I've read some articles about the matter and want to make sure I understand correctly. RSUs count towards your taxable income. They are taxed at vesting. They are taxed when you cash out. So you stand to lose over 50% of that portion of your TC? Wtf uncle Sam?!
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You pay taxes on the value at vest, at ordinary income rates. If you were granted $100 in stocks, on vest date you'd pay tax on $100, leaving (approx) $60. If you reinvest that $60 and it climbs to $65, you pay tax on the $5 gain. If you sold in less than 1 year, you pay ordinary income rates (your marginal tax bracket). If you hold for over a year, you pay capital gains rates. You do not pay tax on the $60 again.
I see, so you pay capital gains tax on the delta if it is positive. Still, that's rough man.
Uh. Why is that rough? You will pay capital gains on any realized gain, including on whatever diversified stock(s) you buy and then sell later. I don’t think you’re quite getting it.
Technically it's not taxable at vest but at delivery of shares. Some companies only deliver shares after lockup ends 6 months after IPO. But for public companies, it's all the same.
Yup it’s rough because all of the shares are taxed at vesting price at ordinary income taxes regardless of what happens to the stock itself. Meaning if you got granted $100 per share and it goes up to $200 when it vests, you pay ordinary income tax on all $200. Private equity gets to call appreciation during vesting time ‘carried interest’ and it pretty much means they pay ordinary income taxes on $100 and then capital gains tax on the other $100 in gains. We don’t get the same treatment because we’re politically weak.
It's just income. As always tc is for beginners. Focus on business and passive income.
vest price taxed as income. capital gains taxed as capital gains
Precisely Vest price taxed as income If there is additional gains on top of that before you sell, then those gains are then taxed as capital gains.
Just going off of what I’ve read Correct me if I’m wrong please