Estimated taxes for RSUs / stocks

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Estimated taxes for RSUs / stocks

Post by ThisJustIn »

I own a number of RSUs from 2 companies I worked at in the past, and I will be paid RSUs in my next company. I remember mentions of estimated taxes I have to pay for these RSUs, or otherwise I pay penalty during tax season. Questions here:

1) When RSUs are vested, is that when the tax clock starts? And does the tax clock at the end until end of the year?
2) How can I correctly estimate these taxes (and pay via IRS website)? I don't want to overpay (I know the extra money will be returned back to me, but there is an opportunity).
3) Are there taxes to be estimated for these stocks after tax season? For example, for RSUs there were vested 5 years ago, tax season was in 2016, and I'm guessing I already paid estimated taxes for these RSUs for the year they vested. Do I need to pay estimated taxes for the years following the vesting year? I guess not, but just checking.

I just want to prevent feeding the tax monster, I'm already paying more than my fair share of it. Given that my RSUs are higher than my base + bonus in my next role, I don't want to be paying extra estimated taxes.
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Re: Estimated taxes for RSUs / stocks

Post by WhatsIRR »

They count as regular income so you would pay estimated taxes at your marginal tax rate the quarter that they vest. I.e $100,000 vest and you are in the 32% bracket you’d need to pay $32,000 in estimated taxes.

You can usually select net shares and they will see a portion of your RSUs to pay the taxes. I have always used net shares to pay the taxes.

You only pay income tax when they vest and capital gains when you sell if they have appreciated.
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Alto Astral
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Re: Estimated taxes for RSUs / stocks

Post by Alto Astral »

When the RSUs vest, the administrator will sell a portion of it to cover the taxes. Basically it's income and its taxed as such. This is unless they allow you to send them a check for the taxes. The only tax you would pay on past RSUs is the gain. With the new company, sell the RSUs as soon as they vest . See: Sell Your RSUs As Soon As They Vest
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