I received a 1099-B from my brokerage and it has a total of 5 sales on it. These are RSU's, where 2 of the 5 sales were sell-to-cover options for taxes. 3 of the sales were me manually selling the stock.
What I'm struggling with is entering this detailed info in the RSU section of TurboTax. Mainly, at some point it asks for the total number of shares vested, followed by the total number of shares withheld for tax. Since 2 of my "sales" were sell-to-cover, I'm not sure how to enter this information in?
For example:
Let's say I had 200 shares vest May 1st. On June 1st, 50 of those shares were sold as a sell-to-cover. On August 1st, I sold 150 shares of the available stock.
That's 2 sales on my 1099-B, so when I go to enter the information into TurboTax, do I say my total vested was 150 for one sale, 50 for another? If so, do I then say 0 withheld on the 150 then 50 on the 50? The first half makes sense because it adds up to 200, but the 2nd half seems like it'd throw off the tax calculations by saying 0 of 150 shares were withheld, so this is the part where I'm getting confused.
I'm a stock imbecile, I really wish my company had never given me these things, so please help explain this to me like I'm 5.
Thank you!
My suggestion is to NOT use the RSU step by step interview to report these sale. That interview confuses lots of people and there is no valid "income tax reporting" reason that you need to use that particular interview. You can report the sale as a simple sale of plain-vanilla stock, stock that's no different than a stock you bought through your broker.
But to answer the question you've posed in your example, you'd say 50 shares vested on the 50 share sale and 150 shares vested on the 150 share sale. That "withheld for taxes" box can be left blank. But if you do end up using the RSU step by step interview make sure you go all the way to the end of the "Stocks, Mutual Funds, Bonds, Other" interview. Don't just stop when you finish entering the trades. There's a page that comes up asking if the compensation created by the vestings of the RSU's agrees to your W-2.
Here's the information you need to understand so you don't consider yourself a "stock imbecile."
Here's what makes reporting the sale of stock acquired via an RSU just slightly puzzling: starting in 2014 brokers need only report the "out of pocket" cost of of stock that's been acquired through an employer stock incentive program. Since you pay nothing "out of pocket" when an RSU vests, the brokers typically report a basis of $0 when you sell the stock. If you report the sale exactly like it reads on the 1099-B then you end up reporting income twice: once as "compensation" income on the W-2 when the stock vests, and then as an overstatement of "gain" (or understatement of "loss) when you report the sale.
So clearly what you need to do is to enter the sale in TurboTax just like the broker reported it, then adjust the basis from $0 to the correct amount.
To do this you simply report the sale as a plain-vanilla stock, entering the details off the 1099-B just as it reads. Then click the blue "I'll enter additional info on my own" button. On the next page enter the correct basis in the "Corrected cost basis" box. And the correct basis is simply (# of shares sold) x (per share basis for that lot). Much easier then using the RSU step by step process.
If you didn't get a 1099-B for a sale of some of those shares, (brokers aren't required to prepare 1099-B's for a "same day" sale, but they do need to prepare a "statement" with the same information), you can enter those sales, too, though you don't have to.
In this case you'd tell TurboTax that no 1099-B was received, identify that what you're selling is simply "stock", enter a description the amount of proceeds, and the date of sale. Tell TurboTax you "bought" the stock, your "date purchased" is the vesting date, and then enter your purchase price which, again is (# of shares sold) x (per share basis for that lot).
Tom Young
My suggestion is to NOT use the RSU step by step interview to report these sale. That interview confuses lots of people and there is no valid "income tax reporting" reason that you need to use that particular interview. You can report the sale as a simple sale of plain-vanilla stock, stock that's no different than a stock you bought through your broker.
But to answer the question you've posed in your example, you'd say 50 shares vested on the 50 share sale and 150 shares vested on the 150 share sale. That "withheld for taxes" box can be left blank. But if you do end up using the RSU step by step interview make sure you go all the way to the end of the "Stocks, Mutual Funds, Bonds, Other" interview. Don't just stop when you finish entering the trades. There's a page that comes up asking if the compensation created by the vestings of the RSU's agrees to your W-2.
Here's the information you need to understand so you don't consider yourself a "stock imbecile."
Here's what makes reporting the sale of stock acquired via an RSU just slightly puzzling: starting in 2014 brokers need only report the "out of pocket" cost of of stock that's been acquired through an employer stock incentive program. Since you pay nothing "out of pocket" when an RSU vests, the brokers typically report a basis of $0 when you sell the stock. If you report the sale exactly like it reads on the 1099-B then you end up reporting income twice: once as "compensation" income on the W-2 when the stock vests, and then as an overstatement of "gain" (or understatement of "loss) when you report the sale.
So clearly what you need to do is to enter the sale in TurboTax just like the broker reported it, then adjust the basis from $0 to the correct amount.
To do this you simply report the sale as a plain-vanilla stock, entering the details off the 1099-B just as it reads. Then click the blue "I'll enter additional info on my own" button. On the next page enter the correct basis in the "Corrected cost basis" box. And the correct basis is simply (# of shares sold) x (per share basis for that lot). Much easier then using the RSU step by step process.
If you didn't get a 1099-B for a sale of some of those shares, (brokers aren't required to prepare 1099-B's for a "same day" sale, but they do need to prepare a "statement" with the same information), you can enter those sales, too, though you don't have to.
In this case you'd tell TurboTax that no 1099-B was received, identify that what you're selling is simply "stock", enter a description the amount of proceeds, and the date of sale. Tell TurboTax you "bought" the stock, your "date purchased" is the vesting date, and then enter your purchase price which, again is (# of shares sold) x (per share basis for that lot).
Tom Young
Thanks Tom, that does sound much easier! Just to make sure I don't fudge the numbers though, I noticed on your answer you said to do (# of shares sold) x (per share basis for that lot). Is the (per share basis) the market value at the time of the sale? The per share cost at the time of sale? If the shares are granted as one lot but vest in small increments annually, I'm not sure what the per share basis is and don't wanna get it wrong.
Otherwise, everything else you said made great sense! Thanks, I hope you're able to clear up that one detail for me 🙂
The grant itself has nothing to do with the valuation. Each vesting sets the price for the gross number of shares received in that vesting. So each vesting is a lot and each lot has a per share basis that's the same as the per share "fair market value" used by the employer to calculate the compensation that's going to be reported for that lot.
Broadly speaking your basis is the same as that stock's "price" on the day of vesting, but of course a stock's price varies during any given trading day. Your employer picks a price to use - it might be the same price you sold the stock at, or it might not be - so the "most accurate" basis number to use is the same one your employer used.
If you ever end up holding some of these stocks for many years and lose all your paperwork on the vesting, but remember the vesting date, looking up the stock's closing price on that date would be "close enough."
It seems like every year I have to go digging for answers on RSUs. This is very helpful, thanks Tom. Now, one follow up question - on the same page where I enter the corrected cost basis, it also asks for federal tax withheld and state tax withheld. If I already entered the number of shares withheld to pay taxes, do I also need to enter those amounts here? or would that be duplicative? Is there a problem with leaving all other boxes blank?
Your comment about "already entered the number of shares withheld to pay taxes" suggests to me that you are using, or used, the RSU step by step process as that's the ONLY place in TurboTax that asks that question. Although I guess you could be referring to entering the sales of shares sold "for taxes"? But then you also mention "the same page where I enter the corrected cost basis" and suggest that you're using the same method I recommended to mrbusto71. You can't use both methods, the RSU step by step or the "normal" 1099-B entry with basis correction, you only use one or the other.
If you are using the RSU step by step method, entering the shares withheld "for taxes" does absolutely nothing, except lower the number of share available for sale "not for taxes". That is, you get no credit for "taxes withheld" on your income tax return because you told TurboTax the number of shares withheld for taxes.
When entering the sale of these shares using the regular "1099-B" interview - where you simply transcribe numbers of your paper 1099-B into a TurboTax screen that uses the same box numbers - you only enter taxes withheld if those taxes are actually showing up on the "official" 1099-B. Taxes withheld are normally reported on the W-2.
I just need to give massive kudos to TomYoung - he is all over the outrageously convoluted RSU entry into TurboTax. He has literally made it so that I don't need to have my taxes prepared for the first time ever and I wanted to pass on a sincere thanks as a consumer of the many posts he has been the first (and often only) person to respond on. Thanks, @TomYoung 🙂
I got in touch with someone at TurboTax yesterday while waiting on an answer. They tax expert said that if it was accounted for on my W2, then I don't have to enter anything else. Now I'm even more confused, and about to call a CPA to do my taxes instead. Is there a place that provides a step-by-step instruction list for how to handle this? Frustration levels are growing. In my particular case there is no 1099-B - it's all reported on my W2. It seems duplicative to enter the stock sale again.
You jumped into a thread where the original poster had a 1099-B so there was no need to deal with a "no 1099-B" situation. (That's the problem with tagging on to another poster's question. It's better to start your own question where you can lay out your particular details.)
Anyway, in a "same day" sale situation - vesting and sale occurring on the same day - then brokers are not REQUIRED to issue a 1099-B, though they should provide a "statement" with the same information. IF you don't get a 1099-B THEN you don't need to report the sale. You might want to anyway because a same day sale typically results in a small loss due to selling commissions and fees, but you don't have to.
So, was this a "same day" sale situation? If not, then you should get a 1099-B, in which case you would report the sale.
I just spent most of the morning on hold and being transferred around with my employer-provided/mandated broker for the RSU and ESPP plan. I originally thought we didn't get 1099-B's because there's three different accounts for me: RSU grants, ESPP, and DRIP account. I only sold out of my RSU account, but apparently the 1099-B's (and all other tax forms) are associated with my ESPP account (even those with the correct information for my RSU and DRIP stuff), which caused significant confusion. I saw there were none, and assumed that there were no forms since it was a same-day sale. I now have the 1099's and will report the sale using that information. Thanks - and I'll take your advice by creating a new question in the future.
I entered each RSU sold for taxes as shown on my 1099, didn't go thru the RSU interview questions, and adjusted the cost basis for each. at the end, how does it know that it is ordinary income reported on my w2?
If by "it" you mean TurboTax, TurboTax doesn't know and doesn't care. You simply reported a sale of "stock" that's absolutely indistinguishable from any other sale of stock that you reported. ALL sales of securities look the same on Form 8949:
Description of what was sold
Date of sale
Proceeds
Date of acquisition
Basis
What was reported on the W-2 is "compensation." The fact that some of that compensation came in the form of stock instead of cash affects absolutely nothing.
so by adjusting the cost basis, this is how i report that taxes have already been paid?
You already reported that taxes were paid on the COMPENSATION created by the VESTING when you entered the W-2. The sale of the stock you got is a distinct and separate matter. But you do want to use the correct basis so that you are not reporting the INCOME AGAIN.
Ok, as I review my pdf records, does it matter that these RSUs don't show up on the "summary of compensation income from employer stock transactions" page? I have some ESPPs that do show up there because I was able to check "included on w-2," when going thru the TT software.
IT DOES NOT. That's not part of your income tax return. That's a worksheet for your records.
WOO HOO! thank you so much Tom! You're explanations are really helpful 🙂 Just wish TT was more intuitive.
Tom, you are a 1099-B hero. In prior years, you suggest people skip the guided part of the form. For TY 2028, I can't figure out how to skip it. I know all the inputs, and if I could directly enter on the form, I would. Instead, I'm guessing at what the interview is trying to get at and then checking the output on my form - which is wrong, and checking is time consuming since TT doesn't have an easy way to check the 1040. Is there a way to skip the interview this year?
Thanks!
Amy
Hi Tom,
I didn't sell any RSUs in 2018 but I had RSUs that vested in 2018. Is there any reporting to be done in the year that the RSUs vest?
I understand that when we sell your RSUs, we need to have the right sale price and cost basis to come to the capital gain and loss. I sold them all in 2019 so I will do the appropriate reporting for the year of 2019.
Thanks.
Hi Tom,
Looking for some help. I followed your directions (atleast I think I did), and entered the RSU as regular stock sale. Entered the value as shown on 1099-B for date acquired / sold, sale price and cost basis. Then I corrected the cost basis and added the cost basis as # of share sold * stock price on day of sale. When I did this, TurboTax shows that it calculated the W2 as $0, and asks to confirm that this is reported in Box 1 of W2. On my W2, I do have a non.zero RSU number on box 14.
Am I doing anything wrong? Or should I just ignore the fact that TurboTax thinks my W2 RSU shows as $0?
thanks
Tom,
You're my hero! Just happened to come across this thread struggling to get my taxes done in time.
Never had a problem in the past, but for some reason, this year the RSUs are really tripping me up, and I can't figure out where I'm going wrong.
Problem solved! Thanks!
Hi All,
Similar problems for me with RSU's this year. I have thirteen different vests to enter and I've tried to do it with the step-by-step. Everything is fine until lucky thirteen. The cost basis for this vest is within $15 of the proceeds listed on the 1099. For some reason when I enter it, exactly the same as the others, the tax owed jumps by several thousand dollars. If I enter it as a plain stock sale and don't worry about the RSU part (saying 'No' on the screen that asks 'Was this a sale of employee stock?') it works fine. It's almost acting like there is some type of limit on the RSUs or that it's somehow comparing it to W-2 data and is exceeding that. I want to take Tom's advice and just enter them all as non-employee stock sales but I'm worried about how that shows up. Does it only effect the worksheets and doesn't matter for the actual return? The only sales on the 1099 are those used for tax witholding and all are included in the W-2.
Any help would be much appreciated. -Jim
It's adding the basis to your income. Go ahead and enter it as a non-employee stock sale.