Restricted stock units (RSUs) are a form of equity compensation for employees. It is a promise from your employer to give you shares in the company in the future. Over time, RSUs can become a significant part of your overall income and net worth.
What tax do you pay on RSU?
With RSUs, you are taxed when the shares are delivered, which is almost always at vesting. Your taxable income is the market value of the shares at vesting. You have compensation income subject to federal and employment tax (Social Security and Medicare) and any state and local tax.
Do you put RSU vested shares in your W2?
Her W2 shows the RSU’s as income, but I cannot confirm that the shares withheld to cover taxes (both Fed & State) are captured in the W2 as well. I received a letter from her employer showing RSUs vested and shares withheld, but this is not an IRS form and there is nothing that states the amount withheld for taxes is represented in the W2.
How to report RSUs or stock grants on your tax return?
If you don’t want cash withheld from your paycheck, you may be able to pay the tax by having your employer take it out of the shares. For example, if you need 10% tax withheld and receive 100 shares of stock, your employer may be able to liquidate 10 shares and give you a net grant of 90 shares. Got investments?
Where does income from RSU vesting go on taxes?
The income from RSU vesting and the associated tax withholdings are already included on your W-2, and you just use those numbers as-is. That’s all. Hope this is helpful to someone looking for info on the tax treatment and implications of RSU sales. If you are paying an advisor a percentage of your assets, you are paying 5-10x too much.
What happens when a company gives you a RSU?
If your company gives you an RSU, you don’t actually receive company stock. Rather, you receive units that will be exchanged for actual stock at some future date. Typically, the date you take ownership of the actual shares, known as the vesting date, is based on either time or performance.
