Compensation income for RSU reporting

[Sandeep1]

My W2 income includes vested RSU value. While reporting the RSUs sold (going through the RSU reporting interview), I see that something called "compensation income" is generated by TurboTax.

Is this compensation income again added to my reported W2 income? I am getting taxed twice?

Can I simply report RSU sales as regular stock sale (with the correct cost basis)?

[HelenC12]

Yes, the compensation is added to your reported W-2 income. No, you won't get taxed twice if you follow these instructions:

• You will need to change the stock basis on the date of the sale, to the price on the date of sale.  
• The result is zero gain or a minor loss due to brokers commission/fees.  
• The IRS will expect to see that information on your tax return.  

To enter your 1099-B form, see Where do I enter a 1099-B?

For additional information, see the TurboTax article: Non-Qualified Stock Options.

[Sandeep1]

@HelenC12 thanks for the answer. On a related note: say 50 RSUs vest (and included in my W2 income) out of which 10 are withheld for taxes (so only 40 are in my brokerage account). I sell 25 of them. In the RSU reporting interview,  I enter number of RSUs vested as 50 and tax withheld RSUs as 10 and enter the correct basis. Since I only sold 25, will the compensation income for the remaining 15 RSUs get again added to the W2 income?

[Sandeep1]

@HelenC12 

1. Since the W2 already has the RSU value added to the income, why will turbotax again add the compensation income to the W2 income?

2. which tax form is the compensation income added to the W2 income?

[HelenC12]

Let me clarify, TurboTax doesn't add the RSU value to your W-2 income. Your employer has added it. TurboTax will add the RSU as investment income (per Form 1099-B) which would be double taxation. That is why you need to change the stock basis on the date of the sale, to the price on the date of sale.  

[dteaj]

The basis is requested in two separate places for RSU- the box 1e prompt on the first Turbotax page for stocks  (the forms from my brokerage do no list a box 1e, basis is listed as 0). Then on the 8th Turbotax page for stocks the prompts are for "market price on vesting date (per share)" and "price paid per share (often this is zero)"

[DianeW777]

The 'market price on vesting date (per share)' would be the fair market value on the date you were fully vested.  This value is your cost basis and must be entered into TurboTax so that you do not pay tax on that amount a second time.  It will reduce the gain or increase the loss on the sale