Restricted Stock Units (RSU) and TurboTax: Net Issuance

The included help in TaxCut was nearly useless, and of course I received no help from my employer. You report when you sell. Harry, Thanks so much. If we do not do anything for this. Hi, correct me if I am wrong that in this case we only need to pay taxes on gains and when Turbotax asks if this amount is included in W2 then we need to choose that yes it is included in wages section of W2?

Exercising options to buy company stock at below-market price triggers a tax bill. How much tax you pay when you sell the stock depends on when you sell it.

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Thanks for this post. Turbotax flags a delta between what is reported on my W2, and what it computes. The delta is exactly the amount of the two vestings that I did not sell. This tutorial was really helpful. I do have one follow up very basic question. Thanks so much for your help. If you followed the article to the end, you realize you should just skip the Easy Guide and jump right into Enter On a Spreadsheet.

There, you make two entries: I already showed you how to do the 97 shares. You do it the same way for the 63 shares with the numbers on your B. I have RSUs vested during I did not sell any. Employer deducted shares to withhold tax on eTrade.

How do I tell turbotax that tax has been withheld since I have less sellable shares since employer already withheld taxes? Thanks for the reply Harry. I am confused though. Since the wage is reported on my w2, I have to pay taxes on it. But I have less sellable shares since tax was deducted. Will the remaining vested shares become sellable once I pay the tax? You employer already added the value of the shares it deducted as tax withholding on your W The remaining shares are yours to keep or sell.

Your cost basis in each share is the price per share at the time of vesting. If the price goes up from there, you get capital gains. Turbo Tax only calculates the tax on the lots that I entered that I sold. There is a delta, which is exactly the value of the grants that I did not sell. Steve — Where did you tell TurboTax about the grants that you did not sell? Oh man, thank you for this. Injecting some sanity into this needlessly complicated and misleading process was exactly what I needed.

This was super helpful! If I choose this approach, I end up with a huge tax bill equal to the amount of the tax withholdings on the RSUs vested and sold for taxes. Barbara — It depends whether the shares sold for taxes appear on a B or not.

This article deals with Net Issuance, i. See comment 21 above if the shares sold for taxes are reported on a B. If it got from W-2 box 14, delete it. Hi Harry — Thanks for your help…just tipped you for it! Comment 21 is for 2 transactions — the sell-to-cover taxes and the sale of the rest of the shares.

So do I still report the sell-to-cover taxes shares in TurboTax as sold just like you would report the 97 shares in your example? I really appreciate your time. Barbara — It all depends on whether the shares sold for taxes are reported on a B from a broker or not.

If they are, you enter them, the same way as the 97 shares in the example. I did not upgrade to Premier turbo tax, but believe I am following this helpful conversation — please confirm. I usually move the remaining shares into a different broker account and then sell them when I need the money or want to invest them different.

David — Just a standard stock sale but you will have to remember the basis price per share at vesting. Dear God thank you! At the Investment income section and answer the first couple questions that you will type in the info yourself.

You are now at the Enter Other Sales screen. Then click the start button to the right. This will take you to a screen where you can select Restricted Stock Units. Thank you so much, Scott! You saved my day. I had shares vest in , with held for taxes. I sold the remaining in , which I have a B for. Nothing was included on my W2. The company I received the shares from was sold in What do I do??

Thanks for any advice. They were taken care of on the W-2 in Just find out the per-share price your shares were vested at. That times the number of shares plus any reinvested dividends form your cost basis. There were shares withheld to cover the taxes. Also I do not see that they added any taxes taken for the withheld shares.

I sold some of them this year, can I add the taxes that were taken via the shares to additional taxes paid in the other category in TurboTax? I re-wrote this article using new screenshots for tax year. See if those help. I thank you for providing so many of us with a clearer understanding of how to enter the transaction.

My situation is as follows…most of our RSU sold were done as sell to cover, one was a net issuance. I completely understand how to calculate the cost basis for the partial shares sold to cover the tax and the remaining shares which I sold the same or next day. The broker reported the gross proceeds for both sales. I am a little confused about the cost basis on the one sale which was sold as a net issuance.

I entered into Turbo tax the correct gross proceeds which were reported on the B. No cost basis was reported on the B. I entered 34 shares in the description which is how it is listed on the B. I had figured the cost basis for the net issuance RSU as the shares available to sell 34 shares , which I sold the next day, times the FMV on the day it vested. The B does not list the transaction involving the 13 shares.

The compensation element on my pay stub is the amount of shares vested 47 shares times the FMV on the day it vested. I do not want to under state the cost basis, but from what I read it should match the compensation element added to your earnings. From your explanation I believe the cost basis is the actually 34 shares sold times the FMV. However, I read on another site that the cost basis is the amount of shares vested which would be 47 shares times the FMV.

Everyone seems to address selling the stock at a later date, we sold it immediately. I was expecting the amount on the pay stub to be identical to the compensation element I was including in the cost basis. Can you clarify which compensation element do I use in my cost basis calculation……47 shares or 34 shares times the FMV.

You taxable income for 47 shares vested is the per-share price times The taxes you paid are the per-share price times Your basis for 34 shares remaining is the per-share price times 34, and if you only sell 17 out of the 34 shares received, your basis for the 17 shares sold is the per-share price times The only differences between sell-to-cover and net issuance are the shares taken for taxes are not sold through a broker, not at a slightly different price from the open market but assumed to be the same price at vesting.

The only transaction on the B is for the 34 shares sold. I am getting a little confused, so to be sure, I am only reporting to the IRS the transaction for the 34 shares sold, right? My cost basis for the 34 shares will be shown on the return as the FMV times 34 shares. I almost prefer cover to sell because all my numbers match: Thanks again for your clarification. In Net Issuance you never saw the 13 shares. You only report what you sold. If you sold 1 share you use the compensation element for 1 share.

If you sold 2 shares you use the compensation element for 2 shares. Your W-2 or paystub had 47 shares is really beside the point. Hi, this is still confusing to me. My company sells to cover taxes through the e-trade broker and form shows both, virtually everything. When I imported the form in TT, I then need to account for which is what. The confusing part is though that w2 also reports everything but the sum is different and they do not match, the reports lower than w2.

So when I tell TT which of the shares reported on were used for taxes, is it correct if for the ones used for taxes I report it like this?

Then for the remaining 17 I do: Also see comment above from Cindy for sell-to-cover. A sell is a sell. It makes TT confused for some reason. You will only confuse yourself if you do. Have you seen this happen as well? Maybe it should drop because you entered it wrong before. What was the per-share price when the shares vested? What was the basis reported by your broker divided by the number of shares you sold?

I followed a few threads on the TT support pages and found that the best answer is to follow the interview and just tell TT that the amount included on the W2 matches the amount that TT calculates even though it is higher in W2. I tried to enter a sale of 0 shares and include the share that vested and it then matched my W2 and the end refund number ended up the same, so I feel good telling TT that the number on W2 matches the partial calculation.

Hi, correct me if I am wrong that in this case we only need to pay taxes on gains and when Turbotax asks if this amount is included in W2 then we need to choose that yes it is included in wages section of W2? Thanks for your explanation. They appear on my W2 in box 12, code V as exercised stock options.

Hi Harry — Thanks for this article! Do you know a way to find out which RSU grants were associated with each sale. My call to ETrade yielded nothing — I will try again.

Considering the insights you provided in the article I thought you might have some guidance. But if IRS gets B, it would seem that they would want instead of me adjusting the basis which would cause inconsistency with B? Or will TurboTax report this correctly anyway? Should be entering the total of 34 shares that were vested or the 21 that were granted to me after withholding taxes. I ended up selling all the 21 shares in Dec and need to figure out what to report. In-dependent of this, the cost basis is still being calculated on the 21 shares that I sold.

Thank you, very helpful. And the only person that gains from these secrets is the government from getting a lot more of my tax money than I can afford. So glad you updated this for the current year also, made it very easy to follow along.

I am wondering if this means I must adjust the cost basis provided on my B for my RSU sales which are specified as not including the compensation portion. I did not pay a price to acquire shares they were granted. Also, if there is a missing compensation element, how do I calculate it? Janessa — In RSUs your acquisition cost is zero. Your compensation component is the per-share price at time of vesting times the number of shares sold.

Thank you Harry for the quick response. The taxes reported in W-2 covers both shares withheld for taxes and reminding shares. You mentioned we do not need to do anything specially for shares withheld for taxes portion in our tax return. If we do not do anything for this. David — Take a step back and forget all these about shares. What problem will it cause if the answer is yes but RSU is not noticed in Box 12? David — Again, think cash bonus. You just say you were paid total X and you had total Y withheld.

How do you know whether the number of shares withheld is correct? If it was too much you get a refund when you file your taxes. If it was too little you pay the difference when you file your taxes. Hence, there are different vesting dates and vesting price per share. The only problem is that the step-by-step guide only allows me to enter 1 vesting price per share for the entire RSU sale transaction. How do I go about this so I can enter in TurboTax my real cost basis for each vesting?

Dee — Just as the screenshots shown in this article, one row for each vesting? My ex employer reported both vested and released shares. My company was bought out this December I sold non-qualifying stock options prior to my company being bought out.

These shares were included in my W2 income and taxed at that rate. Thereafter, the remainder of my restricted shares not included in W2 were vested and paid out. According to company documentation, of these new shares had taxes withheld. I do not think these were included in my W2 income. Another shares did not have taxes withheld. From my understanding, all of it needs to be placed in the Sale of Stocks portion of my software. If the B you received only had your strike price times as the cost basis, you will need to adjust it higher to the full price times the number of shares.

Even though it was for ESPP, the adjustment part is similar. You received the remaining shares. If you received a B for any sales, look carefully to make sure the cost basis is the price on the vesting date times the number of shares sold. If not, you will have to adjust again.

The included help in TaxCut was nearly useless, and of course I received no help from my employer. Your explanation made short work of the confusion. I find this very odd. I am trying to understand how so? So TurboTax says I have to pay taxes on the income. My brokerage account shows the shares sold to cover the taxes for vested shares and tax amount. Basic provides the tools for simple tax preparation while Deluxe includes more features to walk users through the filing process. Premier is billed as for "Investment and Rental Property" and builds upon the lower two levels with the addition of tools for income based on these sources.

The fourth available level is the Home and Business version which adds tools for self-employed filers. You can choose either Premiere or Home and Business for filings that include stocks. According to the TurboTax website, the Premiere edition of TurboTax includes tools for reporting your investment sales and cost basis. In addition, you can explore employee stock plans as well as tools to manage your k plan. And while income you make from the sale of stocks must be reported as another source of income, taxes paid on those sales differ depending on how many of your shares are sold and if they are sold at gains or losses.

According to Smart Money, selling higher-cost shares of stock can reduce the tax burden. TurboTax premiere will calculate your owed taxes regardless of how you have chosen to sell your stock options. When preparing to file taxes with TurboTax Premiere, start by gathering together all of the documents that track your investments.

Some employers use Incentive Stock Options (ISOs) as a way to attract and retain employees. While ISOs can offer a valuable opportunity to participate in your company's growth and profits, there are tax implications you should be aware of. We'll help you understand ISOs and fill you in on important timetables that affect your tax liability so . Sale of employee stock options. I exercised stock options from my employer in that I was granted in I made a profit on the Reviews: 1. Do I need to claim the investment amount on my tax return? Exercised stock options - transferred into TFSA investment account. Stock options were taxed on purchase.