Am I being double-taxed?

[ConusedByTaxes]

Hello,

I received RSUs from my company. They vested in Oct 2021. There were $32,000 in total RSUs. I sold to cover $7k worth of the RSUs, for about $24.5k left over.

On my earnings payslip, I'm seeing that my total yearly compensation includes not only my salary, but also the $32,000 from the RSUs I received in October 2021, and the RSU earnings have also been included in the Box 1 total on my W2. However, since I "sold to cover," didn't I already pay my owed taxes on the RSUs amounting to the $24,500? Am I being double-taxed since these earnings are being included in Box 1?

Box 1 is $240,000 (this includes my salary + my commission + the $32k of RSUs).

Box 2 shows I paid about $46,000 in federal taxes.

Box 14 (if that matters) shows "US RSU" at $32k. 

I am very confused. I feel like since I already sold to cover, that it doesn't make sense (to me) why the RSUs are still being taxed again by being included in Box 1 as taxable income. What am I missing? 

Thank you!

[Country Apple]

Based on what you wrote, sounds to me like it’s all proper.  You received $32k of RSUs and the FMV of those shares were added to your W2 as income; $7k of those shares were given up and sold to pay taxes (contributing to the $46k of taxes you paid).  You have $24.5k of shares remaining.  You’ve only paid the tax once.  When you sell those shares you would pay the tax on any gain/loss between the grant price and the actual sale price.

[GeorgeM777]

Your RSUs, like your other income, are not being taxed twice.  Your sell to cover was approximately 22% of the total value of RSUs vested.  If you owe tax after completing your return, you did not withhold enough to cover your total tax liability.  It's probably close to impossible to calculate withholding that will result in no tax due and no refund.  

Make sure the sell to cover amount, $7,000, was included in your total withholding.  If you included this amount in taxes withheld, then you made the correct entry.  

@ConusedByTaxes

[mdbalvin]

I'm not a "Tax Expert", but the thing that initially tripped me up on RSUs and ESPP shares is that the basis price reported on the 1099-B is usually 0 making the final sale pure profit as though the initial tax was never applied on the W-2. You have to go through and apply the adjusted base price values that are generally supplied in a report from your brokerage that identifies each batch of RSU or ESPP shares and the base prices for each when the tax was applied and paid in your W-2. Once, that's done, the gain/loss numbers will be more sane and you'll only be taxed on the increase in share value since the purchase date where the initial taxes were applied.

[GeorgeM777]

You are correct in your analysis.  Many taxpayers overlook the fact that their 1099-B will reflect, incorrectly, their cost basis as 0 especially with respect to RSUs.  However, with additional research, the basis can be adjusted as you describe and the correct result reported on the tax return.

@mdbalvin