As my RSRs vest, they withhold shares for taxes. Once I sell the vested shares, do I still need to report the shares I sell even though they already withheld shares for taxes?
@melissa_eckmann - depends which transaction you are asking about requiring the need to report:
there are two separate transactions occuring
1) your RSU's vest and you are given the shares outright. You owe ordinary income tax on that transaction. The estimated taxes are withheld and appear in your W-2. Your cost basis on those shares are established based on the market value at the time they vest (this is important!). This transaction does NOT have to be further reported. The income should already be part of your W-2 as additional wages.
2) you decide to sell the shares that you own outright. That can occur on the same day they vest or months or years later. Whatever you sell the shares for LESS the cost basis determined in #1 is the capital gain or capital loss that has to be reported. This would be reported on Form 1099-B by the brokerage firm and put in Schedule D of the tax return.
which transaction were you asking about?
The sale will be reported on the W-2 along with the withheld taxes AND on the 1099-B from the broker and you MUST report BOTH on the tax return ... failure to do so will get you an audit letter in about 2 years. The basis on the 1099-B will reflect the W-2 box 14 entry code V and will usually result in a loss of the broker's fee. If the broker doesn't have the correct basis you will need to enter it from the info the employer gives you.
Without researching the tax issues of RSRs specifically, the answer is always, yes, you must report all your taxable income on your tax return.
Any withholding is only an estimate. It might be too high or too low. The tax you actually owe is calculated on your tax return and takes into account all factors (income, dependents, other credits and deductions, etc.). You get one tax bill for the whole year, and you get credit for all your withholding and payments. If you were over-withheld, you get a refund, and if you are under-withheld, you owe an additional payment.