Entering RSUs on Turbotax

[SharonD007]

No, do not delete the 1099-B that shows the stock sales for your RSU’s. Even though the stocks you received from your RSUs are reported in Box 1 of your W-2, you must report income based on the fair market value of the stock,  which is why you need to include the information on your 1099-B. You should have received paperwork from your administrator that indicates the fair market value the date that your RSU’s vested.  To review your 1099-B, open TurboTax, and search for 1099-B in the search box. Select jump to 1099-B and follow the instructions on the screen.

Please review the TurboTax articles What are restricted stock units (RSUs) and how do I report them? nd How to Report RSUs or Stock Grants on Your Tax Return for further details and instructions.

[jshen95]

Hi, sorry I am not talking about deleting the 1099B entirely.  I am only referring to the stocks sold to cover taxes. For example, if I vest 100 shares, the rsu admin will estimate the taxes owed and sell the equivalent number shares (lets say 35) automatically to cover taxes.  Those 35 shares appear on the 1099B as stocks sold, but the proceeds are withheld.  

I don't  think these articles cover how to treat these 35 shares in Turbotax.  If I leave these in like a normal sale, I will be taxed on the sale.     

[TomD8]

@jshen95 --

The value of the 35 shares sold for taxes should be included in Box 2 of your W-2, "Federal Income Tax Withheld".

Hence you actually are credited for that sale.

[jshen95]

Thanks! the 35 shares still show up on my 1099B though.  So just don't enter the 35 shares from the 1099B into Turbotax? 

[TomD8]

Enter the 1099-B into TurboTax.  Just be sure you enter the correct cost basis for the shares.  (The per-share cost basis is the total compensation you received for them, divided by the gross number of shares you received.)

Since the shares were presumably sold for taxes on the same day they became vested, there should be little or no capital gain or loss from the transaction.

[HerpDerpson]

Thread has been helpful, however I'm getting stuck on one point of logic here.  My situation is that I sold some RSU in 2022 and received the requisite 1099b and w-2 from my former employer to account for the 15% discount.    I fixed my cost basis based on the supplemental form received from my brokerage, and went through the prompts to enter shares vested (6) and shares traded/witheld to pay taxes (2).  However, when I enter in the number of shares withheld for tax it increases my tax liability.  How can this be?  If shares were sold to pay taxes why would I owe more than if they were not.   

[DaveF1006]

First, let's explain how and why taxes are withheld from shares of stock by your employer. Income taxes are withheld upon delivery. Many companies automatically sell your shares to cover the tax withholding without giving you a choice. Some companies may offer you different ways to pay withholding taxes including but not limited to paying by personal check or deducting from your paycheck directly. Usually the amount of income taxes that are withheld for any purpose are reported on a W2. 

Now in the end, your total W2 withholdings(including what was withheld for the shares of stock) are reported in Box 2 of your W2. As a result, your total tax liability is reduced by all income tax that was withheld by the employer.  So the income tax that was withheld from the shares has already been reported.

Now, selling shares of stock for whatever reason is taxable income whether it be a long term capital gain or a short term gain. This will increase your tax liability in your return but remember the tax that was withheld by your employer is already reported in your W2 for the year and is reflected in Box 2 of the W2 that reports ALL income taxes withheld. 

@HerpDerpson 

[DaveF1006]

First, let's explain how and why taxes are withheld from shares of stock by your employer. Income taxes are withheld upon delivery. Many companies automatically sell your shares to cover the tax withholding without giving you a choice. Some companies may offer you different ways to pay withholding taxes including but not limited to paying by personal check or deducting from your paycheck directly. Usually the amount of income taxes that are withheld for any purpose are reported on a W2. 

Now in the end, your total W2 withholdings(including what was withheld for the shares of stock) are reported in Box 2 of your W2. As a result, your total tax liability is reduced by all income tax that was withheld by the employer.  So the income tax that was withheld from the shares has already been reported.

Now, selling shares of stock for whatever reason is taxable income whether it be a long term capital gain or a short term gain. This will increase your tax liability in your return but remember the tax that was withheld by your employer is already reported in your W2 for the year and is reflected in Box 2 of the W2 that reports ALL income taxes withheld. 

@HerpDerpson 

[HerpDerpson]

Thanks for the response @DaveF1006   But there's one piece I'm still unclear on.  When indicating the number of shares that were sold to cover tax burden at vesting why does my tax burden go up in the software?  I would still think having not done so should be the only reason taxes would increase or a refund would go down in the software.

 Is it that money withheld at tax time via the W2 should be treated differently depending on if it's from RSU tax sales?  For full disclosure they were not held for the full two years, and therefore are non qualified deferred comp.   

Just want to make sure I'm being taxed fairly and now some kind of double taxation.  

[MarilynG1]

The amount you are being taxed on as income on your W-2 is the difference in price you paid for the stock and the market value on vesting date (the employee discount, taxed as wages). 

The amount you may get taxed on for your 1099-B is the difference between market price on vesting date and market price on sale date (generally a small amount) which is reported as Capital Gain, rather than regular income. 

It's important that you enter the correct Cost Basis when reporting the sale of shares from your 1099-B.

You are not being double-taxed on the same income; it's two different 'incomes'. 

Here's more info on RSU's.

@HerpDerpson 

[TomD8]

And remember the per-share cost basis is the compensation created by the vesting divided by the GROSS number of shares received (including the shares sold for tax purposes).

[gb1]

Cost Basis is 0 for sell-to-cover in 1099-B

Should this be adjusted manually to equal the Proceeds?

Even if I delete the import & manually enter, I still have the same issue, which is "What is the cost basis?"

I didn't sell any, they were sold to withhold taxes (all proceeds went to IRS and I presume my W2 box 2 includes this total proceeds). By reporting this as gain with cost basis 0 - makes it look like you are paying taxes again.

[TomD8]

@gb1 —

“Should this be adjusted manually to equal the Proceeds?“

Yes. Since the shares were sold for taxes on the day of vesting, the capital gain is zero and the proceeds are accounted for on your W-2.