RSUs withheld during vesting tax question

Oracle DcsB40
Mar 7 25 Comments

So let’s say I get paid out 1,000 shares of RSUs and 40% is withheld (and sold presumably) to pay taxes so I only get 600 shares now. After doing taxes, I find my tax liability is only 32% so that means they over withheld 80 extra shares.

Let’s say the stock grew in price ($10/share) by the time I do my taxes...does that mean I missed out on $800 in capital gains because of extra overwithholding??

Seems unfair. Any way to stop share withholding during vesting (because I think company stock is gonna go up so I don’t want to sell just yet)? Is this usually a company policy or the trading firm you use? Oracle uses Fidelity and they didn’t ask me.

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TOP 25 Comments
  • Stripe ten nines
    You can buy stock in a publicly traded company whenever you want. If you want to hold a certain amount of your company’s stock, why are waiting for your RSUs to vest? RSUs are a cash bonus that happens to be paid in stock. They are W-2 income like a cash bonus. Thus, they are taxed like a cash bonus.
    Mar 7 1
    • Google / Product 4pmCoffee
      Absolutely- RSU is a cash bonus. Not selling it on the vest date = investing that bonus in your company’s stock.
      Mar 7
  • Google / Eng yogi bear
    Uncle Sam just collects his money, he gives 0 fuck about YOUR fairness.
    Mar 7 1
  • Google / Product 4pmCoffee
    You can choose to pay cash in taxes at vest, which will be 400 stocks worth of cash in your example so you retain all 1000 stocks. But how is it different than letting go of 400 stocks as taxes then buying 400 stocks of your company in the market.
    Mar 7 2
    • Square / Eng sj42hc
      The difference is OP may not have cash to cover the purchase (loaned to IRS interest free), in which case I'd suggest to reduce withholding on previous regular paychecks to offset that.
      Mar 7
    • Google / Product 4pmCoffee
      ^Sound advice for everyone who get tax refund at the end of year to use that money to do something for you, cover taxes for your RSU vesting = investing more in your company’s stock or any other investment.
      Mar 7
  • Walmart.com hwsidh
    It is unfair and company doesn't let me choose any other options.
    Mar 7 0
  • Google / Eng qYDgc2
    Lol good luck calculating the right amount of tax to pay quarterly. Because it's due quarterly, not end of the year.
    Mar 7 3
    • Oracle DcsB40
      OP
      Well if your vest schedule is 1x a year wouldn’t you just pay it for that quarter? It can’t be that hard right? I mean even if I have to hire a tax consultant for $200...still better than losing out on $800 because someone sold my RSUs prematurely.
      Mar 7
    • Google / Eng qYDgc2
      Shit, at Oracle it's once a year? Yeah, then for you it would be simple
      Mar 7
    • Microsoft HdnF84
      Any accountant can advise you how to do this for a few hundred bucks a year.
      Mar 7
  • Uber God.
    Curious of this as well
    Mar 7 2
    • Societe Generale
      bateman!

      Societe Generale

      PRE
      IBM, Ericsson
      bateman!more
      Me too
      Mar 7
    • Splunk Oloc61
      RSUs are taxed at a different percentage ( higher) than your regular base pay.
      Mar 7
  • Amazon Aidwn
    same question. Especially with AMZN stock....
    Mar 7 5
    • Oracle DcsB40
      OP
      I’ve heard from an amazon employee you have choices to not sell shares at time of vest and just pay the cash value later.
      Mar 7
    • Amazon sensei2
      Yep that is correct. Go to stockplan connect and update how you want to pay for taxes there.
      Mar 7
    • New / Eng pHXp44
      @sensei2 how many RSUs did you get when you joined?
      Mar 7
    • Amazon sensei2
      5 less than sensei1 :)
      Mar 7
    • New / Eng pHXp44
      Come on - it’s for science!
      Mar 7
  • Fidelity Investments benjobs
    Taxing RSUs at the time of vesting is mandatory. It’s up to the employer to offer different withholding options - not Fidelity - and most employers don’t. But if your employer hypothetically did allow alternative withholding options, it’s still on you to be proactive and call Fidelity before the vesting date to discuss those options and provide direction in advance. If the vesting date arrives and no direction has been provided by you regarding withholding, what and when exactly was Fidelity supposed to ask you?
    Mar 8 0
  • Oracle DcsB40
    OP
    Okay it seems I just need to withhold less on my regular paycheck to offset the crappy mandatory selling of stocks to cover tax. I currently take 2 allowances...are you allowed to take more?
    Mar 8 0
  • Amazon / Finance
    IPT5TH

    Amazon Finance

    PRE
    General Motors, Owens Corning, Scottrade
    IPT5THmore
    Talk to your broker.
    Mar 7 0
  • Marvell tyuio789
    Some companies allow you to choose how to pay taxes; withold stocks or pay cash. Talk to your brokerage firm
    Mar 7 0