27 June 2022 6:37

How do I calculate the cost basis of Restricted Stock Units (RSUs)?

Once again, your cost basis for the shares you sold is the amount your employer included on your W-2 for those shares, which is the closing price on the vesting date times the number of shares you sold for tax withholding ($50 * 41 = $2,050).

What is the cost basis of my RSU?

When you receive RSU shares, your “cost basis” in those shares is their market value on the day you received them. Cost basis is the tax accounting method used to keep track of the value of shares you’ve already paid tax on in part one above, and it’s used to calculate gain or loss on shares when you later sell them.

How do you calculate the value of RSUs?

As an example, if an employee is awarded 1000 RSUs at the time of her employment, and those RSUs become vested after five years, the value of those RSUs at the time they are vested is as follows: Stock Value = $20 per share. RSU Value (when vested) = $20 per share. Taxable income (when vested): $20 x 1000 = $20,000.

How are restricted stock units calculated?

Your company calculates the quantity of RSUs (usually based on the average stock price over the most recent 20-30 day period). If the stock price is $100, for example, you will receive 6,000 RSUs. But you’re not paid 6,000 shares on Day One due to the vesting schedule.

How are RSUs taxed?

With RSUs, you are taxed when the shares are delivered, which is almost always at vesting. Your taxable income is the market value of the shares at vesting. You have compensation income subject to federal and employment tax (Social Security and Medicare) and any state and local tax.

Do RSUs get taxed twice?

No, RSUs are not taxed twice. However, it can seem like RSUs are taxed twice if you hold onto the stock and it increases in value before you sell it. RSUs are taxed at the ordinary income tax rate when they are issued to an employee, after they vest and you own them.

How much tax do you pay on restricted stock units?

Since RSUs amount to a form of compensation, they become part of your taxable income, and because RSU income is considered supplemental income, the withholding rate can vary from 22% to 37%.

How is capital gains tax calculated on RSU?

You can calculate capital gain by deducting the market value of your RSU shares on the vesting date from the selling price. For instance, you sold your 200 shares above which were valued at $10 on the vesting date at $15.

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