How are RSUs taxed?

Google
UJBB44

Go to company page Google

UJBB44
May 9, 2021 6 Comments

I was allocated some pre-ipo RSUs. The company went public and the lockdown period ends in May. I will be selling all of them and want to understand how are they taxed so that I can save the money for next year's filing before investing the sum in other investments.

Let's say I was assigned the stock at a cost of $10 per share. The stock is currently $15. Will the taxes be deducted automatically at $15 price as soon as I am assigned the stocks? If I autosell the stocks do I owe any taxes if the taxes are pre-deducted before I am assigned the stocks in brokerage portal(Charles Schwab in my case)

#personalfinance #investments

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TOP 6 Comments
  • Amazon
    \AMZING

    Go to company page Amazon

    \AMZING
    You pay tax on the stock value you receive and then on the difference between the received price and the sell price
    May 9, 2021 1
    • Investment Bank
      Glinda

      Investment Bank

      PRE
      HP
      Glinda
      This is correct. You pay income tax on RSUs when they vest and then capital gains on the difference between that price and sales price.
      May 10, 2021
  • Learnt that hard lesson today while filing taxes. I was under the assumption that when RSUs vest “sell for taxes” would cover any tax and as long as I don’t sell them I don’t have to show any capital short term gain. Sadly I realized that’s wrong. When filing taxes even the RSUs you sell for tax show up as short term capital gain…sigh!!!
    May 9, 2021 0
  • RSUs is just an ordinary income. If the company gives you 500 shares then except to be taxed about the same tax rate as your income so you get 300 shares (if your ordinary income tax rate is roughly 40 percent). If you sell your 300 shares, you do not get taxed unless you earned some gain from the 300 shares, in that case, you pay tax only on the gain.
    May 9, 2021 0
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