Sell upon vesting RSUs to pay the taxes

[ssetayeshfar]

I have selected the option in ETrade to sell parts of my RSUs upon vesting to cover the taxes. In 2019, I had RSUs vested, I didn't sell any but the portion that was needed to pay taxes was sold automatically. Do I still need to enter the sales from the issued 1099-B even though I didn't really get any money/sold any myself?

[Helper]

I believe you do need to include the sale and taxes paid in your return. The fact that you did not get the money doesn't matter. You got the larger amount of RSU's, minus the taxes paid = Net smaller number of shares.  It's the same as if you had received the larger amount of shares and then sold some to pay the taxes, leaving you with the number amount of shares.

With the current fall in the Stock Market, you should pay the tax with cash and not sell the shares because the share prices are so low.  In a few months when this all settles down, we are optimistic that the market will again rise. You can than sell the shares at a higher price

[RobertG]

If you received a 1099-B you have to report the sale.

RSUs are taxed when they vest. Income is reported on the W-2 and shares are withheld to cover tax on the shares. Nothing else is reported on the tax return until the shares are sold.

A 1099-B is issued when the shares are sold. The basis of the shares is the market rate of the shares at the time of vesting that was reported as income on the W-2. When the sale is reported there will be a capital gain or loss. If sold the same day they vest, there will be a small capital loss due to the sales fee.

You need to know how many RSUs vested and how many were withheld for taxes in order to determine your basis.

You should be able to find the grant information on your 1099-B form or your consolidated statement. If you can’t find this info, contact your brokerage or your employer's stock plan administrator.

To report RSU sales in TurboTax:

When you enter you 1099-B information you will be asked: 'Do these sales include any employee stock? This includes ESPP, RSU, RS, NQSO, and ISO' Say yes.

Then you will be asked 'What type of investment did you sell?' Select 'Restricted stock units'

Check the box that says 'The cost basis is incorrect or missing on my 1099-B'

Then select 'I need help figuring out my cost basis'

[ssetayeshfar]

Thank you. Will add 1099-B information then.

[nobglop]

Normally the fair market value of the RSU shares are included in your W2 Box 1 income. That includes those shares withheld to pay taxes. Since that income has already been recognized on the W2, it does not need to recognized again on Schedule D. Likewise, the Federal, Social Security, Medicare and State withholding for that RSU income will be already be included in W2 Boxes 2, 4, 6 and 17 respectively.

If you enter sales transactions for the withheld shares, you could be double-taxed on the withheld shares.

I have had RSUs handled by both Morgan Stanley and E*Trade and neither reported the sale of withheld shares 1099-B. However, if you did see them on a 1099-B I would read it carefully to see if the transactions were reported to the IRS. If not, I would not enter them in Turbo Tax unless you are convinced your company did not include them as Box 1 income.

Finally, Be sure to download and read all the supporting documents from E*Trade pertaining to stock plan transactions.

[AmyC]

All shares sold are reported. Usually, you have to manually change the basis of your stock sold to the amount that was in your W2. Otherwise, you would be paying taxes on the same money twice.

I want to urge you to create a financial notebook that is kept separate from your tax return. Keep it safe and each year, add your year-end statements from all your financial accounts plus a copy of your W2’s. This will protect you down the road as proof of your basis in your various investments. As you go through life, rollovers, RSU sales, and more will be captured for you.

You will need to make note of how many shares you received and the amount on your W2. You will continue gaining shares. When you sell, you will have different basis prices for different shares.

When you do sell your RSU, you can then decide if you are selling LIFO, FIFO, or lots. Your notebook will be invaluable with knowing what was first, the order, the basis, and the lot size.