I have a weird situation that I haven't seen listed yet. Over the last several years, I've been granted RSUs. In one instance, the RSUs were vested and paid out and reported as income on my W-2. In another instance, an RSU was paid out when the account was closed, and not included in my W-2 but added to 1099-B without a cost basis. If I'm reading this right, the cost basis should be the same as the payout/proceeds, even though it's not listed on the 1099-B. Is that accurate? Thank you!
Maybe. If you sell the stock at a higher price than its fair market value at the time of vesting, you'll have a capital gain.
Click this link for more detailed info on How to Report RSUs or Stock Grants.
Maybe. If you sell the stock at a higher price than its fair market value at the time of vesting, you'll have a capital gain.
Click this link for more detailed info on How to Report RSUs or Stock Grants.
the stock price used to convert the RSUs to stock is the cost basis to be used when you eventually sell the stock
example:
RSU converts to stock: $10
stock cost basis: $10
stock price upon sale:$12
profit: $2
How do I document RSU income that was not included in my W-2? I did not receive a 1099-B when I sold it a month after becoming invested. I sold it for the same price as when it was vested. Does that mean I don't have any capital gains?
Correct, you would not have a gain, In fact, you may have a loss due to paying brokerage fees.
RSU income is no longer required to be in your W2 in the same year as the sale. Your employer should have asked if you wanted your RSU reported when it vested. Was there a crossover between years with your vest and sale?
If all in 2019, it should be in your W2 and you should definitely have a 1099B from the sale.
Related:
What are restricted stock units (RSUs) and how do I report them?
Cost Basis Reporting FAQs | Internal Revenue Service
Tax Cuts and Jobs Act: A comparison for large businesses and international taxpayers
The stock vested in March 2019 and was sold in April 2019. The company is French. Could that be why it wasn't in the W2 and a 1099B was not received? I now have it listed as "Other income" on Schedule 1, line 8. Is that correct? There was no brokerage fee. So if I have no capital gain or loss, do I need to document anything else related to this activity on my 2019 taxes? Thank you
There are ways to get the compensation income included in your TurboTax income tax return, but first I'd suggest you talk this over with your payroll department. The vesting is compensation and is required to be included in your income tax return as such, and "compensation" also generates the requirement for withholding of taxes.
I tried to get a new W-2 with the payout included. I was told that payroll is done in the U.S. while the stock payment came from France. No new W-2 will be coming for me.
If you report the RSU sale properly in TurboTax, the ordinary income portion will be added to your wage income and appear on line one of your form 1040.
You need to find the "Investment Income" section of TurboTax and choose "Stocks, Mutual funds, Bonds and Other."
When you come to the "Choose the type of investment you Sold" option, and click on "Restricted stock Units" you will be given an opportunity to indicate that the income was not reported on your W-2 form, and when you do that it will appear as an addition to your wage income on your form 1040 as follows:
When I get to the section "type of investment you sold", I do not have an option for RSU. I am using TurboTax Deluxe so maybe that is why my options look different than the ones you posted. ?? Should I chose stocks? I tried this once before but it didn't seem like the appropriate way to document it since it later asks for the purchase price but I did not buy them. ??
First of all, to report investment sales, you will need to be in Turbo Tax Premier. I am surprised the program did not prompt you to upgrade.
Now, if you are using Turbo Tax online and before you enter any sales, select Stocks, Mutual Funds, Bonds, Other
If you are using the software version of Turbo Tax, when you get to the screen where you start entering the stock information, select guide me step by step. The first screen that will appear will ask if you have employee stock to report. As with the online version, the program will prompt you to upgrade to Turbo Tax Premier.
Making progress thanks to your wonderful help. I upgraded to Premier and found the RSU option! However, I never found a prompt for me to click on to indicate that the income was NOT included on my W-2. ?? I entered the sales information, indicated there were no sales expenses, they were sold from 1 lot, vesting information, they were not split, and no reinvested dividends. What did I miss? Thanks!
Did some more digging around. I still didn't find the button indicating the income was NOT reported on my W-2. However, I did find the employee stock worksheet. Line 28 indicated the amount reported as compensation income for 2019. Currently, it has the total stock compensation. Should I manually change that value to $0, assuming it will let me do that? Waiting for your response before I do anything. Thanks
The problem here is that you didn't go far enough into the "Stocks, Mutual Funds, Bonds, Other" interview. You can't simply stop when you're done entering trades. Keep pressing "Continue", "Done" or whatever until you finally come to a page titled "Your Employee Stock Plan Results." Answer "No" on that page and TurboTax will include the compensation on the correct line of the income tax return.
You are exactly correct!! Thanks so much to everyone who helped.
Have a great weekend and stay safe.
This thread is really helpful for me. I have the same situation that the RSU income is not included in Box-1 while it is included in the "Gross Pay" on my W-2.
I have further question. After selected "No" for "Is it on W-2", TurboTax treats the Total Cost (Shares for Tax Withholding, which is on the RSU vesting statement) as the Gain, so that I need to pay tax for the Gain. I checked my payslip, the tax was already withheld for the RSU gain..
It doesn't make sense to me that the Total Cost (Shares for Tax Withholding) was treated as Gain. Do you see the same problem ? and can you suggest how to resolve this ?
maybe I am not following....... if you have 1000 RSU vest at a time when the stock sells for $20 per share, you are going to pay tax on the whole $20,000. Let's further say 200 of the RSU's are sold to pay federal, state, social security and medicare taxes, leaving you with 800 shares (with a cost basis of the same $20 per share).
later, you sell those 800 shares at a time when the stock trades at $25 per share. You would have $4000 of capital gains (800 * $5 per share)
does that help?
My case is :
I have 1000 RSU vested at a time when the stock sells for $20 per share, $20,000 in total. And 200 share were withheld for tax, $4000 in total. I didn't sell the remaining 800 shares.
I input it in turbotax as below.
Data Sold : 06/30/2020
Number of Shares Sold : 1000
Total shares vested/released : 1000
Shares withheld (Traded) to pay taxes : 200
Date vested/released : 06/30/2020
Market price on vesting date : 20
Price you paid per share : 0
Purchase commissions or fees paid : 0
Then I answer "No" for the question "Is it on W-2".
This way, Turbotax treats the $4000 as the "Gain" in the summary page, and it does result in more tax.
As my understanding, I didn't sell them in 2020, so there is no long-term gain/loss.
And obviously, the $4000 is the cost/tax paid for the vested RSU, not the gain.
Please suggest what I missed.
"Please suggest what I missed. "
Nothing in your last post really makes sense. You told TT that you sold 1,000 shares when you didn't, you obviously used the RSU step by step process, but this:
--------------------------------------------------------------------
Total shares vested/released : 1000
Shares withheld (Traded) to pay taxes : 200
--------------------------------------------------------------------
should result in a final tax return check error. That's because the programming logic, (unless it's changed from 2020 when I stopped posting here), should result in only 800 shares being available for sale. And the entry you've posted should, (absent the error noted above), result in a capital gain of 800 x $20.
I think you need to start right here: "I have the same situation that the RSU income is not included in Box-1 while it is included in the "Gross Pay" on my W-2" because that absolutely should not be the case. Don't do a thing until you walk into the payroll department, W-2 in hand, and determine if this really is the case.
If, if the above statement is correct then get a corrected W-2. What you've done here is simply flat-out wrong.
Tom Young
Thank you! One of the payroll team told me that my W-2 is correct, which also confused me. I am doubling check with them. My base salary is 10000, RSU income is 5000, but the Box-1 is ~10000 while Gross Pay is ~15000.
"Thank you! One of the payroll team told me that my W-2 is correct, which also confused me. I am doubling check with them. My base salary is 10000, RSU income is 5000, but the Box-1 is ~10000 while Gross Pay is ~15000. "
I continue to be confused. $20 x 1,000 (your figures) = $20,000 and if those shares vested in 2020 Box 1 should equal $10,000 + $20,000 = $30,000. I can't get "$5,000" from anything you've posted. I think you're misunderstanding something. RSU income is fully taxable when the shares become yours.
I just took "$5000" for an example. Sorry for confusion. Let's continue to use the 1000 shares as example. Then my total income is 10000 + 20000 = 30000 which should be in Box-1, but today Box-1 is just 10000.
"Then my total income is 10000 + 20000 = 30000 which should be in Box-1, but today Box-1 is just 10000."
If this is a genuine "vested RSU" situation then that doesn't make sense.
Instead of RSUs did you get a grant of Restricted Stock (RS) and make an 83(b) election at the time of the grant? This still wouldn't make a huge amount of sense as the vesting of the restricted stock wouldn't be a taxable event, an event requiring withholding, but it could, sort, kinda, explain the W-2 presentation (though I'm not at all sure that presentation is actually correct if that's the case.)
No grant of RSU in 2020. Just vested 1000 RSU, not sold/exercised.
@Shengliang - I am totally confused by your post
1) when the RSUs vested, was that included in your W-2 wages (box 1). Yes or No.
2) when the RSU's vested, was the federal, state, medicare and social security taxes also increased on your W-2. Yes or no.
3) once vested the RSUs not sold to pay taxes are just shares. Did you subsequently sell any of the shares? Yes or no
once you post a response, I can explain what to do next