Let's say you have $100k in RSU vested and $20k of that is withheld for taxes, so your broker gets $80k worth of shares which you don't sell. The problem is that those $100k are included in total wages in W2, but federal income tax withheld does not include the $20k that was withheld when depositing remaining RSUs to broker.
So now turbotax says you have to pay $20k in taxes because RSU withholding is not accounted for in W2. The solution to this should be equivalent to updating the W2 box 2 (federal income taxes withheld) to add $20k. If instead you add $20k to your RSU cost basis, then basically what you are doing is taking a $20k capital loss, which is not at all the same thing as paying $20k in taxes - assuming 30% tax rate, your $20k capital loss becomes about $6k that you don't pay in taxes, instead of $20k that you shouldn't pay because they were already withheld.
I was thinking of directly updating the W2 box 2 to add the $20k, but the problem with that is I'm not sure if IRS will flag the mismatch. Is there another way in Turbotax to specify this additional tax withheld? Or is this a problem with the company's W2, which would affect all employees? I would be surprised since this is a very large tech company which has been around for a while.
