RSU withholding percent
I found the I owe federal almost $50k tax. But when I check my eTrade confirmation, I am already withholding 22% federal, 6.2% social security, 1.45% Medicare, 10.23% state, 1.2% CA VDI, totaling 41%. If I increase federal withholding to 32% as some posts suggested, then my total withholding will be 51%. Is this correct? It means that I will be getting less than half of my RSU after tax!
Yes that is correct because your RSU income will mostly fall in the 32%+ marginal Fed tax bracket
Did you adjust the cost basis?
This, as cost basis for some of the transactions aren’t reported by default in which case you’d otherwise be paying taxes on the entire amount instead of the difference.
I do not see any cost basis for the RSU. The award price is $0 on the Etrade confirmation, I think because RSU is awarded (it is not like stock options)? How do I adjust the cost basis?
So you’re just now finding out how taxes work..
Social security is only for first $150k so you won’t lose that 6.2% for most of your income
But rest assured, Medicare tax is bigger after a certain income level lololol
I can confirm both of you are right. When I check my last vesting, the social security withholding is gone, but Medicare withholding rate increased to 2.35%! This sucks!
the 6.2% social security tax will max out at 147k for 2022 so I guess your base pay should cover most or all of that. So even with 35% marginal rate (upto 523k for single filing) you are getting over half of your RSUs (vs less than half)
Have you talked to a CPA?
W2 TC? And are you in CA? I’m in similar situation 😟
Yes, that’s is the reality