Hello, TurboTax 2022 is reporting an error when entering RSUs. The entries are correct.

[jmprice_314159]

For example, I was awarded 44 shares, 23 were sold to pay for taxes. TT reports an error in the Federal review that states I need to enter information for an additional 2 shares. All info is entered and correct. Why is TT doing this?

[hbl3973]

jmprice_31415926535,

Of course we cannot see your return, a very good thing, but what jumps out at me as a place to look is that 44-23=21 and 21 is 2 less than 23.  Did you enter 21 or 23 twice?  Inquiring minds want to know.  Eight days to Pi Day.

[jmprice_314159]

Hi, thanks for the reply.

Here is a simple case of one that TurboTax warns in the Federal review that it needs information about 1 additional RSU share. Here are the screenshots that show my entries for a total of 5 RSU shares vested, 3 sold to pay for taxes, and 2 kept. I don't see what information is missing, and what I would enter for the "missing 1 RSU share".

Is this a bug in the Federal review in TT? Or, do I need to enter details for the missing 1 RSU share? If so,  where do I enter the info for the 1 RSU share that TT reports as missing info for?

Thanks,

Jason

[hbl3973]

Thanks for the details.  I'll reproduce it in TurboTax Premier desktop and get back to you.

[hbl3973]

Hmmm. On the Restricted Stock  Unit Sale Results page, I show a cost basis of $1,706 while your screen showed a cost basis of $1,093.06.  Other than that, I get the same Forms entries and the same Federal Review issue.

Aha! I see what has happened.  You did not have any shares withheld  for taxes.  More correctly, it is shares withheld in lieu of taxes.  This happens when a private company has no current market for their shares.  You did have shares sold for taxes.  So enter 0 shares withheld.

The call for 1 additional share information was because you had 5 shares to start with and told TurboTax that you both sold 3 shares and withheld 3 more shares, totaling 6 shares.

[jmprice_314159]

Ok, many thanks! The 3 shares were definitely sold to pay taxes automatically by the company ("sell-to-cover taxes"). So, per your recommendation, should I definitely set "Shares withheld (traded) to pay taxes" to 0, even though 3 were sold to pay for taxes?

The company is a normal public company, not private or anything out of the ordinary. If yes, TT has very bad wording in the UI for this as the 3 shares were indeed "traded to pay taxes" because they were "sold to pay taxes".

Very confused here because 3 shares were sold to pay the taxes by the company. Can you confirm the settings for the 3 shares?

And, what should the "cost basis" be (the 1099-B states it is $0 in box 1e, but TT seems to calculate it and set it as $1,093.06). Thanks!

[hbl3973]

jmprice_314159,

I've asked the powers that be to see about revising the explanation for shares withheld so that zero in your case is obvious.    Because the fair market value of the RSU vested shares appeared as W-2 income, your basis changed from zero to their fair market  value.  I'm not seeing your W-2 but if there is an entry in Box 14 (or maybe in Box 12) regarding the vested share income, divide it by 5 to get your per/share basis and them multiply it by 3 and add any sales commission to get the basis for the shares you sold.  From what you show, I would expect a basis of $1,598, though I'm surprised at the $17 charge you included for acquiring the shares.  Perhaps that was the sales commission on the 3 shares old?

[jmprice_314159]

Thanks for the replies!

Yes, the W2 contains the extra income.

Ok, so are the following screenshots 100% correct with the entries?

Notice "Shares Withheld (Traded) to Pay Taxes" is 0, which just seems plain wrong to me, because 3 were in fact sold for that exact purpose.

Any idea why the field is called "Shares Withheld (Traded) to Pay Taxes"?

Thanks!

Had to change the "Cost or other basis" here from $0 which was imported, to $1598 per your calculation:

3 shares sold here:

Procedes shown here for 3 shares sold:

"Shares Withheld (Traded) to Pay Taxes" set to 0 here (seems wrong as 3 were sold to pay taxes):

[hbl3973]

jmprice_314159,

https://www.quora.com/Whats-the-difference-between-withhold-to-cover-and-sell-to-cover-when-vesting-...

explains the distinction between sell to cover and withholding shares for taxes.

You need to enter the 1099-B exactly as it appears.  So do not change box 1e from zero.  The capital gain (loss) is being computed correctly for the sale from what I see, but do check the actual Form 8949 entry.  Did you confirm the W-2 compensation income was $2,646.75?  I have no idea where the extra $27.01 for $,1615.06 in that side bar came from unless there was a sales commission you added somewhere.  If so, you would need to check if that was already subtracted in the sales proceeds (i.e. reporting net proceeds) in which case you don't add it to your basis. Be sure to add the net sales proceeds to your federal withholdings if it hasn't appeared on the W-2 total.  (Check your paystubs to see if the withholding jumped when the RSU vested.)

Fundamentally, RSUs and NQSOs are pretty simple and I just did the 8949 by hand when I had them.

[jmprice_314159]

Hi, yes, the W2 contains the income. And, the extra $27 are just fees/commissions. Little amounts that don't matter much. So, per your recommendation, don't change the cost basis from $0, and set the shares withheld (traded) for taxes to 0 also? And, that's it?

When you write:

"Be sure to add the net sales proceeds to your federal withholdings if it hasn't appeared on the W-2 total.  (Check your paystubs to see if the withholding jumped when the RSU vested.)"

Do you mean check the total sales proceeds were added to the income, and the "tax paid jumped when the RSU vested"?

Cheers!

[hbl3973]

Yes, you have divined my meanings.

[jmprice_314159]

Ok, many thanks! I think if that pesky "withheld" field is either renamed or a clarification statement added to it, that would stop people from tripping up over it. I don't remember it tripping me up last year, so maybe something got changed this year in TurboTax related to RSUs? Cheers for the assist.

[jmprice_314159]

I had a look at TurboTax 2021 and the RSU feature also has that "Withheld (traded) to pay taxes" field. It works differently in TT 2021 and 2022, so there was a bad change in 2022 that breaks the 2021 functionality and has made things confusing. There was one screen rather than two in TT 2021 for entering RSU information and it made a lot more sense in the previous version. TT 2022 breaks the previous functionality and will almost certainly cause a lot of questions for Intuit like I had. You might want to raise this with the development team to perhaps have someone with basic common sense review any changes to perfectly working features in TT 2021 that were then broken in TT 2022 🙂