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RSA: taxes were withheld for this sale

My company awarded me RSA. After one year they vested and my company requested the employees to pay the withholding taxes based on the Fair Market Value with a check. Both the withheld taxes and the vested value of the RSA are reported into my W2 as income and withheld taxes. Few days after the vesting I sold my RSAs for a slightly lower market price, realizing a capital loss. My company does not provide us the 1099 form (the actual RSA sale happens abroad). In my return I'm reporting the capital loss due to the RSA sale, but then Turbotax asks me whether "the taxes were withheld for this sale". Depending if I say yes or no, my return dramatically swings, from me owing (no), to have a tax credit (yes). I'm unsure because from one side I did give the check to my company (therefore the taxes were withheld), but on the other hand the taxes withheld are already reported into my W2. if I say yes, am I claiming the withheld taxes twice? Thanks for your help



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3 Replies

RSA: taxes were withheld for this sale

"if I say yes, am I claiming the withheld taxes twice?"

Yes you are.  The taxes paid at vesting pertain only to the compensation created by the vesting.  Your sale of the stock creates capital gain or loss, an entirely different animal.

Clearly you're doing something wrong, but I'm not sure what.  Ordinarily when people post a question like this it's clear to me that they are using the wrong basis to report the sale.  (The per share basis of the stocks received is the same as the per share "fair market value" to calculate the compensation, so selling at a small decline in price from the vesting date should produce a loss.)   But you say you are reporting a loss? 

The only other thing that comes to mind is that you're using the RSA "Guide me step by step" interview and, somehow, inflating the number of shares vested, increasing the compensation created by TurboTax?  (Sometimes people do tell TurboTax about the same vesting twice, once when they are reporting the sale of stock "for taxes" and then again when the are reporting the sale of stock "for cash to me."  TurboTax looks at that as two separate vestings and doubles up the compensation income.)

IF you do in fact know your basis - same per share number used for the compensation calculation - I'd say delete the trade you're working on and simply reenter it using the "Stocks, Mutual Funds, Bonds, Other" interview and telling TurboTax that no 1099-B was received.  You'd then enter information solicited by TurboTax, including the CORRECT basis, and you should end with a loss, reducing the amount of taxes owed or increasing your refund.

Tom Young

RSA: taxes were withheld for this sale

Hello Tom, thanks for the answer, but I'm actually using the "Stock, Mutual Funds, Bonds, Other" interview and I'm entering the information as TurboTax is asking me and then I receive the question about the Tax withholding in the "Some Basic Info About this Sale". Should I therefore answer yes, the taxes were withheld for this sale?

RSA: taxes were withheld for this sale

NO.

Taxes were NOT withheld for the sale.

IF taxes were withheld for the sale THEN the taxes would be on the Form 1099-B in Boxes 4 and/or Box 16.

Taxes were associated with the VESTING/COMPENSATION event, NOT the sale.
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