RSU withheld to cover taxes at grant reporting in Colorado

[ellens98]

I received RSUs as part of my overall compensation in 2020, and those grants vested in 2023.  Upon vesting/release, my employer's stock plan manager withheld some of the vested shares to cover federal and state taxes and the value of the withheld shares was shown on the statements I received.  My W-2 did not include the value of the withheld shares in the taxes withheld, but it did include the value of the shares I did receive in the overall wage income.  The federal 1040 allows me to report the withheld value as taxes paid without a W-2 or 1099, but the Colorado form requires me to provide copies of W-2 and 1099 forms corresponding to the total amount of state taxes paid.   I don't know how to do that--I only have my plan statements indicating the value of the shares withheld to cover the state taxes.   Has anyone else handled this in Colorado?

[ThomasM125]

Can you please clarify how the state and federal taxes withheld were paid in to the government? You state " The federal 1040 allows me to report the withheld value as taxes paid without a W-2 or 1099" I interpret this to mean that federal and state income taxes were paid in for the stock shares not issued to you, but how did your employer pay those taxes in to the IRS and state department of revenue without reporting them on your W-2 form? 

I think you are trying to reported taxes withheld that aren't reported on your W-2 form. The only way I know an employer can pay in payroll taxes for an employee is to do that through a W-2 form reporting.

It is possible your employer only paid in social security and Medicare taxes as reported on lines 4 and 6 on your W-2. This is typically the way it is done, and any federal income tax withholding would be reported in box 2 on your W-2 form. In this case, there would be no additional taxes to be accounted for.

[ellens98]

It's complicated.  There were three RSU grants that vested. I received statements from the stock plan manager reporting the number of shares withheld upon vesting to cover both state and federal taxes.   One of the grants vested while I was employed by my original employer, but that employer was acquired by an affiliate in a merger transaction, and I became an employee of the acquiring company.  The second two grants vested after I became an employee of the acquiring company, but before the merger closed.  At closing, all of the common shares of the original company were "sold" at the merger price to the surviving company, and the proceeds settled as cash (I have a 1099B for my shares).  I received two W-2s.  The first employer DID include the value of the withheld shares from the first grant on its W-2 in the reported numbers for federal and state taxes paid, and included the value of the released shares in the gross income.  The second W-2 did not include the value of the second or third grant as income or the value of the taxes paid by withholding (and the ss and medicare reported correspond to the pay statements I received).  That seems wrong.    

[MarilynG1]

Yes, the second W-2 appears incorrect, based on what you have stated.  The fact that it didn't include income for the vested RSU's, nor the tax withheld, leads me to think there is another W-2 (corrected) that needs to be issued to you, or if you are still working for that employer, that it will be reported on a 2024 W-2.

Either way, you could reach out to the employer to verify.  You can't report federal or state taxes withheld without documentation that it was done.

Here's more info on RSU's and Taxes.

@ellens98 

[ellens98]

thanks--I no longer work for that employer, but I will reach out to their HR department to find out what they will do to correct my W-2.  Given timing, it might require me to correct my returns later, but can't be helped at this point.