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How are RSUs taxed? I was granted RSUs at time of employment…

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How are RSUs taxed? I...
How are RSUs taxed? I was granted RSUs at time of employment and they have been vesting. How does the tax work as they vest?Also, are there any things to be aware of when selling the RSU (i.e. in contrast to ESPP which have an 18month hold time for capital gains). Are there any quirks for RSUs?Thanks
Submitted: 4 months ago.Category: Capital Gains and Losses
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Answered in 4 days by:
3/21/2018
Tax Expert: Marcia Mitrano,
 replied 3 months ago
Marcia Mitrano
Category: Capital Gains and Losses
Satisfied Customers: 62
Experience: Marcia M Mitrano, CPA at Marcia M Mitrano, CPA
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Hello.

In regard to RSU:

Restricted Stock Units are normally not taxed at the time of the grant. (There is an option to pay taxes at the time of grant, though taxes would be paid out of pocket.) Instead, the employee is taxed at vesting. Your taxable income is the market value of the shares on the vesting date. You have compensation income subject to Federal and employment tax (Social Security and Medicare) and any state and local tax. Typically at vesting, enough shares are held to cover the related taxes. The employer includes the fair market value of the total vested shares on your W-2, as well as taxes withheld (paid from shares withheld). When the remaining share are sold your cost basis will be the fair market per share value at vesting. An adjustment may need to be made to the basis provided by the broker.

Hopefully, this answers your question.

Thank you,

Marcia M Mitrano

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