RSU shares traded/withheld for taxes but no 1099-B issued

[Dishguy]

I see in etrade multiple RSU lots vested and each shows award shares / shares traded / shares issued. the tax payment method is Withhold Shares. It is reported in W2, but I did not get a 1099-B from eTrade, so my tax liability is high. How do I report this if I didn't get a 1099-B so I can report the cost basis correctly to lower my taxes??

[GeorgeM777]

That depends.  Did you sell your RSUs?  If you did not, then there is nothing to report in terms of stock trades.  If you did sell some or all the of RSUs, then see if you can get your trade confirmation to ascertain your sale price(s).  A 1099-B is preferred, but a trade confirmation is a good substitute and will contain the information you need to report the transaction in TurboTax. You will need to contact E-Trade to get your trade confirmation.

Even if you have a 1099-B, such document may not accurately reflect your cost basis for the RSUs.  E-Trade may not know your cost basis and thus, E-Trade may include a zero as the cost basis.  A zero-cost basis will likely increase your tax liability beyond what it should be.  Your correct cost basis is the value of the RSUs on the day they vested with you.  At that time, your firm would have sold some of the RSUs to cover the tax withholding requirements.  You are correct in that the value of the RSUs on the day of vesting, and the amount of the withholding--from the RSUs that were sold--should be reflected on your W-2.  

Remember, if you did not sell any of your RSUs, then there is nothing to report on your return.  If you did sell, then you will report any capital gain, or capital loss.  Such gain or loss is computed by comparing your cost basis to your sale price.  

@Dishguy

[Dishguy]

hi @GeorgeM777 thanks for your reply.

I did not sell the RSU's, however part of the vested RSU's were sold for taxes. As an example, it shows 100 RSU sold and reported as income in the W2. 40 stocks were sold at vest for taxes and it shows $2k paid in taxes. And I have 60 stocks in my brokerage account now (I didn't sell any beyond what was sold automatically to cover for taxes).

I have noticed sometimes the RSU's don't report the cost basis correctly, so I'm not sure if the taxes paid account for that. From eTrades confirmation it shows this

Shares Released: 100

Market Value per Share: $10

Award Price Per Share: $0

Shouldn't the award price per share be equivalent to what the RSU price was awarded at? Meaning that if I get $10,000 worth of RSU's that equate to let's say 500 shares, then the award price should be $20 per share? 

Since I didn't get anything from etrade like a 1099-B, don't I still need to answer Yes when it asks "Did you sell any investments in 2022" because they were sold to cover taxes, and then say no when asked if I got a 1099-B then enter everything manually about the actual cost basis of those vested RSU's?

[GeorgeM777]

If the award price means the price when the RSUs vested, then yes, the award price should be the same as the price when the RSUs vested.  We don't know the price on vesting day that your company uses to value your RSUs.  For example, does your company use the opening price on vesting day?  Or does it use the closing price?  Some companies may use the average price on vesting day as the per share price for the RSUs.  

E-Trade likely does not know at what price your company has valued the RSUs, and thus, it uses zero as the award price.  What is most important is the actual amount of withholding on your W-2.  You can determine the per share price of the RSUs sold to cover by dividing the withholding amount by the number of shares sold to cover.  The per share price seems to be around $50 ($2,000 divided by 40 shares).  

No, you do not need to report the sale of the RSUs that were sold to cover.  You did not sell any RSUs.  Your company did on your behalf, as they are required to do, and reported that withholding on your W-2, which they are required to do.  If you sold your RSUs in 2022, they you would need to report that sale; however, because you did not sell any RSUs in 2022, there is nothing for you to report.  Therefore, in connection with your RSUs, when asked did you sell any investments in 2022, answer No.  

@Dishguy

[alexmarin]

I have the same situation with my RSU - here is the problem:
- let's say you have $50k in RSU vested and $10k of that is withheld for taxes, so your broker gets $40k worth of shares which you don't sell.
- the problem is that $50k is included in total wages in W2, but federal income tax withheld does not include the $10k that was withheld.
So now turbotax says you have to pay $10k in taxes because it's not accounted for in W2. The solution to this should be equivalent to updating the W2 box 2 (federal income taxes withheld) to add $10k. If instead you add $10k to your RSU cost basis, then basically what you are doing is taking a $10k capital loss, which is not at all the same thing as paying $10k in taxes (assuming 30% tax rate, your $10k capital loss becomes about $3k that you don't pay in taxes, instead of $10k that you shouldn't pay).
I was thinking of directly updating the W2 box 2 to add the $10k, but the problem with that is I'm not sure if IRS will flag the mismatch. Is there another way in Turbotax to specify this additional tax withheld?

[GeorgeM777]

No, there isn't.  You are correct about the IRS identifying the mismatch.  Perhaps the best option here is to get your employer to issue you an amended W-2.  It is not clear why your employer would sell to cover--as they are required to do--and presumably remit that withholding amount to the federal/state taxing authorities, and yet not include the withholding on your W-2.  

You are also correct in that if you add the withholding amount to your cost basis you are only further complicating your tax situation.  Given these facts, your best option is to get your employer to issue an amended W-2.

@alexmarin 

[Grace1991]

Hi Alex, I have precisely the same situation with you.

My W-2 does not show the RSU tax withheld, and I did not get a 1099-B from eTrade because I did not sell any of the RSU.

I contacted ADP and they said the RSU tax was not included in the W-2, and we need to work with eTrade.

But like you said, this is a W-2 issue. 

I wonder if you ever received an amended W-2 from ADP for such inclusion to address IRS inconsistency? 

Or how you are able to address the dilemma?

Any input would be greatly appreciated!!

[Grace1991]

Hi George,

Your responses are most helpful!! I have precisely the same situation as Alex.

My W-2 did not include the RSU tax withheld, even though it included the Earnings portion (Gross).

I did not get a 1099-B from eTrade because I did not sell any of the RSU.

I contacted ADP, and they confirmed the RSU tax was not included in the W-2. However, they said it was not supposed to (???) and we need to work with eTrade.

But as you said, this is a W-2 issue. I think your explanation (and Alex) made total sense, we should received an amended W-2 to reflect the RSU taxwithheld, otherwise, we were being double taxed.

Would you have any suggestion how to address the dilemma? 

Any input would be greatly appreciated!!

[tay71]

I have the same problem.  On vesting Etrade withholds shares = ~50% of the value of the vest (state/federal); but the w-2 does not reflect the taxes paid.  I think for years my CPA has not captured these taxes paid and is always telling us we do not pay enough  tax (especially with stock being a big portion of income)>  Does anyone have experience getting the data from etrade???

[TomD8]

@tay71 --

..."but the w-2 does not reflect the taxes paid"

Are you saying that your employer withheld taxes on the vested RSU's, but did not report the withholdings on your W-2?  

Normally an employer would include the withheld taxes in Box 2 of your W-2.

[tay71]

Yes.  The employer grants RSUs at price XXX. which goes onto the w-2 as income the year they issued (not vested).  When they vest; taxes are withheld by the broker before depositing remainder into account (once deposited your sale drives additional cap gains/losses).  The withheld amounts are NOT reported on the brokers tax reports; and only available for each vest confirmation...

in short words, no feedback loop after company issues the RSUs and records as income

[TomD8]

"The employer grants RSUs at price XXX. which goes onto the w-2 as income the year they issued (not vested)." 

Your employer is doing this incorrectly.  With RSU's, no actual stock is issued at the grant date, so there is no taxable compensation to report.  The value of the stock is reported as ordinary income only at vesting date.

[tay71]

this is incorrect Tom.  This is how it has always been done (I work for one of the largest tech companies in the US).  The income is on grant; the gains/losses on sale from vest. the tax needs to be manually captured.

[TomD8]

See:

https://turbotax.intuit.com/tax-tips/investments-and-taxes/how-to-report-rsus-or-stock-grants-on-you...

Also see "Taxation" in this web reference:

https://www.schwab.com/public/eac/resources/articles/rsu_facts.html

[tay71]

I am not disputing how it is recommended to be done; I am telling you this is how its done (and has been done for a long time)