How to report RSU withheld to pay for taxes?

[genius1wjc]

Let's say 100 shares of my RSU vested in 2017, and 30 shares of it were withheld to pay for taxes. Assume each share worths $10 and my base salary is $60000. So I got 70 shares, which worth 70 * 10 = $700 and my total income on w2 becomes 60000 + 700 = $60700. If I use w2 in Turbotax then I need to pay taxes on all of $60700, but I already payed the taxes for the $700, right? Where in the Turbotax I can indicate that I already payed the taxes for the $700? If I don't indicate that I will be double taxed on the $700, right? I am using Turbotax premium and didn't sell any of the 70 shares.

Thanks!

[ToddL · Accepted solution]

If they sold 30 shares for $700 to pay your taxes, then that $700 (or most of it) would also be included in Box 2, Federal Taxes Withheld of Form W-2 (some portion may be in Boxes 4 and 6 for your SS and Medicare Tax).

This is a "sell to cover" exercise, where you sell only enough shares to cover the option costs, fees (fees, if any) and applicable taxes. The proceeds of the 30 shares are reported as income (Box 1 of W-2) and applied to taxes withheld and option costs/fees (if any). 

[aghosh03]

What if the taxes withheld in the W2 do not include the amount from shares sold for sell-to-cover?  Do I have to ask my employer for a corrected W2 or can I make the adjustment in a form using TurboTax?

[wang2xu4]

Can someone answer this? Facing the same issue.

[meesh_28]

Me too - need help figuring out where I can input the shares that were withheld for taxes

[Acramer]

go to income and wages, then to stocks, mutual funds, bonds, other. The program will ask if you received a 1099B, select NO, then choose RSU and follow through the program, it will ask about each lot as you go.

[kwell1208]

Where in Turbo tax do I report the RSUs released to me because of vesting as income? What if I did not receive a tax document to reflect this activity? My brokerage statement reflects activity and shares sold to have taxes withheld on the transaction.  Should I report all of this even though I do not have a 1099 B?

[AmyC]

No. I think you received RSU due to vesting. Once it vests, you own the stock The fair market value of the stock is reported as ordinary income, usually in box 1 of your W2. This is already reported for you, on your W2. This was the easy part, stay tuned. 

When you decide to sell the stock down the road:

• you will receive a 1099-B which will report the sale. 
• you have to know how much was added into this year's box 1 wages to use as your basis for the sale.

I want to urge you to create a financial notebook that is kept separate from your tax return. Keep it safe and each year, add your year-end statements from all your financial accounts plus a copy of your W2’s. This will protect you down the road as proof of your basis in your various investments. As you go through life, rollovers, RSU sales, and more will be captured for you.

@kwell1208

[Shri42]

I am using TurboTax Premium Desktop version. I have set for automatic sell to cover taxes. Portion of RSU(58 of 140) are sold to cover the tax cost and remaining shares deposited to account/not sold. For whatever reason company transaction shows vesting date 3/22/2020($100) while sold date shows 3/23/2020($98) aka price is different for both days. Compensation is 140*$100= $14000, while cost basis is 58*$100 =$5800, when stock is sold it is 58*$98 = $5684. I checked the Forms directly and it reports a short term gain $30. Where do I report the capitol loss $5684- 5800 = $116 ?

[MarilynG1]

@Shri42 Yes, you would have a short term loss on your RSU stock sale to report.

Go back to your original 1099-B entry.  Did you Adjust the Cost Basis to reflect $100?

If you used the 'Employee Stock' interview, you could delete your original entry and simply enter your 1099-B, indicating a 'Cost Basis Adjustment' without using that interview section.

Click this link for more info on RSU Shares Sold for Taxes.

[Shri42]

 @MarilynG1 Thank you and appreciate your quick response. I created the calculation in xls and adjusted the cost basis directly on forms. Second year in row Turbotax calculations are not accurate. Still I could not figure out why costbasis for my wife RSU are reported in W2, but Turbotax will not prompt in interview step /check to make adjustments.

[MarilynG1]

@Shri42  The amount on your wife's W-2 for your RSU stock is probably reported in Box 14, which is 'informational only' so TurboTax does not ask you about this when entering your W-2, since it is already added to your taxable wages in Box 1. 

Since the broker that sold the stock does not know your Cost Basis, they often report $0 as a Cost Basis on your 1099-B, and you always have to adjust it for your real Cost Basis when you enter your 1099-B.

Since the RSU step-by-step interview can be confusing, it is often easier to simply adjust the Cost Basis and enter your 1099-B. 

Click this link for more info on RSU Cost Basis. 

[Klewisx333]

In March 2021 my company stock RSUs rolled over, the amount was added to my wages and 41% was taxed with both reflected in my W2. I started TurboTax by entering my W2 and immediately I owed ~$1700, no big deal but as soon as I entered the first of 13 RSU by owed jumped to $6500, the second over $7,500, I stopped because this is crazy - if the stock was in my wages and I already paid the tax why would anything change or at least this drastic? Thanks.

[RaifH]

It sounds like you need to adjust the basis on the sale of your RSUs. Your 1099-B may report no basis for these sales. This needs to be adjusted since the price on the vesting date has been included in your compensation on your W-2. The supplemental information from your broker may have the adjusted cost basis for each sale. It may also be found in Box 14 of your W-2 or other information supplied by your employer. If you cannot find the adjusted cost basis, TurboTax will adjust it when you provide all the relevant information: 

1. In the Federal > Income & Expenses > Investment Income section of your return, click Start/Revisit next to Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
2. Answer Yes and then select stocks. Import or enter your transactions manually. 
3. For the RSU transactions, make sure to select Yes to Do these sales include any employee stock?
4. Enter the transactions as they appear on the 1099-B with RSU selected as the type of investment.
5. If the basis reported on the 1099-B is not correct, you will be able to adjust it to match the supplemental information provided. 
6. If you do not have the adjusted cost basis, TurboTax will calculate it, but you must enter the total shares, the shares sold to cover taxes, the vesting date and market price on the vesting date, as well as the amount you paid in commissions if any. 
7. You will have to repeat this for each sale. When done correctly, the capital gains on the sales to cover taxes should be close to 0 and the ones that you sold at a later date will only be for the difference of the market price on the exercise date and the sale date. 

@Klewisx333

[Grace1991]

Help - ADP W-2 Assistant said my RSU earnings (Gross) were incorporated in the W-2 already. However, the RSU tax withheld was not recorded in the W-2.

I checked e-Trade, and it said they do not issue any 1099-B related to our investment account.

So where on earth should I report this tax withheld?? Please help!!!!