When RSUs vest they create compensation that gets reported on the W-2. Assuming you paid nothing "out of pocket" to get this stock, (that's the typical RSU situation), the compensation is calculated as:
(GROSS number of shares received in the vesting) x (per share "fair market value" at the vesting date)
and that's what should be reported to you in Box 14, with the amount included in Box 1.
ANYTIME an employer reports compensation on a W-2 there's an absolute REQUIREMENT that taxes be withheld. The cash to pay the taxes typically comes from selling some of the stock, but that's not really necessary. You could have reached into your pocket, handed the cash to the employer saying "here's the cash you need for the withholding", and ended up owning ALL the stock. In either case the employer takes the cash, pays the government(s), and includes that cash among the various "taxes" boxes on the W-2. So that's what I'd expect should have happened in your case but of course I can't be sure. But you can settle the question definitively by simply asking the payroll department about this and that's what I suggest you do.
Because the vesting of the RSUs creates compensation, compensation that gets taxed, your basis in the GROSS amount of stock received is the same as the compensation created by the vesting. Logically, mathematically, your per share basis in the stock you end up owning is the same as the per share "fair market value" used to calculate the compensation.
Brokers are only required to report your "out of pocket" cost on the 1099-B when you sell some of that stock. Since your out of pocket cost for stock acquired via RSUs is typically $0, that's what you should see on the 1099-B and, clearly, if you report a sale of that stock using the $0 cost reported by the broker you end up reporting income twice on your income tax return: once as "compensation" as reported on the W-2 and then again as "capital gain" as reported on the 1099-B!
In order to avoid this situation you have to use the correct per share basis when you report a sale. Mechanically the way you do this in TurboTax is to enter the 1099-B exactly as it reads on TurboTax's default 1099-B entry form. Then you click on the "I'll enter additional info on my own" blue button. On the next page enter the correct basis in the "Corrected cost basis" box. The correct basis is (number of shares sold) x (correct per share basis, which includes the compensation per share)
TurboTax will report the sale on Form 8949 "as reported by the broker" but will put an adjustment figure into column (g) of the Form, a code "B" into column (f) of the Form, and the correct amount of gain or loss which includes the adjustment.
Tom Young
