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If I already paid tax by selling RSU on the vesting date, do I still need to pay more taxes when I report my 1099B? I did not sell anymore RSU besides to cover tax.

Some RSU were sold to cover tax on the vesting date, but the total vested amount still seems to contribute to my annual gross income and taxable. It seems like I’m paying taxes for both the vesting of my RSU on vesting date plus the total RSU amount as income on my W2 even though I did not sell any additional RSU throughout the year. 

Appreciate any help.

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3 Replies
DanielV01
Expert Alumni

If I already paid tax by selling RSU on the vesting date, do I still need to pay more taxes when I report my 1099B? I did not sell anymore RSU besides to cover tax.

It depends.  It is considered a capital transaction, however, so it will be reported.  Although the value of the RSU was originally reported as income on your W2 (and became the basis price of the stock involved), when you sell the stock for any reason, that is a separate transaction reported on Form 1099-B.  You will need to report the transaction.

It is likely that the 1099-B does not show the correct basis, however (might say $0).  If this is the case, you must enter in the transaction as it is reported to you (with a basis of $0), and then, at the bottom of the 1099-B screen, click on the button "I'll enter my own adjustments" .  On the next screen, scroll down towards the bottom to Cost Basis Adjustment and enter the amount of basis provided on your RSU worksheet (hopefully Form 3922).  

You may then show a small capital gain, or even a capital loss.  If a gain, you may have a small increase in your tax.  If a loss, your taxes decrease.  Either way, you are reporting the transaction correctly for the IRS and tax purposes.

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If I already paid tax by selling RSU on the vesting date, do I still need to pay more taxes when I report my 1099B? I did not sell anymore RSU besides to cover tax.

i areadly paid taxes on the rsu that vested on the same day by selling some of the vested stocks to cover taxes. Am i getting taxed again for the total rsu value on my tax return when I report my rsu value as income?
DanielV01
Expert Alumni

If I already paid tax by selling RSU on the vesting date, do I still need to pay more taxes when I report my 1099B? I did not sell anymore RSU besides to cover tax.

No, not for the total value, or at least you shouldn't be.  You would be getting taxed for the gain on the stock (if any), which is determined by the purchase price and the sales price.  The purchase price is how much the stock was previously included  in income, and the sales price the amount the stock was cashed in for, regardless of the motive for cashing it in.
Chances are it will look something like this:  In 2016, you received the RSUs and $10,000 was included in income.  This year they vested, and were cashed in to pay taxes on RSUs included in income this year.  The RSUs were sold for a total of 10,500 due to growth.  You pay tax on $500, not on the entire amount.
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