How restricted stock and restricted stock units (RSUs) are taxed

However, I DID have shares withheld at vest to cover taxes. Restricted Stock offset is shown as Any help would be appreciated to make sure I am entering this right. Thank you so much for going through this. TFB-thanks for your response. Add these amounts, which are treated as wages, to the basis of the stock in determining the gain or loss on the stock's disposition.

Restricted stock and RSUs are taxed differently than other kinds of stock options, such as statutory or non-statutory employee stock purchase plans (ESPPs). Those plans generally have tax consequences at the date of exercise or sale, whereas restricted stock usually becomes taxable upon the completion of the vesting schedule.

How Restricted Stock Works

From this page, you can view detailed information about a particular RSU, view your vesting and distribution schedules, accept or decline unaccepted RSUs, or select a tax withholding method which will take effect at vesting or distribution for an accepted RSU.

You can view vesting schedule information, grant details, and the grant's current estimated value. The total value of unvested grants is equal to the previous day's closing price of the stock times the number of unvested grants, but not including unaccepted grants.

Note that this value is not the same as the fair market value for federal income tax purposes of your unvested grants. The fair market value for federal income tax purposes is the value of the units at the time they vest and the proceeds are delivered to you. Fair market value is specified in your RSU agreement, and is used to determine the amount of income treated as compensation for federal income tax purposes.

The calculation may be based on prior business day's close, average high and low for the day, real-time price, or today's close. Fair market value per share is the fair market value for federal income tax purposes divided by the number of RSUs you own.

The expiration date is the date on which your RSU agreement expires. For restricted stock that vests based on time, the expiration date is immaterial. If vesting is based on factors other than the simple passage of time, such as performance measures, the expiration date is the end of the period within which vesting is possible. For these plans, if vesting has not occurred by the expiration date, the grant is forfeited. Please refer to your company's plan rules to understand whether any expiration dates will apply under your plan.

For accepted grants, select View Details. You can also view your plan document and grant agreement when you accept or decline an unaccepted grant. The plan document and grant agreement are in PDF format. You can view a history of all transactions for your restricted stock units plan for the past 10, 30, 60, 90, or days. Transactions appear in reverse chronological order, but you can also sort the list of transactions by transaction type, grant ID, grant date, or quantity.

You can view details pertaining to accepted and declined grants. On the Unvested Grants page, you can view the vesting date, grant date, grant ID, number of units, and tax withholding method for each unvested grant.

You can also view a grant's estimated value upon vesting, and an estimate of the taxes you may owe upon vesting. The View Details page for an unvested grant also shows you the estimated fair market value per share , total estimated taxable income, and tax withholding amounts and percentages broken out by Federal, State, and Medicare. See Accepting and Declining Grants for details. If so can I use turbo tax to do it.

Any suggestions would be of great help. It will remind you the price per share you paid for the shares. How do i report RSU? I did not receive B either. Any suggestions would be appreciated. You enter each sale as shown on the B. Do this for each entry on the B. I have a situation where a total of RSUs from 3 different grants vested Sept employer withheld shares for tax and distributed shares to me. Since in my case the shares vested and were sold in different years- do I need to do anything different?

Follow the example there. You will avoid all the problems. If yes, how many times within a tax year can this be done? Are two consecutive sell to cover for taxes resulting in a loss within 30 days of each other considered a wash sale if there are no other transactions in the stock in those 30 days? Thanks for this post. Turbotax flags a delta between what is reported on my W2, and what it computes. The delta is exactly the amount of the two vestings that I did not sell.

This tutorial was really helpful. I do have one follow up very basic question. Thanks so much for your help. If you followed the article to the end, you realize you should just skip the Easy Guide and jump right into Enter On a Spreadsheet. There, you make two entries: I already showed you how to do the 97 shares.

You do it the same way for the 63 shares with the numbers on your B. I have RSUs vested during I did not sell any. Employer deducted shares to withhold tax on eTrade. How do I tell turbotax that tax has been withheld since I have less sellable shares since employer already withheld taxes? Thanks for the reply Harry. I am confused though. Since the wage is reported on my w2, I have to pay taxes on it. But I have less sellable shares since tax was deducted.

Will the remaining vested shares become sellable once I pay the tax? You employer already added the value of the shares it deducted as tax withholding on your W The remaining shares are yours to keep or sell. Your cost basis in each share is the price per share at the time of vesting.

If the price goes up from there, you get capital gains. Turbo Tax only calculates the tax on the lots that I entered that I sold. There is a delta, which is exactly the value of the grants that I did not sell. Steve — Where did you tell TurboTax about the grants that you did not sell? Oh man, thank you for this.

Injecting some sanity into this needlessly complicated and misleading process was exactly what I needed. This was super helpful! If I choose this approach, I end up with a huge tax bill equal to the amount of the tax withholdings on the RSUs vested and sold for taxes. Barbara — It depends whether the shares sold for taxes appear on a B or not.

This article deals with Net Issuance, i. See comment 21 above if the shares sold for taxes are reported on a B. If it got from W-2 box 14, delete it.

Hi Harry — Thanks for your help…just tipped you for it! Comment 21 is for 2 transactions — the sell-to-cover taxes and the sale of the rest of the shares. So do I still report the sell-to-cover taxes shares in TurboTax as sold just like you would report the 97 shares in your example?

I really appreciate your time. Barbara — It all depends on whether the shares sold for taxes are reported on a B from a broker or not. If they are, you enter them, the same way as the 97 shares in the example. I did not upgrade to Premier turbo tax, but believe I am following this helpful conversation — please confirm.

I usually move the remaining shares into a different broker account and then sell them when I need the money or want to invest them different. David — Just a standard stock sale but you will have to remember the basis price per share at vesting.

Dear God thank you! At the Investment income section and answer the first couple questions that you will type in the info yourself. You are now at the Enter Other Sales screen. Then click the start button to the right. This will take you to a screen where you can select Restricted Stock Units.

Thank you so much, Scott! You saved my day. I had shares vest in , with held for taxes. I sold the remaining in , which I have a B for. Nothing was included on my W2. The company I received the shares from was sold in What do I do?? Thanks for any advice. They were taken care of on the W-2 in Just find out the per-share price your shares were vested at. That times the number of shares plus any reinvested dividends form your cost basis.

There were shares withheld to cover the taxes. Also I do not see that they added any taxes taken for the withheld shares. I sold some of them this year, can I add the taxes that were taken via the shares to additional taxes paid in the other category in TurboTax? I re-wrote this article using new screenshots for tax year. See if those help. I thank you for providing so many of us with a clearer understanding of how to enter the transaction. My situation is as follows…most of our RSU sold were done as sell to cover, one was a net issuance.

I completely understand how to calculate the cost basis for the partial shares sold to cover the tax and the remaining shares which I sold the same or next day. The broker reported the gross proceeds for both sales. I am a little confused about the cost basis on the one sale which was sold as a net issuance. I entered into Turbo tax the correct gross proceeds which were reported on the B. No cost basis was reported on the B.

I entered 34 shares in the description which is how it is listed on the B. I had figured the cost basis for the net issuance RSU as the shares available to sell 34 shares , which I sold the next day, times the FMV on the day it vested. The B does not list the transaction involving the 13 shares. The compensation element on my pay stub is the amount of shares vested 47 shares times the FMV on the day it vested.

I do not want to under state the cost basis, but from what I read it should match the compensation element added to your earnings. From your explanation I believe the cost basis is the actually 34 shares sold times the FMV. However, I read on another site that the cost basis is the amount of shares vested which would be 47 shares times the FMV.

Everyone seems to address selling the stock at a later date, we sold it immediately. I was expecting the amount on the pay stub to be identical to the compensation element I was including in the cost basis.

Can you clarify which compensation element do I use in my cost basis calculation……47 shares or 34 shares times the FMV. You taxable income for 47 shares vested is the per-share price times The taxes you paid are the per-share price times Your basis for 34 shares remaining is the per-share price times 34, and if you only sell 17 out of the 34 shares received, your basis for the 17 shares sold is the per-share price times The only differences between sell-to-cover and net issuance are the shares taken for taxes are not sold through a broker, not at a slightly different price from the open market but assumed to be the same price at vesting.

The only transaction on the B is for the 34 shares sold. I am getting a little confused, so to be sure, I am only reporting to the IRS the transaction for the 34 shares sold, right? My cost basis for the 34 shares will be shown on the return as the FMV times 34 shares. I almost prefer cover to sell because all my numbers match: Thanks again for your clarification. In Net Issuance you never saw the 13 shares. You only report what you sold.

If you sold 1 share you use the compensation element for 1 share. If you sold 2 shares you use the compensation element for 2 shares. Your W-2 or paystub had 47 shares is really beside the point.

Hi, this is still confusing to me. My company sells to cover taxes through the e-trade broker and form shows both, virtually everything. Employers sometimes prefer to pay employees a portion of their payment in stock, rather than in ordinary cash.

They often don't want to immediately transfer the stock without restrictions to employees, though, and instead set up a so-called vesting schedule where the stock gradually becomes available to sell. Sometimes this is done using what is called restricted stock units, which are exchanged for shares of the employer's stock, according to the vesting schedule. Once stock vests, employees are free to sell it or hold on to it as they would be with any other kind of stock investment.

When restricted stock vests, employees are taxed on the market value of the stock, minus anything that they paid for it. Often stock grants simply give the restricted stock to employees as compensation, so they will have paid nothing for it and will be taxed on the market value of the stock.

Employers often are required to withhold tax from employee paychecks to cover this restricted stock as it vests. Sometimes, employees can have employers withhold some of the stock itself to pay the tax.

Tax Liabilities

As with RSUs, stock grants typically vest after a period of time, or after certain performance measures are met. You're not liable for income tax until your stock grant vests, at which point you must report income equal to the value of the stock. 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. Restricted Stock Units (RSU) These stock units are awarded to an employee as a form of compensation. The employee does not receive the stock at the time of the award, but has a specific vesting plan outlining when the employee will receive the stock.