RSU already included in W-2
My employer includes the bonus given as RSU on the W-2.
How to correctly import the data from E*Trade (who manages the RSU and provides tax forms) into turbo tax (or any other tax software) so it does not get double counted ?
The tax election for RSUs is Sell to Cover which means at vesting a certain amount of the stocks will be sold to pay taxes.
This is how E*Trade lists transactions
2017 FORM 1099?B: PROCEEDS FROM BROKER AND BARTER EXCHANGE TRANSACTIONS
In this list there are both transactions that are Sell to Cover and stock sales I actually made. The cost as you may see is 0 everywhere.
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Restricted stock units (RSUs) are fairly simple in terms of taxation. They are taxed on their fair market value (FMV) like regular income on the date they vest. After that, they become subject to normal capital gains rules, as if you had purchased the stock on the date of vesting.
It's typical for RSUs to be reported on your W-2. In my experience you won't have to worry about being double taxed because your brokerage will report that your cost basis is equal to the FMV on the date of vesting, and the date of acquisition is the date of vesting.
Unfortunately that doesn't seem to be the case here, it looks like E-Trade did not report a basis to the IRS. What you'll need to do is in TurboTax, look for an option that says "my basis needs adjustment" or something to that effect (it might force you to do this since it has no basis). Here is an article that describes the process for an employee stock purchase plan. You should have some sort of documentation stating the FMV on the date of vesting. Last resort, you should be able to figure it out from your payslips or W-2.
E-trade doesn't report the cost basis to the IRS on RSUs that I have seen.
Using sell-to-cover, your tax situation will look like this:
Assume /share
100 shares vest.
30 shares sold to cover taxes.
W-2 income = 00 (100*10) with 0 withheld for taxes (30*). In the eyes of the IRS, you earned this income of 00 on that day, you had taxes withheld on that day, but you didn't actually receive a check. Instead, you received 70 shares of stock.
At this point, you own 70 shares for which you have already had taxes withheld. I think of these as after-tax as I've already had the taxes withheld. It's the same as if I had taken 0 and invested in the stock after getting the money in my paycheck.
Now suppose shares go up from to .
Value of your 70 shares goes from 0 to 0.
You sell all of your shares and get 0.
Your taxes then look like:
00 income on W-2 from vest date. Just enter your W-2 as normal.
income on stock sale. Use 0 (- commission) as your basis and 0 as your sale price.
The 00 is only taxed once, on your W-2.
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