Solved: My employer withholds taxes when my RSUs vest. The fair market value is reported in my W2 as income, but the taxes are not. Why? Do I file the taxes withheld separately?
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My employer withholds taxes when my RSUs vest. The fair market value is reported in my W2 as income, but the taxes are not. Why? Do I file the taxes withheld separately?

 
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My employer withholds taxes when my RSUs vest. The fair market value is reported in my W2 as income, but the taxes are not. Why? Do I file the taxes withheld separately?

No you do not "file the taxes withheld separately."  The cash from the sale of stock "for taxes" is passed back to your employer, who pays the government(s) and then includes those amounts in the various taxes boxes of the W-2.  These typically are not reported to you separately on the W-2, unlike the income.  You can ask your payroll department if you're unsure about their inclusion.

If you're raising this issue because when you entered the sale your tax liability went up, leading you to believe you have to report the withheld taxes again, then your problem is that you're using the wrong basis in reporting the sale.  Your per share basis in the stock received is the same as the per share "fair market value" used by the employer to calculate the compensation created by the gross number of shares in the grant.

Tom Young

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Level 12

My employer withholds taxes when my RSUs vest. The fair market value is reported in my W2 as income, but the taxes are not. Why? Do I file the taxes withheld separately?

No you do not "file the taxes withheld separately."  The cash from the sale of stock "for taxes" is passed back to your employer, who pays the government(s) and then includes those amounts in the various taxes boxes of the W-2.  These typically are not reported to you separately on the W-2, unlike the income.  You can ask your payroll department if you're unsure about their inclusion.

If you're raising this issue because when you entered the sale your tax liability went up, leading you to believe you have to report the withheld taxes again, then your problem is that you're using the wrong basis in reporting the sale.  Your per share basis in the stock received is the same as the per share "fair market value" used by the employer to calculate the compensation created by the gross number of shares in the grant.

Tom Young

View solution in original post

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