Options Trading Tutorial

Restricted Stock Unit (RSU) Tax Reporting?

Like many companies mine issues RSUs (restricted stock units) in lieu of stock options. They are essentially shares of stock with a value of the date issued. When they were issued a portion of them were automatically sold to cover the taxes associated with them as they are income. When I received my W-2 this year in Box 14 it made a simple mention of 3,000 - RSU, which implies that I received 3,000 in income from RSUs. However, no mention was made of the taxes paid through unit sales. Finally the question... Do I need to add to my tax 1040 form income or taxes fields when filing? I have not sold them yet and some have not vested. Naturally, irs.gov and my local state (Mass) are useless. My tax software indicates that I should consult my tax professional. They all just run you in circles. Any ideas if (a) I need to add the amount of tax/income and (b) what boxes? Again I haven't sold anything... Thanks!

Public Comments

1. You should go back to the IRS.gov website and pull a schedule "D". This will allow you to report the income on stocks and bonds and also indicate the Fair market value and then if you took a loss or if there's a gain. Since they haven't vested - you would indicate the FMV and the loss.
2. Regarding restricted property: Generally, if you receive property for your services, you must include its fair market value in your income in the year you receive the property. However, if you receive stock or other property that has certain restrictions that affect its value, you do not include the value of the property in your income until it has substantially vested. (You can choose to include the value of the property in your income in the year it is transferred to you.) For more information, see Restricted Property in Publication 525. Dividends you receive on restricted stock are treated as compensation and not as dividend income. Your employer should include these payments on your Form W-2. Dividends you receive on restricted stock you chose to include in your income in the year transferred are treated the same as any other dividends. Report them on your return as dividends. For a discussion of dividends, see Chapter 8 of IRS Publication 17. For information on how to treat dividends reported on both your Form W-2 and Form 1099-DIV, see Dividends received on restricted stock in Publication 525.
3. I found a good explanation here: http://thefinancebuff.com/2008/02/restricted-stock-units-rsu-sales-and.html Use it at your discretion God luck with your taxes