RSUs vested in 2023, did not sell; anything needed besides W-2?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
SwiftKey
Posts: 53
Joined: Fri Dec 15, 2023 6:46 am

RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by SwiftKey »

I see a fair bit of discussion on RSUs that vested and were sold, and making sure you use the correct cost basis for them (see e.g. viewtopic.php?t=370856). My question is slightly different:
  1. Employer uses E*TRADE for stock plan management
  2. I had RSUs vest in 2023
  3. The company withheld approximately 40% for tax purposes
  4. I did not sell the remaining RSUs, I am still holding them
Do I need to wait for anything from E*TRADE, or is all the relevant information (wages, income tax withheld, etc.) covered by my W-2?

I am otherwise ready to file my 2023 tax return, the only provider I haven't received any tax documents from (yet, at least) is E*TRADE. From the other threads, I'm guessing I may or may not receive a supplement from them; if my understanding is correct, that supplement only becomes relevant for the tax year I sell the RSUs.
93Boiler
Posts: 15
Joined: Sun Sep 13, 2020 8:24 pm

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by 93Boiler »

If you didn't sell anything, you should be good with your employer W-2 unless your vested RSU paid a dividend
Topic Author
SwiftKey
Posts: 53
Joined: Fri Dec 15, 2023 6:46 am

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by SwiftKey »

Excellent, thanks :)
investlikebogle
Posts: 63
Joined: Sat Dec 12, 2020 7:12 pm

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by investlikebogle »

Did your company sold RSU's for taxes?

You still need to report those transactions. Typically, the vesting and selling would happen the same day so your cost basis and proceed will be close enough with a few dollars difference. But those need to be reported as capital gain/loss (even if gain/loss was zero)
User avatar
mhc
Posts: 5202
Joined: Mon Apr 04, 2011 10:18 pm
Location: NoCo

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by mhc »

investlikebogle wrote: Sun Feb 04, 2024 1:08 am Did your company sold RSU's for taxes?

You still need to report those transactions. Typically, the vesting and selling would happen the same day so your cost basis and proceed will be close enough with a few dollars difference. But those need to be reported as capital gain/loss (even if gain/loss was zero)
I do not believe this is correct at least from my experience. The proof will be if you receive a 1099-B from the broker. I believe the shares withheld for taxes is some sort of bookkeeping magic where the shares from the RSUs are not released to you so they are never sold. I could be wrong, but I have never had to report those transactions because they do not show up on my 1099-Bs.

You only need to report when you sell. You will then get a 1099-B.
52% TSM, 23% TISM, 24.5% TBM, 0.5% cash
diy60
Posts: 917
Joined: Wed Sep 07, 2016 6:54 pm

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by diy60 »

mhc wrote: Sun Feb 04, 2024 10:14 am
investlikebogle wrote: Sun Feb 04, 2024 1:08 am Did your company sold RSU's for taxes?

You still need to report those transactions. Typically, the vesting and selling would happen the same day so your cost basis and proceed will be close enough with a few dollars difference. But those need to be reported as capital gain/loss (even if gain/loss was zero)
I do not believe this is correct at least from my experience. The proof will be if you receive a 1099-B from the broker. I believe the shares withheld for taxes is some sort of bookkeeping magic where the shares from the RSUs are not released to you so they are never sold. I could be wrong, but I have never had to report those transactions because they do not show up on my 1099-Bs.

You only need to report when you sell. You will then get a 1099-B.
I rec'd RSUs for over 20 years and this was my experience as well. Transactions were on the company side, everything I needed to know showed up in my paycheck and W2. There were no transactions to report other then when I sold my vested shares.
HawkeyePierce
Posts: 2341
Joined: Tue Mar 05, 2019 9:29 pm
Location: Colorado

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by HawkeyePierce »

diy60 wrote: Sun Feb 04, 2024 11:31 am
mhc wrote: Sun Feb 04, 2024 10:14 am
investlikebogle wrote: Sun Feb 04, 2024 1:08 am Did your company sold RSU's for taxes?

You still need to report those transactions. Typically, the vesting and selling would happen the same day so your cost basis and proceed will be close enough with a few dollars difference. But those need to be reported as capital gain/loss (even if gain/loss was zero)
I do not believe this is correct at least from my experience. The proof will be if you receive a 1099-B from the broker. I believe the shares withheld for taxes is some sort of bookkeeping magic where the shares from the RSUs are not released to you so they are never sold. I could be wrong, but I have never had to report those transactions because they do not show up on my 1099-Bs.

You only need to report when you sell. You will then get a 1099-B.
I rec'd RSUs for over 20 years and this was my experience as well. Transactions were on the company side, everything I needed to know showed up in my paycheck and W2. There were no transactions to report other then when I sold my vested shares.
This was not the case for the RSUs I received at a major tech company. We got 1099-B forms for the sell-to-cover transactions.
CeeKay1729
Posts: 56
Joined: Thu Aug 27, 2015 1:12 am

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by CeeKay1729 »

RSU vest is considered part of your W-2 ordinary income. It is include in your W-2 line items and part of the stocks that vest are withheld for taxes the same way your wages are. Nothing is needed from E-Trade.
Topic Author
SwiftKey
Posts: 53
Joined: Fri Dec 15, 2023 6:46 am

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by SwiftKey »

HawkeyePierce wrote: Sun Feb 04, 2024 12:25 pm
diy60 wrote: Sun Feb 04, 2024 11:31 am I rec'd RSUs for over 20 years and this was my experience as well. Transactions were on the company side, everything I needed to know showed up in my paycheck and W2. There were no transactions to report other then when I sold my vested shares.
This was not the case for the RSUs I received at a major tech company. We got 1099-B forms for the sell-to-cover transactions.
Well I guess this helps explain why I kept getting contradictory information when I was searching around. Assuming both of you are correct from your own experiences, I guess whether or not you get a 1099-B must come down to the stock plan administrator, the brokerage, the company, and how the plan is set up.

E*TRADE says brokerage and stock plan tax documents will be available Feb 15; I guess I'll just wait and see if I get a 1099-B or not :?
shess
Posts: 2141
Joined: Wed May 17, 2017 12:02 am

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by shess »

SwiftKey wrote: Sun Feb 04, 2024 1:11 pm
HawkeyePierce wrote: Sun Feb 04, 2024 12:25 pm
diy60 wrote: Sun Feb 04, 2024 11:31 am I rec'd RSUs for over 20 years and this was my experience as well. Transactions were on the company side, everything I needed to know showed up in my paycheck and W2. There were no transactions to report other then when I sold my vested shares.
This was not the case for the RSUs I received at a major tech company. We got 1099-B forms for the sell-to-cover transactions.
Well I guess this helps explain why I kept getting contradictory information when I was searching around. Assuming both of you are correct from your own experiences, I guess whether or not you get a 1099-B must come down to the stock plan administrator, the brokerage, the company, and how the plan is set up.

E*TRADE says brokerage and stock plan tax documents will be available Feb 15; I guess I'll just wait and see if I get a 1099-B or not :?
It is a definite "it depends" case. In some plans, the withheld RSUs happen BEFORE you receive them, in other plans you receive them then the brokerage sells to cover. The receive-then-sell case was common in the old days, but since the early 00's more companies have setup their plans to allow the withholding to happen before.

That said, also beware that the withholding is generally calculated according to some sort of regulation, and it may have little or nothing to do with your actual tax situation. So you may have a goodly chunk of additional taxes owed.
alexbogle
Posts: 278
Joined: Thu Sep 22, 2022 8:01 pm

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by alexbogle »

Nothing to report, just make sure you update cost basis when you do sell so you don't double pay taxes.
"Learn every day, but especially from the experiences of others. It’s cheaper!” -- Jack Bogle
Topic Author
SwiftKey
Posts: 53
Joined: Fri Dec 15, 2023 6:46 am

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by SwiftKey »

shess wrote: Sun Feb 04, 2024 1:23 pm That said, also beware that the withholding is generally calculated according to some sort of regulation, and it may have little or nothing to do with your actual tax situation. So you may have a goodly chunk of additional taxes owed.
Thanks for the heads up. In this case I can already see from the pay stub I received for the vesting (yes, I get a pay stub with only RSUs on it, and then they had their own YTD line item on all future pay stubs) that 40.9% of the vest was withheld and applied to federal, state, medicare, social security, and SDI; so I should be alright on that front.
User avatar
mhc
Posts: 5202
Joined: Mon Apr 04, 2011 10:18 pm
Location: NoCo

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by mhc »

SwiftKey wrote: Sun Feb 04, 2024 1:31 pm
shess wrote: Sun Feb 04, 2024 1:23 pm That said, also beware that the withholding is generally calculated according to some sort of regulation, and it may have little or nothing to do with your actual tax situation. So you may have a goodly chunk of additional taxes owed.
Thanks for the heads up. In this case I can already see from the pay stub I received for the vesting (yes, I get a pay stub with only RSUs on it, and then they had their own YTD line item on all future pay stubs) that 40.9% of the vest was withheld and applied to federal, state, medicare, social security, and SDI; so I should be alright on that front.
They probably withheld at the 22% level for federal. If that is your tax bracket you will be fine. If not, look into the safe harbor rules or increase your withholdings. Additional income can trigger lots of fun stuff like tax credit phaseouts, NIIT, additional medicare tax, ....
52% TSM, 23% TISM, 24.5% TBM, 0.5% cash
investlikebogle
Posts: 63
Joined: Sat Dec 12, 2020 7:12 pm

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by investlikebogle »

The RSU vest gets added in W-2.

Is your brokerage account showing a sale of stock to pay for taxes? Check your account activity.

If yes, you should get a 1099-B and you need to report the transactions.
Topic Author
SwiftKey
Posts: 53
Joined: Fri Dec 15, 2023 6:46 am

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by SwiftKey »

Following up: today, E*TRADE posted both a 1099-B for the sell-to-cover transactions (there were actually two for some reason, with slightly different sale price per share; lot splits I guess?) as well as the supplement detailing the adjusted cost basis information. The RSUs vested on 03/20/2023 and the sell-to-cover happened on 03/22/2023, so there was a small capital gain incurred (which exceeded the commissions and fees, for a net gain; although a small one).
shess
Posts: 2141
Joined: Wed May 17, 2017 12:02 am

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by shess »

SwiftKey wrote: Sat Feb 10, 2024 7:52 pm Following up: today, E*TRADE posted both a 1099-B for the sell-to-cover transactions (there were actually two for some reason, with slightly different sale price per share; lot splits I guess?) as well as the supplement detailing the adjusted cost basis information. The RSUs vested on 03/20/2023 and the sell-to-cover happened on 03/22/2023, so there was a small capital gain incurred (which exceeded the commissions and fees, for a net gain; although a small one).
Unfortunately, any system which vests the shares to you then sells to cover will have capital gains or losses. The basis value is calculated on a specific metric on the date of vest, while the sale price is the actual price sold for. I don't recall the actual calculation used, it's something like average of high and low, or average of open and close, or volume-weighted average - but it doesn't matter, because you can't choose it, and the basis and selling price will almost never be the same.

There are other systems which adjust the withholding BEFORE you receive the shares, which gets around this, but it requires a bit more sophistication on the setup end, because the company needs to realize the problem well in advance. I think those systems are also more complicated for the company (sell-to-cover is often implemented by the company's assigned broker as a "service" which they do in exchange for getting to market to the people receiving the shares).
User avatar
mhc
Posts: 5202
Joined: Mon Apr 04, 2011 10:18 pm
Location: NoCo

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by mhc »

SwiftKey wrote: Sat Feb 10, 2024 7:52 pm Following up: today, E*TRADE posted both a 1099-B for the sell-to-cover transactions (there were actually two for some reason, with slightly different sale price per share; lot splits I guess?) as well as the supplement detailing the adjusted cost basis information. The RSUs vested on 03/20/2023 and the sell-to-cover happened on 03/22/2023, so there was a small capital gain incurred (which exceeded the commissions and fees, for a net gain; although a small one).
Thank you for the update.
52% TSM, 23% TISM, 24.5% TBM, 0.5% cash
60B4E24B
Posts: 137
Joined: Tue Jul 16, 2019 8:55 pm

Re: RSUs vested in 2023, did not sell; anything needed besides W-2?

Post by 60B4E24B »

CeeKay1729 wrote: Sun Feb 04, 2024 12:48 pm RSU vest is considered part of your W-2 ordinary income. It is include in your W-2 line items and part of the stocks that vest are withheld for taxes the same way your wages are. Nothing is needed from E-Trade.
This depends on the company. I've worked for two large tech companies, and each vested the whole amount and then explicitly sold shares to cover the taxes. I got a 1099-B each year.
Post Reply