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Nat
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Previous year tax return, IRS asked for additional payment

IRS sent me a document that I owe more money for 2015. The amount that that they adjusted  equals to the amount i sold my RSUs for.
However RSU were already a part of my w-2 and I already payed taxes on it (some units were withheld to pay taxes during vesting).
What document can I send to IRS to prove that sold RSU were included in my total compensation ?
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1 Reply

Previous year tax return, IRS asked for additional payment

I assume you got a 1099-B and figured "I don't need to enter this because it's already on my W-2"  The problem is that the IRS doesn't "know" that your sale of stock relates to the vesting of the RSU, so they simply ask you to pay taxes on the entire proceeds because the broker reported a basis of $0.

You can amend your income tax return in response, if you like.  Most "same day" sales - which certainly seems to be the case here - result in a small capital loss due to selling commissions and fees.

If you don't want to do that then write a letter of explanation.  You'd tell the IRS that you sold the stock you acquired through the RSU vesting on the same day and that the proceed are included on your W-2.

A photo copy of the 1099-B and the W-2 with the proceeds off the 1099-B circled and matching the compensation figure, (probably in Box 14, but could be Box 12), also circled should put the matter to rest.  Send this information via "registered" mail and keep copies of your correspondence.

Tom Young

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