I have the same situation with my RSU - here is the problem:
- let's say you have $50k in RSU vested and $10k of that is withheld for taxes, so your broker gets $40k worth of shares which you don't sell.
- the problem is that $50k is included in total wages in W2, but federal income tax withheld does not include the $10k that was withheld.
So now turbotax says you have to pay $10k in taxes because it's not accounted for in W2. The solution to this should be equivalent to updating the W2 box 2 (federal income taxes withheld) to add $10k. If instead you add $10k to your RSU cost basis, then basically what you are doing is taking a $10k capital loss, which is not at all the same thing as paying $10k in taxes (assuming 30% tax rate, your $10k capital loss becomes about $3k that you don't pay in taxes, instead of $10k that you shouldn't pay).
I was thinking of directly updating the W2 box 2 to add the $10k, but the problem with that is I'm not sure if IRS will flag the mismatch. Is there another way in Turbotax to specify this additional tax withheld?
