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The face value of the RSU is treated as income (taxed) when it vests. If the stock then appreciates, you have to hold it for a year to get long term capital ga
by adam_arthur 4y ago
The face value of the RSU is treated as income (taxed) when it vests.
If the stock then appreciates, you have to hold it for a year to get long term capital gains tax on the appreciated amount (not the original vest amount).
So there's no tax advantage to waiting to sell. Only if you wait and it happened to go up in that time, and then you don't want to incur short term cap gains on that appreciation.
There is a big tax liability problem if you choose not to sell and the stock declines though. You may end up owing more in taxes than the stock is worth in some cases
- erik_seaberg 4y ago22% of my RSUs (the federal withholding rate on supplemental income) are sold rather than released to me, so only a huge crash could leave me in the hole on my 8%-ish estimated taxes.
- lupire 4y agoA huge crash like 70%, which happened this year?
- erik_seaberg 4y agoBigger; if I receive $78,000 out of $100,000 in shares and then they drop to $23,000, that still more than covers the $8,000 of under-withholding I need to pay. Granted, $15,000 after tax income would not be what I was hoping for. (I'm ignoring state income tax because my withholding on that happens to be correct.)