How to report RSU that were sold to cover taxes? I have done extensive research and I see multiple options on turbotax to do this each leading to different tax due amount

If the 1099-B reports the sale of shares that were for taxes then you need to report that sale.  The cash from the sale of shares sold "for taxes" was passed back to your employer, who paid the government, and included those amounts in the "taxes withheld" boxes of the W-2.

Since it's a Box B sale - basis not reported to the IRS - you simply enter the correct basis as you enter the sale in the spreadsheet-like, "fill in the boxes" default TurboTax entry form.  Press "Continue" when you've entered the 5 pieces on information.  You are done.

(I'm assuming, of course, that you DO KNOW your correct basis for the shares sold.)

Tom Young.

1099b does not mention that sale of shares is "for taxes" it just shows the transaction which my employer did to cover the taxes. But when do we use the uncommon details option and then again the "Shares Withheld (Traded) to Pay Taxes" box in uncommon details area ?

"1099b does not mention that sale of shares is 'for taxes' it just shows the transaction which my employer did to cover the taxes."

I didn't say the 1099-B would have a notation of "sale of shares for taxes."  In all respects it's just a regular 1099-B reporting your sale of stock.  Accordingly, it has to be entered in the income tax return.

Understand that share number entered in the box "Shares Withheld (Traded) to Pay Taxes" has only one effect.  It subtracts from the box above it - shares vested - to determine the number of shares available for sale.

The only way you can use the RSU step by step process - which is where you are are at when you see that "Shares Withheld (Traded) to Pay Taxes" box - is to report the shares sold for taxes as the number of shares vested, and leave the "Shares Withheld (Traded) to Pay Taxes" box empty.  But that can create its own problem for you because TurboTax calculates its compensation, just like your employer, on the gross number of shares VESTED, not sold.  So you have to make sure that you report at least one other sale - maybe even a 0 share sale, such that the number of shares vested reported to TurboTax equals the actual vesting.

There is no "income tax reporting" reason to use the RSU step by step interview except in two cases:

1) You don't know the basis for the shares sold or,
2) The employer didn't report the compensation income on your W-2.

this is really confusing. easy to get this wrong. i had IRS send me a CP2000 since they still think the 1099 reported for the sale to cover taxes was income and turbo tax had no way to flag that in 2016.

I have the same issue where the sold RSUs to pay for taxes was somehow reported on 1099, even though I don't see the 1099 on my Schwab account.  Did anyone who had this issue just mail in the CP2000 with the document showing that the RSUs were actually sold to cover taxes?

Turbo Tax is so confused about RSU.  I have discussed with several people who also agreed.  Assuming vested RSU is 100 shares, 40 of 100 shares were withheld for tax.  Also assuming $15 per share is the market fair value on vested date.   Therefore the  total proceeds is 100x$15=$1500.  This has been reflected as income in W2.  Following step by step on Turbo Tax, the cost base is 60x$15 = $900  the short gain = 1500-$900 =$600.   Is his right?  If so, final check has error since it requires additional lot about 60 share.  

@rtbtxxiao11 

You are wrong here. 

"Assuming vested RSU is 100 shares, 40 of 100 shares were withheld for tax. Also assuming $15 per share is the market fair value on vested date. Therefore the total proceeds is 100x$15=$1500."

The vesting creates $1,500 of compensation, not $1,500 of  proceeds from a security sale. 

If you sell all the stock on the same day as the vesting then something close to that $1,500, (net of broker fees) could also be proceeds ,but you are talking about two completely distinct activities here.

1. Vesting creates compensation
2. Selling stock (at any time) creates proceeds, (and gain or loss)

I'm guessing that you have a "same day" sale here, (or maybe two "same day" sales, one the the stock sold "for taxes" and one for the remainder of the stock you decided to sell "for cash"), and you've gotten tangled up in the RSU "guided" interview for the sale(s).  But same day sales typically create a small loss due to selling commissions and fees.

Here is how to get out of this mess.

1. Delete the trade(s) that you've entered.  Don't attempt to edit or modify them.
2. Enter the trade(s) using the non-guided basic "1099-B" entry form exactly as the 1099-B(s) received from the broker reads.
3. Then use the mechanism available in TurboTax to "correct" the basis from the $0 shown on the broker's 1099-B to the correct cost basis of $15 per share.

For step 3., in the desktop versions of TurboTax you'd click the blue "I'll enter additional info on my own" button below the 1099-B entry form and on the new page that that comes up enter the correct basis in the "Corrected basis" box.  I assume the online version has something similar.

@isaiahcooper  did you get this figured out last year? I just ran into the same exact problem this year. 

I had the same issue with my  form from Fidelity and the office staff clarified to use page #5 of the form that has Adjusted Cost or Other Basis, so that worked in Turbo Tax as well.

However, next screen in Turbotax asks "Was this a sale of employee stocks"? By definition, employee stocks include RSU plan. Selecting Yes, prompts me to enter all information (Number of stocks vested, market price on vesting date (per share), Price you paid (per share),  etc. ).  Wondering if I need to include all this information considering these stocks were sold to pay taxes and compensation income is already included in W2?

Thanks,

Gulsheen

Facing the same issue here.  Were you able to figure this out?

You do not need to go through the Employer Stock questions if you know the cost basis of your Restricted Stock Units and the value was reported in Box 1 of your W-2 and taxes withheld.  Report as two separate transaction - one for shares sold to cover taxes, if applicable, and one for the other shares.

If you received a stock award (e.g. Resricted Stock, or RSUs), tax is assessed on the value of the stock on the day the stock vests/ is delivered.  That amount is ordinary income, and is included in Wages on Box 1 of your W-2 for that year.  Your cost basis is also the value of the stock on the day it vests or is delivered.  The problem is, brokers don't have (or don't report) that information.  If you know the amount that was added to your income, that is your actual cost basis.  In order to keep from paying tax on the stock award twice, you have to correct your cost basis.  To do so, go to that 1099-B transaction, and on the page with the Description, Date Acquired, Date of Sale, Sales Price, and Adjusted Cost or Other Basis, click on "I'll enter additional info on my own".  On the next page, enter the "Corrected cost basis"

Thanks, DavidD66, for your response.  I have adjusted cost basis in the form from Fidelity and are short term covered transactions (confirmed by Fidelity).

So what should I select from the next screen "Was this a sale of employee stock"?

Sales from employee stock plans, including ESPP, NQSO, ISO, RS and RSU plans often require special handling.

Option 1:  Yes, this is stock that was acquired through an employee stock plan

Option 2:  No, this is not employee stock

<does not have third option that it does not apply to me>

Selection option 1, takes me through screens that computes total proceeds , Market price on vesting date, price you paid per share, purchase commissions or fees paid. 

Why do I need to enter all this information when my RSU data is already included in my W2 and I have my cost basis?

Thanks,

Gulsheen

Tom Young knows what he's talking about but has given up answering this question a hundred times.

i did look at all his replies however some things are still not clear.  I am not importing 1099-B but entering it manually.  I did not sell any RSUs outside of what were withheld for tax purposes, and my 1099-B has correct cost basis.  However, after I am done entering 1099-B, it does ask whether these are sale of employee stock, and I assume the answer is "Yes" as these are from RSUs.  If you keep following the prompts you do have to enter all the information from the statement.  I don't see how you get away with just entering 1099-B info and not the rest of the stuff about vested shared, # sold for taxes etc.

When entering the 1099-B info into TT, it asks for fed/state taxes paid which I have on my transaction statement but not on the 1099-B.  Am I supposed to report the taxes again?

Scenario is: Sold RSUs on date vested for sell-to-cover-for-taxes option.  Kept the remaining shares in the stock broker account, I only sold the necessary stocks to pay the taxes.   So now I'm wondering since the 1099-B doesn't list the fed/state tax am I supposed to enter off the transaction statement. 

On the TT page with where it is asking to fill in "Box 1f, 1g, 3, 4,....) it has a statement "These items may also appear on your Form 1099-B for this sale, but they are not common." - That is making me second guess if I'm supposed to report the taxes there, because the would have already been taxed as compensation on my W2. 

Thanks

"Am I supposed to report the taxes again?"

No.  The taxes have already been reported on your W-2, you don't get to deduct those taxes twice.

"So now I'm wondering since the 1099-B doesn't list the fed/state tax am I supposed to enter off the transaction statement. "

No.

"On the TT page with where it is asking to fill in "Box 1f, 1g, 3, 4,....) it has a statement "These items may also appear on your Form 1099-B for this sale, but they are not common." - That is making me second guess if I'm supposed to report the taxes there, because the would have already been taxed as compensation on my W2."

Any taxes a broker withholds - called "backup withholding" and which would occur if you didn't submit a W-9 or reported that you were subject to backup withholding on a submitted W-9 - would be included in the "taxes" boxes of the 1099-B.  You have no dollars showing in those boxes.

Similar to others here, I have read through all prior comments/guidance and applied them to my entries. 

My RSU's were sold to cover and taxes reported on my W-2 (Box 1).  I received 1099B, cost basis is incorrectly stated as "$0".   I am using the TTP (online) version (which does not present me with the "I'll enter additional information on my own" option "on the page with the Description, Date Acquired, Date of Sale, etc...".

I entered the corrected cost basis (overriding 1099B, "Box 1e" data with corrected vesting date's FMV/$sh).

I selected "YES - this is a stock that was acquired through an employee stock plan" as (TTP online) version instructions includes "RSUs" in the employee stock plan.

Next page, I selected "RSU"

Next page, selected [Employer]

Next page, entered: Date Sold" (Box 1c):  XX/XX/XXXX;  "Number of Shares Sold":  #

Next Page - Summary

Next Page - selected I received shares  "From one grant lot"

Next Page - Enter Vesting (or Release) Information - LEFT BLANK  as instructed here

Next Page - Date Acquired:  XX/XX/XXXX entered RSU vesting date

Next Page - Results

Next Page - Select any less common adjustments that apply:   (nothing checked) entered "Continue"

Next Page - Completed entry <SAVE>

Complete balance Fed Tax entries and run TTP Smart Check.

Results:  Error detected ( 1 of same error, for each RSU transaction entered):

"Check this entry 

Line 25, Column (b)"Number of Shares".

I can not get past this point.  What am I doing wrong?

If you would be willing to share a diagnostic copy of your tax file, it could be helpful to examine the situation in more detail.  

To do so, follow the instructions below and post the token number along with which version of TurboTax you are using in a follow-up thread.

Use these steps if you are using TurboTax Online:

• Sign in to your account and be sure you are in your tax return.
• Select Tax Tools in the menu to the left.
• Select Tools.
• Select Share my file with agent.
• A pop-up message will appear, select OK to send the sanitized diagnostic copy to us.
• Post the token number here. 

If you are using a CD/downloaded version of TurboTax, use these steps:

• Select Online at the top of the screen
• Select Send Tax File to Agent.
• Click OK.
• Post the token number here.

@TRSORR

Hi,

I don't see this issue being addressed. 

Since I have already entered all required information in the earlier screen;  for the question below, even selecting Option 2 is wrong since it is an employee stock plan.  Can we please have another Option #3 such as Not applicable? 

 "Was this a sale of employee stock"?

Sales from employee stock plans, including ESPP, NQSO, ISO, RS and RSU plans often require special handling.

Option 1: Yes, this is stock that was acquired through an employee stock plan

Option 2: No, this is not employee stock

Selecting option 1 takes me through screens that computes total proceeds , Market price on vesting date, price you paid per share, purchase commissions or fees paid. Why do I need to enter all this information when my RSU data is already included in my W2 and I have my cost basis?

This thread has information about how to enter the RSU in TurboTax.

Restricted stock units (RSUs) and stock grants are often used by companies to reward their employees with an investment in the company rather than with cash. As the name implies, RSUs have rules as to when they can be sold. Stock grants often carry restrictions as well. How your stock grant is delivered to you, and whether or not it is vested, are the key factors when determining tax treatment.

Restricted stock units

A restricted stock unit is a substitute for an actual stock grant. If your company gives you an RSU, you don't actually receive company stock. Rather, you receive units that will be exchanged for actual stock at some future date. Typically, the date you take ownership of the actual shares, known as the vesting date, is based on either time or performance.

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.

Stock grants

With a stock grant, a company provides you with stock shares rather than a unit that gives you a future right. However, this doesn't always mean you're immediately free to sell the shares. Many stock grants have a vesting period, during which you may still lose the rights to the stock.

Only when you are fully vested in the stock do you have 100% ownership rights to do with the stock as you please. As with RSUs, stock grants typically vest after a period of time, or after certain performance measures are met. You're not liable for income tax until your stock grant vests, at which point you must report income equal to the value of the stock.

Selling your stock

You'll likely have to pay taxes again if you sell stock you received through an RSU or a stock grant. After you pay the income tax on the fair value of your stock, the IRS taxes you the same as if you bought the stock on the open market. Here are the different ways you can be taxed:

• 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

Paying your taxes

Since stock you receive through stock grants and RSUs is essentially compensation, you'll usually see it reported automatically on your W-2. Typically, taxes are withheld to go against what you might owe when you do your taxes. As with all withholding, the taxes your employer deducts from your paycheck may not be enough to cover the full amount of tax you owe when you file your return.

If your employer doesn't withhold tax on your stock grant or RSU, you may be responsible for paying estimated taxes. With estimated taxes, you'll have to send payments to the IRS about every quarter, on April 15, June 15, September 15 and January 15 of the following year. The payments are estimates of what you'll owe in total when you prepare your tax returns for that year. For example, if you get a huge stock grant in February, you'll be expected to pay estimated taxes for that grant on April 15, if there is no employer withholding. However, if your next stock grant isn't until December, you might not need to send estimated payments in June or September.

If you don't want cash withheld from your paycheck, you may be able to pay the tax by having your employer take it out of the shares. For example, if you need 10% tax withheld and receive 100 shares of stock, your employer may be able to liquidate 10 shares and give you a net grant of 90 shares.

@gulsheenk

My Fed tax withhold is $25,197 in my W2 form. This is from my every bi-weekly paycheck. I calculated that my total RSU Fed tax withhold is $20,585. I am sure that the Fed tax withhold in W2 does not include the RSU Fed tax withhold. 

You've provided no context for the two numbers you threw out so nobody's in a position the say "Yes, you're absolutely right!" or "You're wrong because..."

Go talk to your payroll department and get that sorted out.

I had the exact same issue. But nobody is addressing it. Pls address!

@fdas3213 There are two ways to enter the sale of your RSU stock.

If you know the Cost Basis of the shares sold and reported on the 1099-B, just enter the 1099-B and check the box 'cost basis need to be adjusted' and fill in your correct cost basis on the next screen.  You're done. 

Click this link for info on How to Enter 1099-B. 

If you don't know your Cost Basis of the shares sold and reported on the 1099-B, use the Employee Stock interview in TurboTax, which is helping you to determine your Cost Basis, (the FMV on your Vesting Date).

You don't need to worry about 'shares sold for taxes'; this income was reported on your W-2.

You only need to know your Cost Basis so that the number of shares actually sold (reported on the 1099-B) has a correct Gain/Loss. 

If you know the FMV of a single share at Vesting Date, multiply that amount by number of shares sold, and that's the Cost Basis for your 1099-B entry.

Most employee stock sales only have a small gain (or small loss) to report. 

Click this link for more info on RSU Shares Sold. 

[Edited 4/5/2021 | 3:30 pm]