3 ms·

Perhaps this only happened to me from the difference in market fluctuations in the day or two between vest and the sale (this happened to be in 2020 when my com

by beau_g 3y ago

Perhaps this only happened to me from the difference in market fluctuations in the day or two between vest and the sale (this happened to be in 2020 when my company was on a heater). Or maybe etrade allows you to sell shares from a different grant than the one vesting to cover and I didn't realize? In either case in 2020 it seemed like I got some rich guys W2 instead of mine and most of my sales were just sell to cover. I find it ultimately more simple to do the tax payment in cash rather than also involving a stock sale on top. Interesting you company mandates sell to cover, or do you just mean that is the default?

sokoloff 3y ago
If you sell RSUs immediately upon vesting, there is no capital gains, only ordinary income. What likely happened is that the supplemental withholding rate (22% for supplemental income up to $1 million, and 37% for income exceeding that amount) was lower than your marginal tax bracket, and the tax you owed was a result of the supplemental income (the RSUs) incurring more tax liability than was withheld for them.
kyteland 3y ago
Something that commonly happens is that your brokerage sent you the cost basis for those sales at $0 on your 1099 form. There's typically an adjusted cost basis buried on their website which is what actually needs to be entered into your tax software as the cost basis, not $0. So say you had $50k in stock vest and you sold $10k to cover the income tax. It's likely that when you import your 1099 that the cost basis is set to $0 on the $10k which if treated as a gain is a $2k-$3k tax bill. But if you find the adjusted cost basis and enter it the taxes drop to essentially $0. So if you've experienced a huge, unexpected tax bill from RSUs vesting, go back and look at your tax return. If you see a $0 cost basis on the form then you overpaid. It may not be too late to amend your return and get it back.
- JoshTko 3y ago
  This.
- sublatio 3y ago
  Yes, you likely will get a supplemental document to your 1099 from etrade (or whoever) with the correct cost basis.
- jjav 3y ago
  > Something that commonly happens is that your brokerage sent you the cost basis for those sales at $0 on your 1099 form. Can't emphasize this enough. Etrade does this, which is maddening. The form they send has the wrong numbers (zero cost basis). There's another form buried in their website where you can get the actual cost basis. Must use that one, otherwise will massively overpay taxes. Why Etrade why.
  - PopAlongKid 3y ago
    It's not Etrade, it is the IRS instructions for Form 1099-B, Box 1e (cost basis). "If the securities were acquired through the exercise of a compensatory option, the basis has not been adjusted to include any amount related to the option that was reported to you on a Form W-2."*

by beau_g 3y ago

sokoloff 3y ago

If you sell RSUs immediately upon vesting, there is no capital gains, only ordinary income. What likely happened is that the supplemental withholding rate (22% for supplemental income up to $1 million, and 37% for income exceeding that amount) was lower than your marginal tax bracket, and the tax you owed was a result of the supplemental income (the RSUs) incurring more tax liability than was withheld for them.

kyteland 3y ago

Something that commonly happens is that your brokerage sent you the cost basis for those sales at $0 on your 1099 form. There's typically an adjusted cost basis buried on their website which is what actually needs to be entered into your tax software as the cost basis, not $0. So say you had $50k in stock vest and you sold $10k to cover the income tax. It's likely that when you import your 1099 that the cost basis is set to $0 on the $10k which if treated as a gain is a $2k-$3k tax bill. But if you find the adjusted cost basis and enter it the taxes drop to essentially $0. So if you've experienced a huge, unexpected tax bill from RSUs vesting, go back and look at your tax return. If you see a $0 cost basis on the form then you overpaid. It may not be too late to amend your return and get it back.

JoshTko 3y ago
This.
sublatio 3y ago
Yes, you likely will get a supplemental document to your 1099 from etrade (or whoever) with the correct cost basis.
jjav 3y ago
> Something that commonly happens is that your brokerage sent you the cost basis for those sales at $0 on your 1099 form. Can't emphasize this enough. Etrade does this, which is maddening. The form they send has the wrong numbers (zero cost basis). There's another form buried in their website where you can get the actual cost basis. Must use that one, otherwise will massively overpay taxes. Why Etrade why.
- PopAlongKid 3y ago
  It's not Etrade, it is the IRS instructions for Form 1099-B, Box 1e (cost basis). "If the securities were acquired through the exercise of a compensatory option, the basis has not been adjusted to include any amount related to the option that was reported to you on a Form W-2."*