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RSU's taxation issue in Turbo tax

Forum|Forum|5 years ago
June 18, 2020
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I am trying to enter in my RSUs and the ones sold to cover the taxes. The shares sold to cover the stock were sold on a different date for a different amount than the remaining shares were sold. The shares sold for tax were sold at a loss, but the system is reflecting it as a gain. Please help!!

TurboTax Home & Biz Windows

Best answer by TomYoung

"I am trying to enter in my RSUs and the ones sold to cover the taxes."

That statement in ambiguous. You don't, literally, "enter"RSUs".

When the RSUs vest you get X amount of stock. "X" is the GROSS amount of stock in the award. If shares are withheld or sold "for taxes", that doesn't affect "X."The employer calculates compensation in the amount of

("X" times "per share fair market value at vesting date")

and includes that in your W-2. That "per share fair market value at vesting date" is also your per share basis.

If shares are withheld or sold "for taxes" then the taxes withheld are scattered around the various taxes boxes of your W-2. So the vesting of the RSUs and all the associated taxes are simply part of your recording of your W-2.

Now, if you sold some of the shares "for cash" or some of the shares were sold "for taxes" and the broker sent you 1099-B(s) for these sales, (brokers don't have to send 1099-Bs for "same day" sales), then you need to report the sales of the stock. Presumably you got a 1099-B for the shares sold "for taxes", and maybe you also sold some of the shares "for cash." Perhaps this latter event is what you are referring to by "I am trying to enter in my RSUs..."

I'm not sure what you are doing wrong here, but you might be trying to use the "RSUs guided interview" to report the sale(s) and that could be the crux of the problem. If you're using the RSU guided interview to report the sales then I'd say "delete those trades", to start. There's no "Income Tax Return Reporting Requirement" that says you must use those interviews. Nothing in your income tax return gives the IRS any clue as to how you acquired any security that you sold.

It's entirely correct to report these sales using the "normal" 1099-B interview. You simply enter the 1099-B(s) exactly as they read - wrong basis and all - and then use the mechanisms available in TurboTax, (apparently the online version and desktop versions are different here, though I'm not sure), to correct the basis, which in both cases: (number of shares sold x "per share fair market value at vesting date"). That will properly report the gain or loss on the trade(s) and put the correct information on Form 8949.

T

TomD8

Employee

Normally the proceeds from the sale of your RSU's for taxes would be included as part of the tax withholding amounts shown on your W-2. You wouldn't report them separately.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

T

TomYoungAnswer

Employee

"I am trying to enter in my RSUs and the ones sold to cover the taxes."

That statement in ambiguous. You don't, literally, "enter"RSUs".

When the RSUs vest you get X amount of stock. "X" is the GROSS amount of stock in the award. If shares are withheld or sold "for taxes", that doesn't affect "X."The employer calculates compensation in the amount of

("X" times "per share fair market value at vesting date")

and includes that in your W-2. That "per share fair market value at vesting date" is also your per share basis.

If shares are withheld or sold "for taxes" then the taxes withheld are scattered around the various taxes boxes of your W-2. So the vesting of the RSUs and all the associated taxes are simply part of your recording of your W-2.

Now, if you sold some of the shares "for cash" or some of the shares were sold "for taxes" and the broker sent you 1099-B(s) for these sales, (brokers don't have to send 1099-Bs for "same day" sales), then you need to report the sales of the stock. Presumably you got a 1099-B for the shares sold "for taxes", and maybe you also sold some of the shares "for cash." Perhaps this latter event is what you are referring to by "I am trying to enter in my RSUs..."

I'm not sure what you are doing wrong here, but you might be trying to use the "RSUs guided interview" to report the sale(s) and that could be the crux of the problem. If you're using the RSU guided interview to report the sales then I'd say "delete those trades", to start. There's no "Income Tax Return Reporting Requirement" that says you must use those interviews. Nothing in your income tax return gives the IRS any clue as to how you acquired any security that you sold.

It's entirely correct to report these sales using the "normal" 1099-B interview. You simply enter the 1099-B(s) exactly as they read - wrong basis and all - and then use the mechanisms available in TurboTax, (apparently the online version and desktop versions are different here, though I'm not sure), to correct the basis, which in both cases: (number of shares sold x "per share fair market value at vesting date"). That will properly report the gain or loss on the trade(s) and put the correct information on Form 8949.

H

hdt2skiAuthor

Thank you, you assumed correctly. I received a 1099 B from ETrade. And it's super annoying on the desktop version. Thanks!

DawnC

Employee

The important thing is if there is no basis reported on the 1099 or it is incorrect, make sure you use the ''adjust basis'' function to ensure your basis get reported correctly and you do not overpay taxes.

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S

scar1pet

But how do you delete an RSU trade?
I've been stuck on this for an hour and they wouldn't answer on the phone. Can't file because of this. I'm going to have to do my taxes by hand and get a refund.

G

GeorgeM777

The process is somewhat different depending on which TurboTax product you are using. In TurboTax online, select Wages & Income (left margin), then scroll down to Investments and Savings. Select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B). Because it appears you have already entered an RSU transaction, you should see your RSU transaction on the next screen. Click on the drop-down arrow across from your RSU transaction and then select the trash icon to delete it.

In TurboTax CD/download, the process is as follows:

After opening your return, select Personal.
Select Personal Income. Select "Ill choose what I work on."
Scroll down to Investment Income and select Stocks, Mutual Funds, Bonds, Other.
You should now see a list of your investments. Select delete next to the RSU transaction.

@scar1pet

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