The information provided is based on your example and numbers.
The sale by your employer for your federal withholding would be the value on the vesting date times the number of shares sold to cover your tax withholding for the shares that were fully vested. The employer sold 20 shares x $400 per share = $8,000 and included that amount in your federal withholding on your W-2.
The full amount of the shares on the vesting date is included in your wages on your W-2.
- RSU compensation is taxed as ordinary income (W-2 wages) when the shares vest and based on your shares' value on the vesting date. In your example the additional wages are $40,000 (100sh x $400/per share). This should be the amount in box 14.
The amount included in your wages (the full amount) is your cost basis for the shares you sold. When you enter your sales (both the ones sold by your employer and the ones sold by yourself) you will enter this cost basis to reduce or eliminate any gain on the sales. Your sale will be short term because you did not hold the shares for a long term period.
Holding Periods:
- Long term is a holding period of more than one year (one year plus one day) and receives capital gain tax treatment (0%, 10%, 15%, 20% depending on your regular rate of tax)
- Short term is a holding period of one year or less and receives ordinary gain tax treatment (your regular rate)
@jackkgan
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