How is RSU income reported?
Table of Contents
How is RSU income reported?
RSUs aren’t taxable until they’re transferred to the employee. The fair market value of the stock becomes part of their wages for the year and is reported on their W-2 form at tax time. RSUs are considered income, so your employer must withhold taxes.
How do I report RSU sold to cover taxes?
If the only sales were share to cover, and you did not sell any of the shares received, you should not have to report it. RSUs are taxed when they vest. Income is reported on the W-2 and shares are withheld to cover tax on the shares. Nothing else is reported on the tax return until the shares are sold.
What does exercise and sell to cover mean?
Initiate an Exercise-and-Sell-to-Cover Transaction Exercise your stock options to buy shares of your company stock, then sell just enough of the company shares (at the same time) to cover the stock option cost, taxes, and brokerage commissions and fees.
Do RSUs have a cost basis?
In fact, the cost basis and RSU rules are incredibly straightforward: it’s the price the shares cost for normal market buyers the day they vested into your name. Before you file, double-check that the income from your vested RSUs reported on your W2 matches the cost basis on your Form 1099-B.
How is restricted stock awards taxed?
If you’re granted a restricted stock award, you have two choices: you can pay ordinary income tax on the award when it’s granted and pay long-term capital gains taxes on the gain when you sell, or you can pay ordinary income tax on the whole amount when it vests.
What do you do with RSU?
The relevant considerations are whether you should keep the shares and, if not, when to sell them. In the majority of cases, it’s best to sell your vested RSU shares as you receive them and add the proceeds to your well-diversified investment portfolio.
How do you manage RSU?
Sell to Cover or Net Issuance: Both involve selling vested shares of stock to cover the cost of the withholding tax. Remaining shares are given to the recipient. Same day sale: Sells all vested shares and uses part of cash proceeds to cover withholding tax. Remaining cash is given to the recipient.
