Solved: RSU's taxation issue in Turbo tax
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hdt2ski
Level 1

RSU's taxation issue in Turbo tax

I am trying to enter in my RSUs and the ones sold to cover the taxes.  The shares sold to cover the stock were sold on a different date for a different amount than the remaining shares were sold.  The shares sold for tax were sold at a loss, but the system is reflecting it as a gain.  Please help!!

1 Best answer

Accepted Solutions
TomYoung
Level 13

RSU's taxation issue in Turbo tax

"I am trying to enter in my RSUs and the ones sold to cover the taxes."

 

That statement in ambiguous.  You don't, literally, "enter"RSUs". 

 

When the RSUs vest you get X amount of stock.  "X" is the GROSS amount of stock in the award.  If shares are withheld or sold "for taxes", that doesn't affect "X."The employer calculates compensation in the amount of

                            ("X" times "per share fair market value at vesting date")

and includes that in your W-2. That "per share fair market value at vesting date" is also your per share basis.

 

If shares are withheld or sold "for taxes" then the taxes withheld are scattered around the various taxes boxes of your W-2.  So the vesting of the RSUs and all the associated taxes are simply part of your recording of your W-2.

 

Now, if you sold some of the shares "for cash" or some of the shares were sold "for taxes" and the broker sent you 1099-B(s) for these sales, (brokers don't have to send 1099-Bs for "same day" sales), then you need to report the sales of the stock.  Presumably you got a 1099-B for the shares sold "for taxes", and maybe you also sold some of the shares "for cash."  Perhaps this latter event is what you are referring to by "I am trying to enter in my RSUs..."

 

I'm not sure what you are doing wrong here, but you might be trying to use the "RSUs guided interview" to report the sale(s) and that could be the crux of the problem.  If you're using the RSU guided interview to report the sales then I'd say "delete those trades", to start.  There's no "Income Tax Return Reporting Requirement" that says you must use those interviews.  Nothing in your income tax return gives the IRS any clue as to how you acquired any security that you sold. 

 

It's entirely correct to report these sales using the "normal" 1099-B interview.  You simply enter the 1099-B(s) exactly as they read - wrong basis and all - and then use the mechanisms available in TurboTax, (apparently the online version and desktop versions are different here, though I'm not sure), to correct the basis, which in both cases: (number of shares sold x "per share fair market value at vesting date").  That will properly report the gain or loss on the trade(s) and put the correct information on Form 8949.

View solution in original post

6 Replies
TomD8
Level 15

RSU's taxation issue in Turbo tax

Normally the proceeds from the sale of your RSU's for taxes would be included as part of the tax withholding amounts shown on your W-2.  You wouldn't report them separately.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.**

TomYoung
Level 13

RSU's taxation issue in Turbo tax

"I am trying to enter in my RSUs and the ones sold to cover the taxes."

 

That statement in ambiguous.  You don't, literally, "enter"RSUs". 

 

When the RSUs vest you get X amount of stock.  "X" is the GROSS amount of stock in the award.  If shares are withheld or sold "for taxes", that doesn't affect "X."The employer calculates compensation in the amount of

                            ("X" times "per share fair market value at vesting date")

and includes that in your W-2. That "per share fair market value at vesting date" is also your per share basis.

 

If shares are withheld or sold "for taxes" then the taxes withheld are scattered around the various taxes boxes of your W-2.  So the vesting of the RSUs and all the associated taxes are simply part of your recording of your W-2.

 

Now, if you sold some of the shares "for cash" or some of the shares were sold "for taxes" and the broker sent you 1099-B(s) for these sales, (brokers don't have to send 1099-Bs for "same day" sales), then you need to report the sales of the stock.  Presumably you got a 1099-B for the shares sold "for taxes", and maybe you also sold some of the shares "for cash."  Perhaps this latter event is what you are referring to by "I am trying to enter in my RSUs..."

 

I'm not sure what you are doing wrong here, but you might be trying to use the "RSUs guided interview" to report the sale(s) and that could be the crux of the problem.  If you're using the RSU guided interview to report the sales then I'd say "delete those trades", to start.  There's no "Income Tax Return Reporting Requirement" that says you must use those interviews.  Nothing in your income tax return gives the IRS any clue as to how you acquired any security that you sold. 

 

It's entirely correct to report these sales using the "normal" 1099-B interview.  You simply enter the 1099-B(s) exactly as they read - wrong basis and all - and then use the mechanisms available in TurboTax, (apparently the online version and desktop versions are different here, though I'm not sure), to correct the basis, which in both cases: (number of shares sold x "per share fair market value at vesting date").  That will properly report the gain or loss on the trade(s) and put the correct information on Form 8949.

View solution in original post

hdt2ski
Level 1

RSU's taxation issue in Turbo tax

Thank you, you assumed correctly.  I received a 1099 B from ETrade.  And it's super annoying on the desktop version.  Thanks!

DawnC
Employee Tax Expert

RSU's taxation issue in Turbo tax

The important thing is if there is no basis reported on the 1099 or it is incorrect, make sure you use the ''adjust basis'' function to ensure your basis get reported correctly and you do not overpay taxes.  

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hdt2ski
Level 1

RSU's taxation issue in Turbo tax

Now I'm getting asked to put in something on Line 25 for Capital Gain Wks on the Employer Stock Worksheet but I have no idea what I'm supposed to put.

 

TomYoung
Level 13

RSU's taxation issue in Turbo tax

Remember my first post to you where I said :

 

"If you're using the RSU guided interview to report the sales then I'd say "delete those trades", to start.  There's no "Income Tax Return Reporting Requirement" that says you must use those interviews.  Nothing in your income tax return gives the IRS any clue as to how you acquired any security that you sold. "

 

I can tell that you are using the RSU guided interview because only the guided interviews for employer stock sales makes reference to the Employer Stock Transaction Worksheet.  The normal, "regular stock" sale interview - the one that starts with a 1099-B waiting for you to fill in the boxes - doesn't put anything on the Employer Stock Transaction Worksheet, it just fills out Form 8949.

 

So, delete the trade and enter it using the regular 1099-B interview, incorrect basis and all.  In the desktop version you'd then click the blue "I'll enter additional info on my own" button and on the next page enter the correct basis, (# of shares sold x per share fair market value used by employer), in the "Corrected cost basis" box. 

 

The columns for line 25, dealing with RSUs are:

 

  1. (b) Number of Shares
  2. (c) Date Vested
  3. (d) Market Price Per Share
  4. (e) Price Paid Per Share if Any
  5. (f) Fees Paid if Any
  6. (g) Number of Shares Withheld if Any

So if you want to stick with the guided interview that should tell you what TurboTax is asking for.

 

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