RSU Sell

[drew.fong]

All RSU's sold last year were done via E-Trade where they sell some off for taxes, pass that back to my employer (Apple, Inc.). So I am almost certain that all of my RSU generated income and RSU's sold for taxes are already added as part of my W2 income/taxes paid. Do I need to wait for my e-trade tax documents before filing my taxes or will my W2 suffice enough to proceed with filing? If the answer is "Yes, I do not need wait", then my follow up question would be: "Do I need to re-enter the tax info from my E-Trade 1099's even though the income and taxes are already on my W2? I am worried this will count my income from RSU's twice then.."

Thank you!

Drew

[TomYoung]

I'd say "wait" as you may, or may not, get a 1099-B for the sale.  If you do get a 1099-B then you'll need to report the sale or the IRS will, some day, ask about it.  The 1099-B itself will have no "tax info" on it.  The cash raised from the sale of stock "for taxes" is already on the W-2.  A "same day" sale - vesting and sale occurring on the same day - typically shows a small loss due to selling commissions and fees.

Even if you don't get a 1099-B you can still report the sale, telling TurboTax that no 1099-B was received.  Why would you want to do that?  Simply to avail yourself of the (small) tax benefit of report the small loss.

[drew.fong]

Hi Tom,

Thanks. So I just received my 1099-B, but for some reason it only includes my RSU's sold as a gain/proceed (even though I sold same day). There is nothing there around loss or RSUs sold off for taxes. So there is no loss mentioned either, even-though  I sold it the same day. When I add the 1099-B info into TurboTax, it drastically increases my taxes owed, but this cannot be correct since the proceeds/gains were already included in my W2 as pat of my income.. Should I just not enter my 1099-B?

[ThomasM125]

You do need to report the form 1099-B sales on your tax return, since the IRS will get a copy of it and look for that entry on your tax return. However, you need to increase the cost basis reported by the amount of the income included on your W-2 form as wages.

When you report the sales amount and cost basis from your form 1099-B, enter the cost basis as reported, then choose the option "I'll enter additional information on my own", where you will be given the option to enter a "corrected cost basis" equal to the income reported on your W-2 form.

[TomYoung]

"Thanks. So I just received my 1099-B, but for some reason it only includes my RSU's sold as a gain/proceed (even though I sold same day)."

You need to understand how RSU's are reported on the 1099-B; the broker reports $0 basis even though that's wrong.  (The IRS changed the reporting rule for RSUs just a few years ago allowing this incorrect reporting, and the cynical me feels it was done so that taxpayers that didn't understand that $0 was the wrong basis would over-report their income.)  So you need to correct that incorrect reporting and ThomasM125 explains how to do that.  On a per-share basis your basis for the stock sold is exactly the same as the per share "fair market value" figure your employer used to calculate the compensation in the first place.

Compensation = GROSS number of shares vested x per share "fair market value" at vest date.

[bc2297]

Drew, the information you need for Apple & ETrade can be found on ETrade->Stock Plan->My Account->Gains and losses. Then expand each transaction and there's an option called View confirmation of release. This should open another tab that lists how many shares were withheld for taxes and at what price. I found success importing my 1099 through ETrade, editing each transaction, saying it was an RSU transaction, and just putting in the info from each sheet. The initial 1099 import will blow up your tax due, but entering in the details will bring it back down to where it was. 

[serviciores]

I have the same problem. cost basis looks zero and federal income tax withheld looks zero even though I paid those taxes in my paycheck.

the problem is that these RSUs were vested in 2016 and I sold them last year. I do not have paychecks anywhere for 2016. What can I do?  Paychecks only archived for last 3 years online and there is no way for me to find  2016 paychecks and see how much tax I paid for that RSU. What can I do?

[DavidD66]

@serviciores Assuming your company handled things correctly, your company would have included the value of the RSUs in your income when they vested (2016) and you would have had shares withheld or sold for tax withholding; therefore, the cost basis of your company stock is the value that was added to your wages in box 1 of your W-2, less the value of the shares that were sold/withheld.  If you don't have that information, but you know the date the RSUs vested, you can look up the stock price on that day (use the low for the day to be safe) and use that as the cost per share.  You only need to report the gain/loss from the sales transaction, you don't need to worry about the income, as it was reported in 2016.

[ltsmd]

Hi - if the RSUs were already reported on the W2 and taxed, do we also need to enter the information again from taxes taken out from the sale for both federal and state?  Would federal taxes withheld include social security and medicare?  All three line items are on the confirmation of release statement from etrade.  Thank you!

[Jim the Filer]

Been dealing with E-Trade for a long time … their 1099 info is reliable.  If it causes confusion, TurboTax usually provides a different way to enter the info.

[TomYoung]

@ltsmd 

"if the RSUs were already reported on the W2 and taxed, do we also need to enter the information again from taxes taken out from the sale for both federal and state?"

No.  The vesting of the RSUs created compensation.  The compensation created the need for withholding.  I assume by "the sale" you're referring to shares sold to fund your portion of the withholding.  If that's correct then the cash raised by this sale was handed back to your employer, who paid the governments, and included those dollars in the various "taxes" boxes of the W-2.  You can't somehow report these taxes again.

"Would federal taxes withheld include social security and medicare? "

The compensation created by the vesting of the RSUs is subject to all the regular withholding requirements, just like cash compensation.

[ltsmd]

Thank you, I really appreciate your help.   Just to clarify as my question my have been confusing. My 1099B form from etrade does not have a Box 4 and I assumed I should enter the withholding amounts from my confirmation of release by e-trade that lists the federal tax withheld for the RSU sales, but no amount appears in box 4 of the 1099B.  When I do this, it significantly changes my amount owed. From your response it sounds like doing this will be entering the federal and state withholdings twice since this was already captured on my W-2.     Is that correct? 

Thank you!

[TomYoung]

@ltsmd 

"but no amount appears in box 4 of the 1099B."

And that's exactly correct.  The broker didn't withhold the money and pay the taxes.  The broker passed the money along to the employer, who paid the money, and included these taxes on your W-2.

"When I do this" ,[enter the 1099-B as it reads], "it significantly changes my amount owed"

I assume that "changes my amount owed" refers to a big increase in taxes.  That's because you're reporting the wrong basis for the sale because the broker is only required to report the amount you paid out of pocket to get the stock, ($0), instead of the correct basis.  The correct basis is (per share "fair market value" used by your employer to calculate the compensation created by the GROSS amount of share in the grant) x (# of shares sold.)  You enter the 1099-B exactly as it reads then correct the basis using the mechanism provided by TurboTax to get your basis "correct."  A typical same day sale typically creates a small loss due to selling commissions and fees.