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TimInMass
Level 2

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

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

TomYoung
Level 13

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

"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.

TRSORR
Returning Member

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

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?

AnnetteB6
Employee Tax Expert

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 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

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gulsheenk
Level 2

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

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?

 

ReneeM7122
Level 4

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

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

DSSS1234
New Member

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

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. 

TomYoung
Level 13

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

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.

fdas3213
Level 1

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

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

MarilynG1
Expert Alumni

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

@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]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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milliii
New Member

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

I had exactly same issue with @TRSORR.

What was solution for this error?

Debzz
Returning Member

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

Cannot get our entries to match the imported 1099-B.

 

We imported the 1099-B  but we could not use the TT walk-through questions to get it to match.

 

We have many transactions listed on the 1099-B, one which is an RSU transaction. Next amount lists the number of shares sold for taxes. Since the price of the shares was going down, by the time they sold the 1st set of shares, the price was even lower so they sold a 2nd batch. Now, these are listed as 3 separate items on the 1099-B.  The tax sales are a loss but it is not addressed by TT.  Also, I can't figure out how to indicate those 2 sales as tax sales. We can't bunch the 3 amounts together because we cannot edit the 1099-B. If we answer all the TT questions, we cannot find any way to indicate those 2 batches of sales as the ones that were sold for taxes. At least, it doesn't work and we can't edit the 1099-B that was imported. 

 

What is TT's reasoning for asking these questions? We don't understand because it says, "If you sold some of these for taxes, we'll get back to this later" but it never comes up again!

 

So... then we deleted the import and entered everything again, entering the correct basis for each. We entered everything manually the way we thought it should be. Again, cannot figure out how to indicate the 2 sales were  the tax sales. (Must we?)

 

For example, say we got 100 shares. 10 were sold for taxes. The price was falling so another 5 were sold for taxes. The 1099-B has 3 entries: 80, 10, and 5.  Should we enter 100 and try to let TT walk us through it, (meaning it won't match the 1099-B) or should we just enter all the information ourselves since we have it, let it match the 1099-B,  and ignore TT???

 

Help!

 

Thank you!

DavidD66
Employee Tax Expert

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

I would not use the Employee Stock step-by-step for Restricted Stock or RSUs.  Instead, I would manually enter each transaction.  The IRS is no interested in whether you report one transaction or three transactions.  Often 1099-Bs have incorrect cost basis for transactions related to employer stock, so just make sure have the correct basis, and if necessary make an adjustment.

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Debzz
Returning Member

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

Thanks for your input.

 

I really wish a TT representative would look at this and fix the program. It's garbage for this type of transaction.

caliraftdude
Level 1

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

TT's previous way to handle all this was straight forward - you just walked through line by line and fixed the adjusted cost basis for each line item.. took about 5 minutes.  They could have added all this nonsense with a check box that said, "I need to edit this transaction and enter a lot of information no one else will need to."

Whoever thought it was a good idea to redesign it into this 2020 mess was a fool... its nearly impossible to get your 1099b/account information to line up with the step-by-step process which is precisely the purpose of TT.  They should review the way this was done the previous 4 years and revert to the way it was.

 

Going into the 1099b manually isn't increasing my confidence that this is going to be done properly and after the 7 hours of troubleshooting TT install issues I am struggling with the value add of this software.  I would appreciate (as I am sure many would) if some effort was put into cleaning this up for the next version.

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