My W-2 includes RSUs compensation. After adding all of my RSU transactions to TurboTax, why is the RSU income calculating as less than the actual amount shown on my W-2?

[djhurlbut]

My W2 shows about $5k more for RSUs than Turbo Tax reports. It's unclear where this difference comes from.

[TomYoung · Accepted solution]

It's clear to me that you used the RSU step by step interview.  That's the only way that TurboTax can possibly calculate the compensation.  I generally advise not using the RSU step by step interview as many people find that interview confusing and mistakes get made.  There's no valid "income tax reporting" reason to use that interview EXCEPT if for some reason the compensation income created by the vesting WASN'T reported on the W-2, but that's not your situation.

So if you know that TurboTax is reporting the correct basis for your sales I'd suggest writing those numbers down, deleting the trades, and simply entering the trades again using TurboTax's default 1099-B entry form.  Enter the 1099-B exactly how it reads, click the blue "additional info" button, and enter the correct basis on the page that comes up.

If you want to stick with the RSU step by step process then I can tell you that TurboTax calculates the compensation exactly as your employer is supposed to.  For each vesting the calculation is (GROSS number of shares) x (per share FMV at vesting).  So one of two things could account for the "miss":

1. you entered an incorrect per share FMV for a vesting, or
2. you didn't tell TurboTax about ALL the vestings that occurred in the year

So, for example, if you had a vesting from which no stock was sold, you wouldn't enter it in the RSU step by step interview and TurboTax would come up short on its compensation calculation.  You could actually enter a 0-share "trade" in order to get all the vesting reported to TurboTax.  It's a little odd of course, but it gets you the right answer.

Tom Young

[djhurlbut]

Tom, This makes sense. I did use the walk through as I have in previous years, but the amounts matched. This year, I only sold one lot actually from this year, the rest were from previous years, so the amounts clearly should not match.

[TomYoung]

No, the sales from prior year lots affects nothing insofar as the compensation calculation.  It's only this year's vestings that create compensation and if you only had one sale and one vesting this year then the amounts should agree.  So if you entered the "prior years' vesting" dates properly, (well, at least telling TT that they didn't vest "this year"), you should get the RSU step by step calculation to come up to the correct answer.  If you're still "short" with TT's calculation then it has to be a misstatement in either the number of shares that vested this year or the use of the incorrect "fair market value" figures.

[djhurlbut]

Yes, that is what I expected, but I validated in our internal W2 reporting, the amounts added to my W2 were not the vesting related to the amounts sold, but he amounts vested this year. They actually have line-by line W2 amounts for RSUs, and each one matches perfectly to the amount vested this year, not to lots sold in previous years. It doesn't seem right to me as what you describe was done in previous years, but that's what they have reported this year.

[virgoboy2004]

In my case, the difference between TurboTax calculated vs the amount on my W2 are the Dividend Equivalents with the RSU.

[jlkipping]

Does this apply to ESPP as well? Should I go through the questions for cost basis. The stock was purchased at a discount and I have form 3922.

[ThomasM125]

It would be wise to go through the questions in TurboTax to insure that the correct income is reflected on your tax return.

[1cooldudeinAZ]

I have a situation where I sold RSUs from 3 lots vested in 2020, but didn't sell 1 lot vested in Q4 2020. As a result, the amount of RSU income reported in W2 and what TT calculated from 3 RSU lot sales differ by approx. $8K.

Is this an issue that must be resolved in order to file? If so, how do I enter an RSU lot for which there's no sale information ? Which worksheet (s) need to be modified, and what is the best way to make sure W2 numbers agree with TT calculation?

[ReneeM7122]

Yes, you need to resolve the issue before you file.  You need to know the cost basis.  Just to clarify, do you not have a 1099B form?

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

That would be the first step you need to do before you can properly enter the information.

@1cooldudeinAZ

[1cooldudeinAZ]

Hi Renee,

Thanks for reaching out to me.

I went thru the steps you recommended for all the transactions on the 1099-B. All good there.

The issue I was inquiring about is somewhat different.

My W-2 has RSU income from 4 quarterly vestings, but I sold shares from only 3 out of 4 vested lots.

Because of that, my 1099-B has info for only those 3 (out of 4) lots.

Clearly, I could only do TurboTax interview for these 3 lots, but not the one I did not sell.

As a result, RSU income, as computed by TurboTax, is different, understandably, from I have in my W-2.

From what I can see, TurboTax RSU income calculation appears only in the internal TurboTax worksheet.

Is this difference between the TurboTax-calculated RSU income and what my W-2 states an issue that needs to be corrected? If so, I am not sure how I could get the info about the 4th (unsold) lot into TurboTax.

If it's not material, can I assume I may proceed with the filing?

[MarilynG1]

@1cooldudeinAZ No, you don't need to do anything with the fourth unsold lot of your employee stock.

Save your RSU income info from your W-2; you will need it when you do sell the fourth lot.

Click this link for more info on Cost Basis of RSU's. 

[tmurraysdca]

I'm running into the same problem.  How did you end up accounting for the dividend equivalents?

[GeorgeM777]

A dividend equivalent can be handled the same way as a regular dividend.  Dividends are entered as follows:

In TurboTax online,

1. Go to Income & Expenses
2. Scroll down to Interest and Dividends
3. Click Start across from Dividends and enter your information

@tmurraysdca

[tmurraysdca]

I think entering it as a regular dividend would result in being taxed twice on the same money, since it is included as income on the W-2.  I have found other posts that indicate just to say "Yes" when TurboTax asks if the amount calculated for RSU income matches the amount listed on the W-2.