TurboTax FAQ
TurboTax FAQ
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What is restricted stock and how is it taxed?

Restricted stock (not to be confused with a restricted stock unit, or RSU) is typically awarded to company directors and executives, who then own the stock at the end of the vesting period.

Also called letter stock or Section 1244 stock, a restricted stock award comes with strings attached; for example, it cannot be transferred and it may be forfeited if the recipient fails to live up to expectations.

Unless you made an 83(b) election, don't report a restricted stock award. In fact, you won't report anything until the stock vests. However, if you receive dividends on the award in the meantime, that'll be reported in box 1 (wages) on your W-2 form.

If you did make a Section 83(b) election, your employer will report the fair market value of the award in box 1 of your W-2. If you also receive dividends on the award, those'll be reported on Form 1099-DIV.

Once you're fully vested, the stock is all yours. If you sell any shares, you'll get a 1099-B from the brokerage with the gain or loss information.


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