Old employee stock

[avilax]

In 2022 sold some RSUs that vested in 2021 and paid taxes at the time of vesting. The sale generated a loss. When filling out the 1099 info in TurboTax if I select "Employee Stock", which was how they were received, it seems to think I DIDN'T pay taxes and increases my tax bill substantially. If I enter the 1099 info as is and don't say it was employee stock, it seems to reflect the cost basis and sell price, where I lost money, and reduces my tax bill.

If the shares were taxed at vesting in years prior, is it even considered employee stock anymore? I always thought it would be just like and other traded shares and the taxes are due depending on capital gains/losses.

Thanks for you help!

[DaveF1006]

To clarify, are you preapring your 2021 or 2022 return?

[avilax]

Sorry, I confuses the years and corrected above. This is for the 2022 return; the stock vested in 2020-2021 across various lots and I sold in various lots in 2022.

[DaveF1006]

To clarify again, when the stocks were awarded in the previous years, were these reported on a W2 and  were the taxes you are referring to also reported on the W2's?

[avilax]

Yes, they were reported on the 2020-2021 W2s. My former employer had 'sell to cover' as the default.

[GeorgeM777]

RSUs are a form of employee stock, and that characterization should not change despite the passage of time.   You are correct in that your basis needs to be adjusted to reflect your original cost basis so that you are not paying any additional tax.   Because RSUs are a form of compensation, employers are required to withhold taxes when RSUs vest and they typically do this through, as you noted, a sell to cover transaction.

You can enter the RSU transaction as you would a regular stock transaction if you prefer.  Whether entered as an RSU in TurboTax or a regular stock trade, the result on your tax return should be the same provided you have your correct cost basis, holding period, and sales proceeds.

Your per share cost basis is the total value of the RSUs on the day they vested, divided by the number of shares you received.  Your employer sold some of those shares for tax purposes leaving you with the remainder.  Your per share cost basis does not change. Thus, if you know your per share cost basis, you can enter that information into TurboTax and report the sale of your RSUs as a regular stock trade.  

You mentioned that you sold your RSUs in various lots during 2022.  You should enter each sale as a separate transaction.  While you may have an overall loss, some of the trades may have resulted in a profit; however, it all depends on your cost basis for each separate transaction.  Because you sold in various lots, your holding period will be different for each transaction.  

@avilax