RSU Payout Not Included in W-2

[Shengliang]

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 ?

[NCperson]

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?

[Shengliang]

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. 

[TomYoung]

"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

[Shengliang]

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. 

[TomYoung]

"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.

[Shengliang]

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. 

[TomYoung]

"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.)

[Shengliang]

No grant of RSU in 2020. Just vested 1000 RSU, not sold/exercised. 

[NCperson]

@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

[TomYoung]

"No grant of RSU in 2020. Just vested 1000 RSU, not sold/exercised. "

"Exercised" isn't a word typically used in an RSU situation.  IF they vest THEN they are yours.   If this was really Restricted Stock then the grant would have happened some time in the past. 

You're going to have to go to your payroll department and ask "Why isn't the $20,000 created by the vesting of the RSUs included in my taxable income?  Everybody says it should be."  (Copy this down and repeat it word for word.)  If the payroll department tells you the presentation is correct and WHY it's presented this way, then ask them to write that down so your tax advisor can understand.

[Shengliang]

1) No.

2) Yes. The tax withheld for the vested RSU is included on my W-2. I have checked my payslip for the month when the RSU was vested. The tax withheld for the RSU was added to the total tax, but the RSU was not added to the total income. 

3) No. They were just vested. 

[Shengliang]

Thank you . I have raised the question : why the RSU is not included in my 2020 W-2 Box-1 while it was included in my 2019 W-2 Box-1.  Once I get the answer, I will post it here. 

[Shengliang]

After talking with the payroll team, they have helped me understand that my W-2 does include the RSU. 

Thank all of you for your time and suggestions, really helpful !!

[NCperson]

so there is nothing to do in Turbo Tax related to the shares you now own! 

1) the vested RSU's are already included in the W-2

2) the stock is being held, there was not sale and therefore there is nothing to reflect in TT