RSU Vested with Shares Withheld for Taxes Confusion

[rss1748]

In 2021 we had an RSU vest and the gross compensation is correctly reported on the W2.  At the time of vesting, shares were withheld for taxes.  This is also reflected in the W-2.  We have held onto the net shares that we received.

We did not receive a 1099-B form since we did not sell any shares.  However, should there be a 1099-B for the shares that were withheld?  I've seen conflicting info on this.

My impression is that we are all set for this tax year and that when we sell the shares in the future we will receive the 1099-B and can then make any cost basis adjustment necessary.  Is this correct?

[DianeW777]

It's unclear why you did not receive a Form 1099-B. The company actually sold shares for you so that the taxes could be paid.  When the shares are vested there is additional tax created by adding the value of vested shares to your income on your W-2. The taxes paid become part of your federal tax withholding. The shares sold by the company on your behalf need to be reported.

The cost basis for the Restricted Share Units (RSUs) is the price the shares cost for normal market buyers the day they vested into your name.  This can be found on any number of web sites and most certainly from your financial office of your employer or Human Resources/Payroll. Once the shares vested your employer included an amount of income that was included in your W-2 for that year. This type of transaction requires a taxable income amount for you which in turn becomes your stock cost basis in your RSUs.

Check your W-2 income that was reported in the year your shares were vested.  This is the cost basis for the shares you received. Your employer can tell you the cost per share if there were different vesting dates. You may have to calculate that yourself once you have the numbers.

• What are RSUs and how do I report them?
• Where do I enter Form 1099-B?

[rss1748]

Thanks for your reply.  So you're saying I should have received a 1099-B?

I know all the vesting prices so calculating a cost basis isn't a problem, but you seem to be saying the the cost basis is the gross number of shares that vested x the vesting price. Is this correct?  This conflicts with what others have said here, that the cost basis is the number of shares sold x the vesting price.

Now I'm even more confused.

[RaifH]

Yes, you should have received a 1099-B for the shares sold to cover taxes. I would check the brokerage account your company uses for employee stock or get in touch with your payroll department if you can't track it down. 

It will need to be reported, but once you adjust your cost basis there should be little or no impact on your taxes. The cost basis for that transaction would be the number of shares sold x the vesting price, as you said.

The total cost basis for the entire lot would be the total shares vested x vesting price. That number is probably reported on your W-2 or can be obtained from your payroll department.

[rss1748]

Thanks.

Yes the overall cost basis is on the W2, but is that even used for anything? When I report the shares sold for taxes I would use shares sold x vesting price.

And I've checked on the brokerage account, no 1099-B has been generated, so I'm not sure what to do about that, but will also check with my employer.

[rss1748]

Well, I talked to the broker that handles the company.  The answer is the that those "shares where withheld to cover taxes, not sold. Since there were no sales in 2021, a 1099 was not generated."  So I only need to report what's on the W-2.

[DianeW777]

Yes, you would use the cost basis per share times the number of shares that were sold by the company to cover your taxes.  This will give you the cost basis per share for the shares sold. Then use the sales proceeds at the time of the sale as the selling price.

[rss1748]

The point seems moot given my reply above yours, but thank you.