RSU Taxes

Forum|Forum|2 years ago
January 12, 2024
1 reply
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Quick question:

My employer reported all RSU's granted as ordinary income on my W2. Additionally, I notice that the brokerage the Grants are with also applies net shares to pay more taxes resulting in 3-4 shares less than the grant. Should the brokerage be doing this if 100% of the RSU grant was already included as ordinary income and taxed already? In this example, no vested shares were actually sold yet...so cost basis doesn't figure in just yet.

My concern is that I am paying ordinary income tax on 12.5K of RSU options that I don't have access to...and then when they vest, the brokerage is hitting them again for more income tax by selling a few of the shares. This feels like double taxation.

Not A Product Question

AmyC

Employee

No. Your company is supposed to include the value of the RSU in your box 1 wages. Since this is extra income, some of the RSU is sold to cover taxes. You should get a 1099-B after mid-February showing the RSU sale to cover taxes. These shares that were sold were paid in for you as tax and are in your W-2 under federal tax withheld.

You will need to track your basis in your total shares and individual shares. When you enter your 1099-B for shares to cover taxes, you may have a small loss due to the brokerage fee.

Later, when you sell the shares you have, you will use the RSU amount included in box 1 wages as the basis.

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