It depends. When you receive an RSU, you don't have any immediate tax liability. You only have to pay taxes when your RSU vests and you receive an actual payout of stock shares. At that point, you have to report income based on the fair market value of the stock.
In addition, if you sell your shares of stock after receiving, you may need to pay taxes on the sale of the stock. The amount of tax is dependent on three things according to this article from Turbo Tax.
- If you sell the stock at a higher price than its fair value at the time of vesting, you'll have a capital gain.
- If you hold the stock for less than one year, your gain will be short term, and you'll owe ordinary income tax on it.
- If you hold the stock for one year or more, your gain will be long term, meaning you'll pay tax at the more favorable capital gains rate.
The amount of tax that the IRS or the State of California may take will depend on whether it will be taxed on ordinary income or the capital gains rate depending on the nature of the transaction.
[ Edited 12/28/21| 03:29 PM PST]
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
