RSUs withheld during vesting tax question

Oracle
DcsB40

Go to company page Oracle

DcsB40
Mar 7, 2019 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

    Go to company page 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, 2019 1
    • Google / Product
      4pmCoffee

      Go to company page 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, 2019
  • Google / Eng
    yogi bear

    Go to company page Google Eng

    yogi bear
    Uncle Sam just collects his money, he gives 0 fuck about YOUR fairness.
    Mar 7, 2019 1
  • Google / Product
    4pmCoffee

    Go to company page 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, 2019 2
    • Square / Eng
      sj42hc

      Go to company page 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, 2019
    • Google / Product
      4pmCoffee

      Go to company page 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, 2019
  • It is unfair and company doesn't let me choose any other options.
    Mar 7, 2019 0
  • Google / Eng
    qYDgc2

    Go to company page 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, 2019 3