( hypothetic question to understand the tax implication of RSUs ) Suppose I receive 20 RSU in Jan with a price of $100. After taxing, I receive 12 RSU. Then I hold on to them after one year then sell them. The price then would be $120. Do I pay tax on the capital gain of the 12 RSU ( which is $20 x 12) or on the whole 20 RSUs? Thx
- Fitbit WishedU pay income tax for the 20 RSU at $100. U then pay long term capital gains tax for the $20 x 12 gain
- You were awarded 20 RSUs. Let’s say they vest and you get 15 RSUs after paying for tax by selling the 5 stocks. At the time of vesting, the stock price was 100 bucks. So far you don’t owe any tax.
Now you decide to sell these 15 stocks. The price at the time of selling is 120 bucks. The capital gains here is 15 * 20 bucks since you already paid taxes by selling 5 stock when they vested.
So you need to pay tax on 300 bucks which is over and above the tax you have already paid. If you decide to sell your stocks within an year of vesting, it’s considered short term gains and are taxed at 30%. Which will be 300 * .3 or 90 bucks.
If you sold these stocks after an year of vesting, these are considered as long term gains so you would be taxed at 15% or 300 * .15 or 45 bucks.
- No, 048jfo is right. Short term capital gains are taxed as ordinary income.
- New DvVM0012 obviously. however this is an idiot question. never hold RSUs. you paid the tax, sell them all.
if you really want to own the stock, buy it again using your brokerage account.
- Expedia / EngInTheDNAmoreRSU awards are again source of income. So you pay tax when RSUs get vested. Usually, tax is deducted at source.
Then, when you sell them, you pay tax on capital gains. And this tax will be on the actual profit you make by selling the RSUs.
Country may have different rules on long term capital gains though.
Say, you are sellling after holding for n years