RSUs are pretty straight forward; therefore, I recommend you enter your transactions without indicating you are reporting the sale of company stock. Indicating that it is company stock has no impact on what's reported to the IRS. It only affects what screens and questions you get in the TurboTax interview. In addition, for RSUs (all company stock) do not import the Form 1099-B; instead, enter the information manually. When RSUs vest (the stock is delivered) the entire amount is ordinary income subject to income, social security, and Medicare tax withholding. Your employer must collect payroll taxes, or sell shares to pay it. Since you are taxed on the entire amount, your basis is the amount that is added to your W-2 which you are taxed on. If you retain the stock, any gains on the sale will be short term if you hold the stock one year or less, and long term if you hold it more than one year.
Your cost basis is the total value on the date the RSUs vested. This is also the amount that it is added to your income and included in Box 1 of your W-2. To get your cost basis per share, divide the total value upon vesting (the amount added to your income) by the total number of shares represented by the RSUs.
When brokers report the sale of RSU stock, they usually report a cost basis of zero, or an amount that is not correct. When you report a Form 1099-B with RSU stock sales, you have to enter an adjustment to the cost basis.
You asked:
How do I ensure that I don't get taxed for the 9 shares that were sold automatically? If those are on the 1099-B, wouldn't the government assume that as stock sale income (when in reality it's not)?
You don't. You will be taxed, as earned income, on the shares that were sold automatically. There value was included in your income reported in box 1 of your W-2. You want to make sure you don't get taxed twice. In order to do that, you have to adjust the cost basis reported on the 1099-B to reflect the value on the date they vested. It should be either the same as, or very close to the sales proceeds for those shares.
If you have multiple sales from different RSU lots you will need a detail of your RSU activity that shows the value of the stock on the delivery date, as that amount determines your cost basis. Brokers sometimes have a supplemental schedule included with the 1099 Composite package and/or year-end statement that shows the cost basis for the shares sold. If your broker did not provide the information, you should be able to get it from your employer. If you can't get the information from your broker or your employer, you can look up the historical stock price for the dates sold and use the closing price for the day. It may be off slightly, but it will be close.
Remember, for the stock sold to pay tax, those transactions should result in either very small gain or loss, or no gain or loss.
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