The amount stated in Box 14 for RSUs is already included in Box 1, where wages are. For example, if we have $234,567 reported in Box 1 as wages and $12,345 reported in Box 14 labeled as RSUs, then the $12,345 is already included in the $234,567 amount.
Restricted stock and restricted stock units are included in an employee's taxable wages when one of two things happens:
- The restricted stock vests and thus becomes unrestricted. In this case, the fair market value of the stock at the time of vesting (less any cost to purchase the restricted stock) is the amount of income included in the employee's wages.
- The restricted stock is transferred to the employee, and the employee makes an 83(b) election. In this case, the fair market value of the stock at the time the restricted stock is transferred (less any cost to purchase the restricted stock) is included in the employee's wages.
Record Basis in Restricted Stock for Future Reference
Basis in restricted stock is the amount paid for the stock plus the amount included as taxable income. The sale should be reported on the 1099 B and you will have to fill in the basis from your own records.
RSUs Go on Schedule D When Sold
The amount shown on Form W-2 is included as part of the cost basis in the shares. This is reported on Schedule D and Form 8949 in the year that the taxpayer sells the underlying stock.
In Summary
- If you see RSUs or restricted stock on Form W-2 next to a dollar amount, that dollar amount is already included as part of the employee's wages shown in Boxes 1, 3, and 5.
- Make sure this same amount is included in your cost basis records for that stock in your personal records.
- There is nothing else required in terms of preparing Form 1040. The Box 1 wages are added to the wage income reported on line 7 of Form 1040.
Answers are correct to the best of my ability but do not constitute legal or tax advice.
**If this post is helpful please click on "thumbs up"**
