Today I received a nice CP2000 from the IRS saying that I owed an additional $10,000 in taxes due to a $30,000 income difference reported under Securities by Morgan Stanley.
I did some digging and found that both the securities that were listed as the reason for the difference were RSUs that were sold to cover taxes on those dates because those were the dates that my RSUs were vesting. I received like $80,000 worth of stock and this $30,000 of stock was sold immediately to pay for taxes. I guess I probably misfiled something but I never received any documentation for this and wasn't aware that I had to do anything separately for this if I selected "Sell to Cover". I figured it would be covered in my W-2 as income received and tax paid since the taxes were withheld from me.
Is that not the case?
I was planning to send over the form disputing their proposed amount due of $10,000 and explaining that the sale was for sell to cover (and providing documentation from Morgan Stanley). Is that the right thing to do? What should I do next time so this doesn't happen again?
