RSU's taxation issue in Turbo tax

[hdt2ski]

I am trying to enter in my RSUs and the ones sold to cover the taxes.  The shares sold to cover the stock were sold on a different date for a different amount than the remaining shares were sold.  The shares sold for tax were sold at a loss, but the system is reflecting it as a gain.  Please help!!

[TomD8]

Normally the proceeds from the sale of your RSU's for taxes would be included as part of the tax withholding amounts shown on your W-2.  You wouldn't report them separately.

[TomYoung · Accepted solution]

"I am trying to enter in my RSUs and the ones sold to cover the taxes."

That statement in ambiguous.  You don't, literally, "enter"RSUs". 

When the RSUs vest you get X amount of stock.  "X" is the GROSS amount of stock in the award.  If shares are withheld or sold "for taxes", that doesn't affect "X."The employer calculates compensation in the amount of

                            ("X" times "per share fair market value at vesting date")

and includes that in your W-2. That "per share fair market value at vesting date" is also your per share basis.

If shares are withheld or sold "for taxes" then the taxes withheld are scattered around the various taxes boxes of your W-2.  So the vesting of the RSUs and all the associated taxes are simply part of your recording of your W-2.

Now, if you sold some of the shares "for cash" or some of the shares were sold "for taxes" and the broker sent you 1099-B(s) for these sales, (brokers don't have to send 1099-Bs for "same day" sales), then you need to report the sales of the stock.  Presumably you got a 1099-B for the shares sold "for taxes", and maybe you also sold some of the shares "for cash."  Perhaps this latter event is what you are referring to by "I am trying to enter in my RSUs..."

I'm not sure what you are doing wrong here, but you might be trying to use the "RSUs guided interview" to report the sale(s) and that could be the crux of the problem.  If you're using the RSU guided interview to report the sales then I'd say "delete those trades", to start.  There's no "Income Tax Return Reporting Requirement" that says you must use those interviews.  Nothing in your income tax return gives the IRS any clue as to how you acquired any security that you sold. 

It's entirely correct to report these sales using the "normal" 1099-B interview.  You simply enter the 1099-B(s) exactly as they read - wrong basis and all - and then use the mechanisms available in TurboTax, (apparently the online version and desktop versions are different here, though I'm not sure), to correct the basis, which in both cases: (number of shares sold x "per share fair market value at vesting date").  That will properly report the gain or loss on the trade(s) and put the correct information on Form 8949.

[hdt2ski]

Thank you, you assumed correctly.  I received a 1099 B from ETrade.  And it's super annoying on the desktop version.  Thanks!

[DawnC]

The important thing is if there is no basis reported on the 1099 or it is incorrect, make sure you use the ''adjust basis'' function to ensure your basis get reported correctly and you do not overpay taxes.  

[hdt2ski]

Now I'm getting asked to put in something on Line 25 for Capital Gain Wks on the Employer Stock Worksheet but I have no idea what I'm supposed to put.

[TomYoung]

Remember my first post to you where I said :

"If you're using the RSU guided interview to report the sales then I'd say "delete those trades", to start.  There's no "Income Tax Return Reporting Requirement" that says you must use those interviews.  Nothing in your income tax return gives the IRS any clue as to how you acquired any security that you sold. "

I can tell that you are using the RSU guided interview because only the guided interviews for employer stock sales makes reference to the Employer Stock Transaction Worksheet.  The normal, "regular stock" sale interview - the one that starts with a 1099-B waiting for you to fill in the boxes - doesn't put anything on the Employer Stock Transaction Worksheet, it just fills out Form 8949.

So, delete the trade and enter it using the regular 1099-B interview, incorrect basis and all.  In the desktop version you'd then click the blue "I'll enter additional info on my own" button and on the next page enter the correct basis, (# of shares sold x per share fair market value used by employer), in the "Corrected cost basis" box. 

The columns for line 25, dealing with RSUs are:

1. (b) Number of Shares
2. (c) Date Vested
3. (d) Market Price Per Share
4. (e) Price Paid Per Share if Any
5. (f) Fees Paid if Any
6. (g) Number of Shares Withheld if Any

So if you want to stick with the guided interview that should tell you what TurboTax is asking for.

[jnoon]

My RSUs show up on my W-2 but the amount of taxable income on the W-2 is about twice as much as shown on 2021 FORM 1099−B: PROCEEDS FROM BROKER AND BARTER EXCHANGE TRANSACTIONS. I have not sold any stock. Why is the W-2 number so much higher?

The second issue is Turbotax won't let me enter any numbers on 8949 worksheet. Is this a glitch? The 1099-B is telling me to report on Form 8949, Part 1 with Box B checked. Here's the exact wording on the form:

Noncovered Short−Term Gains or Losses on Gross Proceeds
Report on Form 8949, Part I with Box B checked
Box 6: Gross Proceeds Box 5: Box Checked (Noncovered Security) Box 12: Basis Not Reported to the IRS Box 2: Type of Gain or Loss − Short−Term

I don't see a Part 1 or a Box B on the 8949 Worksheet

[DavidD66]

The amount of income for your RSUs that should be included on your W-2 is the value of the stock on the date they vested.  If your W-2 includes a different amount, you will need to contact your employer to find out why they reported what they did. 

If you are using TurboTax Desktop and trying to enter directly on the Form 8949 worksheet, switch to Step by Step view and then enter the transactions in the investment sales section.

[jnoon]

I tried to enter using Step by Step as you suggested, but isn't this just adding this again to my income. The proceeds were already included on my W-2. It seems that entering again on Scedule D is redundant. What if I just file without a Schedule D?

[RobertB4444]

@jnoon  If you just vested in your RSUs but did not sell any of them then you should not be entering a trade at all.  You should be paying tax on the amount on your W-2 and maintaining a record of that amount to be entered as the basis for these securities when you do sell them.

[scar1pet]

But how do you delete an RSU trade?
I've been stuck on this for an hour and they wouldn't answer on the phone. Can't file because of this. I'm going to have to do my taxes by hand and get a refund.

[GeorgeM777]

The process is somewhat different depending on which TurboTax product you are using.  In TurboTax online, select Wages & Income (left margin), then scroll down to Investments and Savings.  Select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B).   Because it appears you have already entered an RSU transaction, you should see your RSU transaction on the next screen.  Click on the drop-down arrow across from your RSU transaction and then select the trash icon to delete it. 

In TurboTax CD/download, the process is as follows:

1. After opening your return, select Personal.
2. Select Personal Income.  Select "Ill choose what I work on."
3. Scroll down to Investment Income and select Stocks, Mutual Funds, Bonds, Other.
4. You should now see a list of your investments.  Select delete next to the RSU transaction. 

@scar1pet