Tax
Restricted Stock Unit (RSU)
A grant of company shares that vests over time and is taxed as ordinary income at vest.
RSUs are taxed as ordinary W-2 income on the FMV at vesting. The employer typically withholds shares to cover the tax (often at 22% federal supplemental, which is usually too low for high earners).
After vest, the employee owns the shares. Subsequent appreciation/depreciation is capital gain/loss, measured from the FMV at vest.
Common pitfalls
- Under-withholding at vest leads to large balances due at filing
- Mistakenly cost-basis-doubling on the W-2 income in the 1099-B reconciliation
Related service
See personal tax servicesHave a Restricted Stock Unit (RSU) situation in your business?
Federal, state, and local returns prepared and reviewed by a licensed CPA, with the planning done before year-end rather than after it.