Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills. When calculating your taxable gains and losses, you may be entitled to adjust this cost basis to include the amount of ordinary income that you recognized for the shares. Per Share Total Proceeds I think it is. I dont get all the notifications about cost basis changes which happened in tax tear I think its related to my questions above. Many thanks as always.
The proceeds from this sale also hit your W-2 in the year that the vesting occurs. These W-2 proceeds are your cost basis in the remaining shares. I have also always been curious why ETrade didn't report this cost basis, since they actually do know it and thankfully keep track of it so you don't have to try to figure it out from the vesting taxable event , but it comes as a subsection of your where the cost basis is not reported to the IRS. Wouldn't hurt to run it past your accountant, or others in your company that have done similar, just to be sure everything is squared away.
A special line on my pay stubs show how much income was the value of the rsu's when I vest. In the end you have to pay tax on it all. Income tax on the fair market value in the year it vests, plus cap gains on any gains from that point.
There are multiple easy mistakes to make here. The worst would be to pay income tax automatically at vesting and not realize that and pay cap gains on the whole value when you eventually sell.
If you are not comfortable with this I suggest you attempt to do your taxes yourself the first year with turbo tax and then get professional help insisting on someone with rsu experience, not the guy who just took the 8-week tax prep training class. Pay for the help the first year then you'll be more comfortable in later years.
The closest tax prep place to your company would probably be a good place to find someone with rsu experience. Especially if it's next door to an Etrade office. Last edited by ccieemeritus on Sat Feb 21, 5: I'll start with the non-RSU case, then compare it to your situation. This amount would be what eTrade calls the acquisition cost. And, again in the normal, non-RSU case, the amount you paid for the stock acquisition cost becomes the "cost basis" from which you calculate gains or losses.
In this case, you received shares but didn't actually PAY any money for them. Therefore eTrade lists your acquisition cost zero. However, grants of RSU's are always recognized as ordinary income like wages, a bonus, etc when you receive them. There are different ways this tax can be withheld or remitted to the government, but you'll still recognize the fair market value FMV for the RSUs on the day you receive them as income, and pay any appropriate taxes on it.
This what the "ordinary income recognized" line shows. This then used as the basis for calculating gains or losses. Turbotax drags you into ridiculous wizards which do not cover very common cases if you try to characterize such stocks as RSUs just And yet this is very simple, it works exactly like regular stocks that 'magically' appeared on your securities account at the cost basis corresponding to the moment in time where the options vested. Well, it isn't that magical as said amount goes on your W-2 as a taxable income, but this part is processed as regular income, nothing special.
Once the stock 'magically' appeared on your securities account, then it grows or it doesn't amazing what can happen in a day between vesting and a sell order! So yes, all you need to do is to figure out the cost basis and the corresponding date, and you're good to go.
Enters form which you should have received from your employer. And you should see 'restricted transactions', those are RSUs, and the total value column provides the cost basis you are looking for. See also the value date column. Hopefully, you will directly find the lots Turbotax is asking you questions about. At least, it was for me, I hope it will be for you. Also, there shouldn't be any weird steps necessary for TurboTax.
There's two taxable events to take care of: They or may not break out it with a separate code, but both the income and the withholding will be included in the total amount of wages and with holdings.
The basis will be Maybe you can tell us what each Box on the B says? Morgan Stanley Smith Barney appears to be incapable of reporting these correctly, year after year.
If the numbers are incorrect when you bring it over electronically, and there aren't a lot of transactions, you may find it easier to just input these manually. You have the IRS to thank for this confusion. The IRS issued a rule change which prohibits brokers from doing so. Here's is one link which I found http: From through , brokers had the option of making this adjustment for the employee and reporting the correct cost basis on Form B.
Under the new rules, brokers cannot make this adjustment on shares acquired on or after Jan. They can only report the unadjusted basis, or what the employee paid for the stock. To avoid double taxation, the employee must make an adjustment on Form It's not that Etrade does not want to provide the cost basis information. That just seems like more work for the tax payer AND the IRS, since more transactions will be flagged for review due to not matching the reported B information assuming I'm reading this correctly.
Wow, any speculation as to why they are forcing brokerages not to report what would be the correct basis I just realized that the same applies to stock options Therefore needs to be adjusted. Geez, how can the IRS justify their new rules?
I don't get it. You just saved me quite a few bucks on my taxes. If I got it right, that is. My company had a helpful note sent with ESPP information describing the change in reporting for You can look at the W2 and see what is happening, but it certainly seems more confusing to the taxpayer. And a very good discussion above which is also relevant for me re: I'm going to digest all this good info and perhaps ask a few more questions if needed.
My head is spinning on a sat afternoon, with all this complexity. This is a reflection on how complex our tax system has become, not anything else I added the date acquired and cost basis in TT based on evancox10's initial, clear, explanation. Added date acquired from the e-trade stmt. God knows why this wouldn't transfer automatically during the TT import. Added the cost basis based on the ordinary income recognized value, from eTrade.
I did not use any of the W2 data given to me by my employers 'Statement of taxable income', 'restricted transactions' section. I still don't understand whether i need to use this employer document for anything related to my RSU taxes. I don't see the OP transaction Date sold: Is this an employer miss for this RSU transaction?
For the other RSU transactions that were granted in , the a. I think i understand this. RSU's withheld for taxes as mentioned before here. I need a few double scotches. However, I did double check on my own RSU's how the tax withholding is handled. We use the same "sell shares to withhold" method.
However, the best way to think about this is to treat the sold shares as if they were never invested in the first place, but rather just received in cash.
Also, doing the cost basis on a per share method will make things easier. However, for all intents and purposes just treat this amount as "given" to you in cash, but sent to the IRS. As far as your tax return is concerned, those shares never really existed. To summarize so far: Alternative way to calculate this: Just multiply it by however many shares are sold to get the basis for the entire transaction. Hope this clears things up. I think I may have steered you wrong by saying the basis will be the amount recorded as W2 income.
This is only true on a per share basis. Sorry if I wasn't clear on this part. Not concerned about sell date either, in so far as the W-2 income and cost basis calculations are concerned. Difference between sell date and vest date is only going to determine whether or not the gain is long term or short term. Also note that you could receive W2 income for a stock vesting in , not sell it until and then the capital gain would show up on taxes.
I'm not too concerned about it, because I'll just be sure to double check every transaction anyways. I think I should be, but I want to understand in which circumstance would you NOT report ordinary income as part of the cost basis?More...