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How to report RSU that were sold to cover taxes? I have done extensive research and I see multiple options on turbotax to do this each leading to different tax due amount

Forum|Forum|6 years ago
June 1, 2019
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My broker reports RSU transactions that were sold to cover taxes to IRS on 1099b (under box B) with cost basis 0

Now shall I show all these transactions used to witheld taxes on turbotax along with actual transactions that I did?

If yes, do I need to use the uncommon situation button and tell it that:

This Form 1099-B shows the Federal or State income taxes were withheld from the proceeds of this sale

and

The Form 1099-B shows an incorrect cost basis.

OR

I do not add these transactions and then while I am adding my actual transactions I use the option "I have sales from an Employee Stock Plan, including ESPP, NQSO, ISO, RS, and RSU" and then in interview process use "Shares Withheld (Traded) to Pay Taxes" to provide the RSU that were sold to cover taxes.

If I am using the second option the wages are matching my W2 but then I don't get the option to tell the value at which these sell-to-cover-tax RSUs were sold ? As the form where I enter "Shares Withheld (Traded) to Pay Taxes" only has option to enter market value when the shares vested.

TurboTax Deluxe Online

Best answer by TomYoung

If the 1099-B reports the sale of shares that were for taxes then you need to report that sale. The cash from the sale of shares sold "for taxes" was passed back to your employer, who paid the government, and included those amounts in the "taxes withheld" boxes of the W-2.

Since it's a Box B sale - basis not reported to the IRS - you simply enter the correct basis as you enter the sale in the spreadsheet-like, "fill in the boxes" default TurboTax entry form. Press "Continue" when you've entered the 5 pieces on information. You are done.

(I'm assuming, of course, that you DO KNOW your correct basis for the shares sold.)

Tom Young.

T

TomYoungAnswer

If the 1099-B reports the sale of shares that were for taxes then you need to report that sale. The cash from the sale of shares sold "for taxes" was passed back to your employer, who paid the government, and included those amounts in the "taxes withheld" boxes of the W-2.

Since it's a Box B sale - basis not reported to the IRS - you simply enter the correct basis as you enter the sale in the spreadsheet-like, "fill in the boxes" default TurboTax entry form. Press "Continue" when you've entered the 5 pieces on information. You are done.

(I'm assuming, of course, that you DO KNOW your correct basis for the shares sold.)

Tom Young.

T

TomYoung

"1099b does not mention that sale of shares is 'for taxes' it just shows the transaction which my employer did to cover the taxes."

I didn't say the 1099-B would have a notation of "sale of shares for taxes." In all respects it's just a regular 1099-B reporting your sale of stock. Accordingly, it has to be entered in the income tax return.

Understand that share number entered in the box "Shares Withheld (Traded) to Pay Taxes" has only one effect. It subtracts from the box above it - shares vested - to determine the number of shares available for sale.

The only way you can use the RSU step by step process - which is where you are are at when you see that "Shares Withheld (Traded) to Pay Taxes" box - is to report the shares sold for taxes as the number of shares vested, and leave the "Shares Withheld (Traded) to Pay Taxes" box empty. But that can create its own problem for you because TurboTax calculates its compensation, just like your employer, on the gross number of shares VESTED, not sold. So you have to make sure that you report at least one other sale - maybe even a 0 share sale, such that the number of shares vested reported to TurboTax equals the actual vesting.

There is no "income tax reporting" reason to use the RSU step by step interview except in two cases:

1) You don't know the basis for the shares sold or,
2) The employer didn't report the compensation income on your W-2.

G

gb1

It looks like I have the same problem as many people here: during the year I was granted RSU shares by my company every month and sold them.

My company does the sell-to-cover thing, to cover taxes in advance. I see the "Equity tax cover adv" entry eating up to 40%+ of my shares value 😞 . I am actually paid on the following month, already deducted that amount.

Now I received my 1099-b and the sell-to-cover entries are all there, but the corresponding taxes ARE NOT. Worst of all, I did the math on my W-2 and they are not on box 2 as well! Yes, you read it right, the taxes paid on the sell-to-cover shares are not reported on box 2 of my W-2.

Now my question is: how do I report the taxes already paid but not reported in W-2? I am using Turbo Tax Home and Premium 2023 Desktop.

Thank you.

My only problem was Cost Basis 0 on 1099-B

I simply overrode that number after import to match with N*StockPriceOnVestDate

In my case, there was a small loss for Sell-to-Cover shares because they were sold on the next day at lower SP.

Hope this helps someone.