This might have been discussed before but i couldn't find the answer upon quick search. When selling stocks (AMZN on Morgan Stanley), which one of the options below would make more sense assuming the same number of stocks is sold: 1. Selling RSUs that just vested (so that capital gains are almost non-existing hence no additional tax burden) 2. Selling RSUs that vested first chronologically that are older than a year (to pay at most 20% in tax on the capital gains) Also would selling too much stock in one year place you in an upper bracket or it typically doesn't matter much? Do you pace selling your stocks from an income/tax perspective? PS: Trolls welcome to participate
2 (only those that are older than a year), followed by 1
Thanks. That's what I was thinking too.
Yeah it will place you in a higher tax bracket. In Fidelity, you can select the shares you want to sell...makes the whole thing easier. I would just sell the older shares. As for #1 (I am not a tax person), but I think the withheld stock is just the required; you could owe more. This all could be different with the Trump tax plan.
You already got most of income recognized at the moment of vesting, so only additional capital gain will be added to your AGI. It is more the question what is your plan for remaining stocks - if you are going to sell just a little bit and keep rest - option 1 is a way to go.
Thanks. Indeed, AGI is set upon vest but given I expect around 80k of capital gain on the old ones, I wasn't sure whether it makes sense to pay tax on them in one year or spread them across several. My plan is to sell around 1/3 of the stocks and leave 2/3.
You're seriously trying to avoid capital gains tax by not having capital gains?
Agree. Seriously! I can't believe people still don't get what is capital gains tax
Would have been a fair point skurk except that you're missing the progression of AMZN stock. The earlier stocks i have vested at 400$. Stock now is at 1600. Your point would have been valid if I was expecting the stock to go up to 6400 or even cross 2000 soon for the newly vested stocks which I don't.
Don't hold RSUs after they vest, unless you would take a cash bonus and buy company stock with it. Because that's what you're doing when you hold vested RSUs. So my suggestion would be to sell all the vested RSUs you have and put the proceeds in betterment or something like that.
Thanks. Have you had an experience with betterment (I guess you meant the company?). I'm not that familiar with what they do.
Betterment basically invests your money, and they charge you a small percentage. That’s it. You don’t need to spend time managing your portfolio. I use Robinhood, but that requires some more attention. In any case, the central point is to invest that cash from vested RSUs according to your risk profile and investment goals, rather than in just one stock, unless that’s what you want.
Follow up question: Of your long term capital gain stock, would you sell the oldest (lowest cost basis assuming growth) and pay the highest tax, or sell slightly more recent (but still long term) and pay lowest tax? Intuitively, I'm thinking the latter, since paying less now means you can theoretically invest the difference, but maybe there are other nuances.
Just sell it all right now and pay the capital gains tax, and put it into a low fee diversified investment account. I'm sure you'll still have enough exposure to your company's stock.
RSU that had higher vesting price are riskier if price goes down. If you must sell one batch, go with the latest vested.
Auto-sell and diversify.
Thanks. You diversify in index funds?
Index funds are one of the easiest ways. It depends on what you want. I know most Amazon RSUs don’t vest evenly. Your situation may be different based on how well you think stock will perform. Either way you pay income tax when the stock vests.