RSU Cost Basis and (Under-reported on W-2)

[aakhil2022]

Hi y’all, question about RSU and 1099-B and W-2. I’ve rounded numbers for simplicity.

here’s the situation:

14 RSUs in December 12,2022 vested

6.3587 sold at $100 as “sell to cover”, with cost basis of $100

30 RSUs in September 2022 vested

13 sold at $90 as “sell to cover”

with cost basis of $90

i don’t think we did these sales, I think the employer did them.

In our 1099, we reported the 6.3587 and 13 sold, with their respective cost basis. This I believe should also be on our W-2. (It was on the paystubs, for Jan 2023 and October 2022).

When we had originally done the manual calculation with TurboTax for cost basis (since we had no cost basis), we put:

14 RSUs vested, 6.3587 sold, at $100

30 RSUs vested, 13 sold, at $90

They said our total W-2 disposition was $4000 (which I think comes from 14*100+30*90).

But on our W-2, onlt the ones sold for tax are reported ( 6.3587 and 13).

So now, I’m worried when we bypassed the TurboTax calculation and just put the cost basis for the sold shares, we under-reported the amount.

Do we need to make an additional transaction for the RSUs that were vested but not sold to cover? This feels like double taxation. Because if we put these (14-6 = 8 ) and (30-13 = 17) extra 8 and 17 shares as more income; we will get taxed again on them.

And didn’t we already get taxed on the original RSUs, with the shares that we sold as sell to cover?

[Mike9241]

the income added to the w-2 should be  14*100 + 30*90 =1400 + 2700 = 4100 that should have included in box 1 wages.

***.

the employer sold some of those 6.3587 * 100 +13 *90 =635.87 +1170.00 = 1805.87 to cover medicare, fica, federal withholding and state withholding. this amounts should also be included on w-2 in their respective boxes

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then since they were sold for their cost the 1099-B should show proceeds of as above with an equal cost so no gain or loss. the sales proceeds are not includable in wages. you need to report these sales with their correct cost basis. sometimes the 1099-B reflects the correct cost basis and other times not

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summary wages up $4100 taxes up $1805.87 for a net of 2294.13

your left with 17 shares with a tax basis of 90 each  = 1530

and 7.6413 shares with a tax basis of 100 each  = 764.13

for a total of 2294.13

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things would be different if the December shares were not sold until 2023. then while the income would be on the w-2, year of exercised, but the withholding taxes would not and their sale would not be reportable until 2023

[aakhil2022]

Hi Mike9241,

thanks for the reply here! So what exactly do I need to report? 

Just the two transactions on the 1099-B? The cost basis was blank on those, so we got the cost basis from “additional transaction information” in the brokerage firm website. I believe this was reported fine. 

also, the 4100 you mentioned, I don’t believe that’s on the W-2, because the person we talked to on the phone said only the RSUs sold for taxes are reported on W-2. It’s a very weird case. This was my concern, is do we need to report something else here?

also the December stocks were sold in December, but we received the money in our January paystub.