as an employee, sell-to-cover includes necessary amount for federal, state, SS, Medicare, and state-mandated disability program (if your state has one), just like a one-time cash bonus except no deduction for 401k contributions.
JCA says
Still a little confused. My employer issues RSUs to me and seems to use the “Net Issuance” method to cover the taxes. I can infer this because my 1099-B does not have anything related to the RSUs. Every April, I get a chunk of RSUs, let’s say 300. About 1/3 are sold to cover taxes, say 100 shares. So to me, I am just getting issued 200 shares of stock. The value of 300 shares is reported as income, and the value of 100 shares is withheld as tax. OK all that is fine. Now within 30 days of the RSU issue, let’s say I sell a chunk of totally unrelated shares in the same company, at a loss. Let’s say I sell 200 shares at $10, and $5 of that is loss, so $1000 of loss. Let’s say the RSUs that were issued to me were at $10, or a value of $2000. According to IRS Pub550, wash rules are incurred when I “Acquire substantially identical stock or securities in a fully taxable trade” within 30 days of the sale. Does my company’s issuance of RSUs to me count as the “acquire” statement? If so, do wash rules apply? If so, when do I get to claim the loss?
Kbiz says
In reviewing a paycheck from a client, it shows Restricted Stock gross income as $371,000. An after-tax deduction called “Restricted Stock Offset” equals $235,000. Does this $235k represent the tax w/held on the transaction? Not clear how it figures into the calculation.
Harry Sit says
@Kbiz – I will tell you if you share some of the money your client pays you. Charging your client money for an answer you get from me for free isn’t fair.
Kbiz says
I am not charging the client for anything – not preparing a tax return nor providing a fee for service. Was just looking for clarification…no problem for not answering…
And, thanks, you do have an informational site…
zev says
Thank you very much for your informative article. I just have one question. How does the IRS value restricted stock paid to non-employees? i was just paid in restricted stock, and im not sure how much i need to pay tax on. The amount the stock was when recieved, or what the stock is at now. (even though at this point i cant sell it)
AK1 says
Thanks for your informative article. I have a question (apologies in advance if it’s super basic). In relation to RSUs, when are shares deducted from the number of available shares — are the shares deducted when the RSU is granted, or at the time the RSU vests?
Thanks much!
CDS says
Great website, very helpful. I’ve found myself in the camp of needing to answer an IRS audit due to not properly filing a Schedule D for a sale. Quick cost basis question for RSUs (in a net issuance situation. Your guidance indicates using the closing price of the stock on the day it vests for the cost basis of the remaining shares after net issuance. I have a date of 5/17, and using the closing price and number of shares, calculate a cost basis of 3152.50. On the vest date, the company issued a paycheck stub, with gross amount, taxes paid, and a net income amount reported as “RSU” (also included in W-2 income), which is different than my calculated cost basis. Must I use the “RSU” income amount as cost basis, or is my calculated cost basis using closing price (which is slightly higher) fine?
Harry Sit says
@CDS – If you have the paperwork from your employer, use your employer’s.
CDS says
I determined the reason for the difference, and I’m not sure the company’s tax treatment of reported income is correct. The company sells whole shares, and sells fewer than needed, creating a tax “liablility”. For instance, for one RSU vest event, they sold two shares (out of 6), getting $96 in proceeds, with a tax liability of $102. They then reduce the reported W-2 RSU income by the $6 difference, so instead of reporting income/cost basis as (remaining shares * sales price), they are reporting (remaining shares * sales price) – “tax liability”. I can’t quite figure out what’s going on with this $6 tax liability, but I don’t think it belongs in the cost basis of the remaining shares.
John says
My broker website (MorganStanley SmithBarney) shows a $4000 cost basis for 50 restricted shares that I sold to cover. These restricted shares are part of an employee restricted share award. Based on proceeds of about $1500 and the cost basis of $4000, TurboTax Deluxe reported a Gain/(Loss) of -2500. I decided to upgrade to Turbotax Premium for the upgraded stock reporting features and it reports the Cost Basis as zero. When I click on the explanation, I get the following “Your cost basis in stock options you receive through a restricted stock grant is the amount you paid for the stock (this is often zero) plus the amount of compensation income you receive”. Why the discrepancy?
Harry Sit says
Neither makes sense. What was the price *per share* at the time of vesting and at the time you sold those 50 shares?
John says
There is a “FMV (per share)” value of 30.53 and a “Sale Price” of 30.9571. I think you are asking for the FMV price, correct? And when you say “at the time of vesting”, it is not clear to me when it vested, but I think it was the “release date”. MorganStanley reports a Release History table with “shares vested pending release” and shows “release dates”. So on the release date of April 2011, 50 shares were sold. When I click details, it tells me that the FMV (per share) was 30.53 and “sale price” was 30.9571
I do see now that the $4000 cost basis was for all of the shares that were released, not just the 50 I sold. So, in turbotax, I chose a basic stock sale (ignoring the restricted stock sale option) and indicated the net proceeds(sale proceeds – fees/commissions) from my 1099-B and the cost basis (50*30.53). The difference between the 2 came out to a loss of $10.
According to a turbotax agent, the restricted stock option in turbotax is for stocks that have not yet vested. To me this seems real confusing.
Harry Sit says
@John – Yes, vesting and release are the same: when the shares vest, they are released to you. You did it right this time. When you sell the remaining shares, use $30.53 per share as your cost basis.
SGK says
Great article on RSU’s.
Not sure if this was answered above..
My question is, if we did not get a 1099-B from my broker, can we assume that it is “Net issuance” and not a “Sell to Cover”?
The amount (total value of the vested RSU’s) is included in my W2 and the remaining shares deposited with my broker.
thanks for the help.
Harry Sit says
SGK – Yes, assume net issuance if you don’t get a 1099-B.
oldiemotors says
Man this is confusing. On net issuance, I can’t figure out if my cost basis should be calculated by multiplying the FMV at the time of vesting by the number of shares released, or by the number of shares withheld to cover taxes, or by the number of shares I ended up actually receiving.
Donna says
If I enter my RSU’s sold to cover taxes as RSUs in TT, I end up paying a heck of a lot more tax than if I call them a stock sale. Why would this be? I haven’t completed the TT return – just finished up the 1099B income section…perhaps if I continue with TT this difference in tax will be negated by other entries later on that affect the RSUs? Note: My 1099B does not indicate RSUs anywhere on it so technically I think I can call it a stock sale if that results in lower taxes. Also note that the RSUs that vested were included in line 1 of my W2 but not noted elsewhere as vested RSUs. I’m just trying to figure out why calling them “stock sale” instead of “RSUs” results in much lower taxes? Am I doing something wrong?
Harry Sit says
Donna – Just use stock sale. TurboTax is confusing you in the RSU section.
Rohit says
same question as Donna.
RSU vested, tax withhold and received deducted shares, income and tax reported on w-2, no 1099-B reporting for them. I understand there is no gain/loss report, as i didn’t sell them.
But, do i need to report this transaction in my return?
taxact doesn’t have anything for it?
Harry Sit says
Rohit – If it’s net issuance (no 1099-B), you don’t do anything until you sell. When you sell, use the price per share used to calculate your income on W-2 as your cost basis.
oldiemotors says
TFB, Can you clarify how to calculate the Cost Basis for Net Issuance? I have read and re-read this post, but I can’t find an explanation or an example. Sorry, if I missed it…staring at Tax forms for extended periods of time is numbing my brain.
Harry Sit says
oldiemotors – Quoting from the post under Net Issuance.
“You don’t have to report anything for the vesting event. Use the numbers on your W-2 as-is.
Make a note of the closing price on the vesting date. You have to remember the date and this number until you sell the remaining shares. In our example, that’s $50 per share. If you sell the 60 shares for more than $50 per share, you will have a capital gain. If you sell them for less, you will have a capital loss. You report the capital gain or loss in the year you sell the remaining shares.”
The $50 per share in the example is your cost basis.
oldiemotors says
TFB, thanks for the reply. I realize that $50 is the costs basis for the stock price, but TurboTax asks me to enter the costs basis for my sale. Would I enter 100x$50=$5000 as my cost basis, or 60x$50=$3000?
Harry Sit says
oldiemotors – $50 times however many shares you sold. If you sold 30 shares out of 60 shares you have, it’s $50 * 30 = $1,500. If you sold 60, it’s $50 * 60 = $3,000.
oldiemotors says
TFB – That is what I needed to know. Someone in my company’s Payroll department told me that my cost basis was based on the total shares granted (in your example that would be 100 shares). That didn’t sound right to me. Thanks.
Jim Wilson says
Hi TFB. The RSU post was very helpful and got a significant issue squared away for me. Thanks. Have a hybrid of that issue also. Have an noncovered sale of 12xx shares. The shares came from 2 ESPP lots purchased in May and June 2007, and an RSU lot released in October 2007. Company was bought in late October 2007, and the shares were converted to 6xx shares of new company. Stock then splits 2:1, giving us the 12xx shares that were then sold in Jan 2011. New 1099s don’t give basis, as we all know.
Question is how to figure basis.
Do I trace each lot individually (I have basis from each individual purchase) from purchase through merger and split, or should I calculate the basis for the entire lot after the merger and then split? Thanks very much.
Harry Sit says
Jim Wilson – Each lot individually. Prorate the commission on the sale.
Donna says
Slight twist on RSU issue… I was granted RSU shares and they vested 2011. ~30% were sold by my company to cover taxes. The total value of the vested shares appears on my W2 as “income” in box 1. When I use TT and report the vested shares and sale of the shares to cover taxes, I end up with a refund of $1000. If, instead, I call them a stock sale when entering the info into TT, my refund is $4000. I checked every document in my return and I can’t say for sure, but it appears that my carryover stock losses from prior years allow the gain from the RSU sale to be offset resulting in no tax due – but if I call them an RSU using TT, then there is no offset, so I pay a lot more tax. This doesn’t seem fair. And it may be an issue with how TT handles the RSUs? Shouldn’t you be able to offset any gain (whether it’s an RSU or not) to be offset by losses? Can I legally call the sale of the RSU’s a stock sale?
Thanks for all your comments. This site has saved my sanity.
Harry Sit says
Donna – See my reply on March 17. Just use stock sale. TurboTax is confusing you in the RSU section.
Belinda says
Great info & I have learned MUCH from reading so many of these posts/replies about RSUs, but I did not see the situation I have. CO issued RSU & sold some to cover taxes, but a little extra $$ was due to cover the taxes (<mkt value of 1 share) so $$ was due to the CO & was deducted from paycheck. Should the extra $$ paid for taxes be attached to the cost basis of the shares sold to cover OR can I add it to the cost basis of the remaining shares issued that are availble to sell?
Thank you so much for clarifying this confusing topic!
Harry Sit says
Belinda – The extra bit of $$ 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.
Belinda says
Thank you so much for the SPEEDY answer!
Siva says
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% .
Siva says
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.
Harry Sit says
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.
KenK says
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.