Amazon RSU Tax
How does taxation work on the RSU that are vested. Which of the below is a better option and why? 1. Sell Shares for Taxes Or 2. Pay by cash? I think 'Pay by Cash' is better since I get to choose what value I can sell the shares at a later stage, am I thinking this right? I recently joined Amazon. Thank you for sharing your thoughts. #tax #rsu TC: 250k
The tax is Calculated based on the price on the vesting date. If you think amazon is overpriced - then just sell now (and pay tax now itself) instead of owing to IRS for later and when the price goes lower, you’ll have to take money out of your own pocket because IRS thinks you made more money since the price was higher on the day of vesting. If you think the stock is underpriced then keep it, you’ll make the capital gain and it’ll reduce some of your tax burden since your tax calculations will be done at a lower price. Someone correct me if I’m wrong here.
It doesn't make a difference. You'll end up paying the same amount because all of it will be considered income + capital gains. Only difference is when you want to lose the money. If you do option 1, then you lose some shares immediately. But if the stock goes up you'll still have to pay gains on it. For option 2, you keep all your RSUs but just pay with it either when you want to sell it or pay for it out of pocket. This will be done when filing your taxes for the next year. Someone correct me if I'm wrong here though!
No you are right. Paying cash is the same thing as just buying Amzn for cash with the same amount you would have paid to cover
Thank you. So if I want to reduce taxes on any capital gains, it makes sense to not sell for Taxes, rather pay by cash and then sell after a year so it becomes long term, right
They are all the same. You can choose to sell-all and take the same money to buy back the dame shares at the same day
Don’t they automatically sell share for taxes? I don’t think you have an option, but anyone can correct me if i’m wrong
The default is sell shares but you can change it
You have an option to pay for coving taxes. As OP said default is sell to cover taxes.