How to enter RSU vested stock that was sold

[MattKhat72]

I have a question on how to enter RSU information on RSU stocks that were sold AFTER they were vested. I'm doing a tax return for a friend who is getting RSU options from her company. I understand how to enter the RSU information when she gets vested options that have some sold shares to cover the taxes. But, I can't quite figure out what I need to enter when she sells some of her vested shares (Example - she has 100 vested shares and sells 19 from her portfolio).

In going through the step by step process I think I have to indicate that the shares were from an RSU option plan and enter RSU info on the screen shown below. But, when I do that it adds the total to the compensation income (see 2nd screenshot) which is supposed to be on her W-2 but the sale of vested stock won't be on her W-2, it's on the Fidelity statement she received. I tried leaving the Total Shares Vested/Released as zero but that just generates an error in the final review. Do I need to indicate that the sale is from an RSU option or is it just a regular sale of stock?

Any help is appreciated. Thanks 

[DavidD66]

No, you do not need to indicate that the shares sold are from Restricted Stock Units (RSUs).   When an RSU vests, the value on the vesting date is ordinary income and is included in Wages on the employees W-2.  That value also becomes the basis of the stock.  When you sell shares, you only need to indicate the cost basis, as determined by the value (already included in income) on the date of vesting.  RSUs really aren't very complicated when they are properly reported on the W-2.  When entering in TurboTax, do NOT indicate that it is Company Stock.

[ScottW00]

@DavidD66 Thank you for the answer. I have been struggling with this exact issue. I was selecting that it was company stock. TT was then asking for the date of original vest, number of shares, and the market price. TT would add up all of these entries and add it to my income.

Are you saying that if the proceed from an RSU vesting are included in my W2, I can just answer that its not company stock? Why would you answer that it is company stock?

[MarilynG1]

If you indicate that it was 'Company Stock' TurboTax helps calculate the income that should have been reported on your W-2. 

This might be a factor if you are no longer employed by the company and don't receive a W-2. 

[MattKhat72]

@ScottW00 the way I now understand it is that I only have to indicate that the sale of stock is from an RSU if it's stock that was part of a vesting. In that case some of the stock will be sold to pay taxes. As an example - in my friend's case she had 4 separate vestings during 2021. Each one vested 29 shares of stock to her with 11 shares being sold each time to pay taxes. If the selling price of the shares on the vesting date was $100 then she would have $2,900 (29 shares x $100 per share) added to her income for that vesting. In addition, the 11 shares sold to pay the taxes shows up on her W-2 as stock earnings offset. The end result is that her Fidelity portfolio has 18 shares of stock added to it that she can sell when she chooses. So if she decides to sell 10 shares 2 years later for $150 a share she would have a long term capital gain of $500 (proceeds of $1500 (10 shares @ 150/share) minus the cost of $1000 (10 shares @ 100/share)). This stock sale is NOT reported as an RSU transaction because she now owns the stock outright so it's just a regular sale.

When I followed this logic and re-entered all her stock "sales" everything calculated correctly and agreed with the statement she got from Fidelity.

Good luck  

[ScottW00]

@MattKhat72 so this is how I get confused. I have both situations. I have stock that vested and I sold it all. I also sold stock that vested last year. The stock from last year I agree is just a stock sales and capital gains. (short term in my case). The stock that vested this year and was sold off to pay tax and then sold a few days later has been causing me an issue. I went ahead with the advice and just checked that its not company stock. I know that taxes have been held and are reported on my W2. I also adjusted the cost basis and the numbers match my 1099B so I assume its ok. If I select that this is company stock and try to enter the numbers that TT asks for, the tax numbers are still the same, but it calculates too much income from RSU. I know that number is wrong so I must be entering the wrong information.

[MattKhat72]

@ScottW00 if you had stock that vested and then sold that stock a few days later I assume that you have 2 different transactions on your 1099. The first transaction is an RSU transaction, the second is not. The last screen in the RSU stock seems to be where TT figures out what the W-2 income should be but if you don't flag the transaction as an RSU transaction you never get that screen and therefore it never gets added to your income. It sounds like you have it right.

[iammadhu]

@DavidD66 Thanks for the tip to say "No, this is not employee stock" for RSU. However, after I entered the information, my tax due went up. A friend of mine was saying with RSU, that if you don't enter information right, you will be double taxed. You mentioned that RSU is reported in w2 in box1 and I indeed see the value higher than my usual salary.  So does that mean the RSU is already reported/taxed in w2? If so, I am trying to understand why the tax due went up? Is it because the brokerage indicated in 1099-B "Short term transactions for which basis is not reported to IRS"? and I chose the Sale category - box B (short-term noncovered). 

[RobertB4444]

@DavidD66  The basis of the transactions that is included on the broker statement usually does not include the amount that was paid to you as wages on your W2.  You will have to manually adjust the basis to reflect that amount and include it as part of the stock sale.  Otherwise you are being taxed on that amount twice.  

[hoysala]

Should the stocks that were sold-to-cover taxes (at the time of vest) be included in schedule D at all? Because these stocks sold for taxes are NOT part of my 1099-B. 1099-B only includes the stocks that I sold and not the ones that were sold for taxes.

Given this, di I need to include stocks sold for taxes in my Schedule D at all? This would resolve my confusion. THank you,

[MattKhat72]

In my case the stocks that were sold to pay the taxes were on a 1099-B. When I entered the RSU transactions into TT it calculated the gain/loss on each stock sale to put on Schedule D. It's surprising that you didn't get a 1099-B from your broker. I tied out the Schedule D totals from TT to the 1099-B totals and they agreed. If you didn't get a 1099-B I would think you would have to enter the transactions and have TT put them on Schedule D. 

[hoysala]

I did get 1099-B, but it did not include the stocks sold for tax purposes. my 1099-B only included the stocks that I sold. Since stocks sold for taxes are in W-2 already, I am asking do I need to include the stocks-sold-to-cover in sch.D?

[GeorgeM777]

No, do not include the stock that was sold to cover the tax withholding on Schedule D or on Form 8949.  You are correct in that your company has already included on your W-2 the withholding amount from the stock that was sold to cover.  Thus, you only need to enter the stock that you sold that is reflected on your 1099-B.  

Moreover, your company also included on your W-2 the value of the RSUs when they vested.  Thus, your Schedule D and Form 8949 will reflect whether you had a gain or loss from the sale of the RSUs.  

@hoysala

[hoysala]

@GeorgeM777  - Thanks for clarifying!

[TaxFilingMom]

HELP!  I am trying to file our taxes. When my husbands RSU's vested, he sold shares to cover taxes in 2020 and 2021 (at the direction of his employer).  Do I need to file the information from the 1099-B on our taxes?  For 2021, it was a negative number (-$74.65).  I also realized I never included the 1099-B information on our 2020 taxes, so do I need to amend?  Thanks for your help!  This is so confusing to me.