Confusion on Restricted Stock Unit (RSU) taxation

Forum|Forum|1 year ago
February 7, 2025
1 reply
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My wife and I both received vested RSUs in 2024. I have read in so many places that this is supposed to be taxed at the supplemental income rate of 22% (but in many other places that it's taxed as ordinary income). In both our cases the full amount was included in Box 2 of our W-2s and therefore taxed as ordinary income. Is there a way to apply the 22% supplemental rate through entering a 1099-B or am I just confused about the taxation?

Best answer by AmyC

No, you can't do anything and are confused. You have two parts - income and tax. You received vested RSU but did not sell them. At the time they vested:

Income

The full market value is in box 1 taxed as part of your ordinary income.

Tax

Taxes are withheld on the market value of the stocks The supplemental rate of 22% refers to the federal withholding tax rate that employers may use to withhold taxes on supplemental wages, which include bonuses and RSUs.

If you sell the RSUs, then you will receive a 1099-B to report profit or loss and the sale follows normal tax laws for stock sales.

AmyCAnswer

Employee

No, you can't do anything and are confused. You have two parts - income and tax. You received vested RSU but did not sell them. At the time they vested:

Income

The full market value is in box 1 taxed as part of your ordinary income.

Tax

If you sell the RSUs, then you will receive a 1099-B to report profit or loss and the sale follows normal tax laws for stock sales.

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steiny1227Author

Thanks Amy - I also realized that the 22% is just the withholding rate by my employer. It doesn't indicate what I would ultimately end up paying in taxes which is the ordinary income tax rate.