Reporting tax withholding from vested RSUs

[amiqueu]

In 2017 I had several lots of RSUs vest but none were sold (net of taxes). I received a 1099-B from my broker for shares sold in Box A for tax purposes. My W-2 accounts for the RSU compensation in Box 1 as well as the taxes withheld for the vesting events. When entering each sale into TT through the "Stocks, Mutual Funds, Bonds, Other" section, should I click "I'll enter additional info on my own" and enter the federal and state tax paid or would that be double counting?

[TomYoung · Accepted solution]

"When entering each sale into TT through the "Stocks, Mutual Funds, Bonds, Other" section, should I click "I'll enter additional info on my own" and enter the federal and state tax paid or would that be double counting?"

That would be double counting and you can't deduct the same taxes twice.

Frequently people are sure that they have to enter the taxes withheld reported by the broker in supplemental information accompanying the 1099-B because their taxes increase dramatically when they enter the sale.  In almost every case that's because they use the wrong basis for the sale which is not the $0 reported by the broker.  That's not your issue, is it?

Tom Young

[amiqueu]

Thanks for the response. My broker included a cost basis for each sale on my 1099-B. According to them, this was calculated by taking the fair market price on the date the shares were granted to me multiplied by the number of shares that vested in 2017. Does this sound correct?

[TomYoung]

That is correct.  I only mentioned the "wrong basis" issue as that's the impetus for so many questions along these lines.

[amiqueu]

Got it. If my broker is using the FMV on the date the shares were granted (in most cases 5 years ago), should the corrected cost basis be using the FMV on the date the shares vested or were sold to cover taxes?

[TomYoung]

Maybe I missed the "granted" part in your response above.  Broker's need only report the "out of pocket" cost of shares acquired via an RSU which typically is $0.  Unless something else is going on here that I'm not aware of your per share basis is the same as the per share "fair market value" used by the employer to calculate the compensation created by the vesting.

[amiqueu]

I just got clarification from my broker - they use the FMV on the vest date to calculate the cost basis. Does this sound correct or should it be the FMV on the date the shares are sold to cover taxes?

[TomYoung]

"'fair market value' used by the employer to calculate the compensation created by the vesting", although that's frequently shortened to "FMV on the vest date"

[amiqueu]

Great, thanks for your help!