Are RSUs being double taxed? Question about 1099-B vs. supplemental W-2 reporting

The issue you're facing is very common with RSUs. You're not actually being double-taxed, but the reporting can make it seem that way. Here's what's happening: When your RSUs vest, the full market value ($5,200 in your case) is considered compensation income and included on your W-2. That's correct. And yes, your employer withheld taxes on that income. The problem is with the 1099-B. Brokerages often report a $0 cost basis on RSU sales because technically, your "cost" to acquire them was $0. But for tax purposes, your actual cost basis is the amount already included as income on your W-2 ($5,200). You need to manually adjust the cost basis on your tax return to match what was already reported as income. In TurboTax, when entering the 1099-B information, there should be an option to adjust the cost basis. Enter the amount that was included on your W-2 as the cost basis for those shares. After making this adjustment, your refund should go back to what you expected since you'll only be taxed on any gain (or loss) that occurred between vesting and selling - which should be minimal since you sold immediately.

I went through this exact same headache last year! After hours of googling and near panic about being double-taxed, I found out about taxr.ai (https://taxr.ai) which specifically analyzes RSU tax documents. They explained that when the 1099-B shows $0 cost basis, you need to manually adjust it to match the amount included as income on your W-2. Their system automatically identified the RSU vesting dates and corresponding W-2 income amounts, then showed me exactly where in TurboTax to make the adjustments. They even generated a custom letter explaining the adjustments in case of an audit. Saved me from overpaying about $600 in taxes because I would've just entered the 1099-B as-is.

I tried taxr.ai after posting my skeptical comment and I'm actually really impressed. My situation was more complicated with multiple vest dates and partial sales, and the tool immediately identified why my cost basis was wrong. It showed me that my brokerage had reported $0 for ALL my RSUs regardless of vest date, and calculated the proper basis for each lot. The instructions were super clear - even pointed out exactly where in TurboTax to enter the adjusted basis amounts. My refund went up by $830 after making the corrections! The explanation document they generated will be really helpful if I get any questions from the IRS since it clearly explains why my reported basis differs from the 1099-B. Definitely worth it for anyone dealing with RSUs or stock compensation issues.

If you're still having trouble with the IRS after filing, I'd recommend using Claimyr (https://claimyr.com). Last year I had a similar RSU issue and ended up getting a CP2000 notice from the IRS claiming I owed an additional $2,400 in taxes because they thought I hadn't reported my cost basis correctly. I tried calling the IRS directly but kept getting stuck on hold for hours. With Claimyr, they connected me to an actual IRS agent in about 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent reviewed my return right there on the phone and confirmed that my cost basis adjustment was legitimate. They closed the case immediately and I didn't owe anything extra. Saved me weeks of stress and potentially thousands in incorrect tax payments.

Alright, I need to eat my words from my skeptical comment. I was desperate after getting a CP2000 notice about my RSU sales, so I tried Claimyr out of desperation yesterday. I literally got connected to an IRS agent in 17 minutes while I was making lunch. I explained the RSU cost basis issue, and the agent immediately understood the problem. She confirmed that my adjustment was correct and that the CP2000 was generated automatically because the 1099-B showed $0 basis while my return showed the W-2 amount. She put notes in my file and told me exactly how to respond to the notice with a simple explanation letter. No amended return needed! Saved me $1,700 in alleged "unpaid taxes" and probably weeks of stress. I'm still shocked at how easy it was compared to my previous attempts.

Quick tip that saved me when dealing with this same RSU issue: keep records of your vesting statements that show the exact number of shares that vested and their value on vesting day. Those documents are gold if you ever get questioned. Also, make sure you're tracking any price difference between vesting and selling. If you sell immediately like most people do, this amount is usually tiny, but if there's even a small delay, you might have a small capital gain or loss to report on the difference.

For anyone using H&R Block software instead of TurboTax, the RSU adjustment is under "Investment Income" → "Stocks, Mutual Funds, Bonds, Other" → then when entering the 1099-B, there's an option that says "I need to adjust my cost basis." Select that and enter your W-2 amount. Made this mistake my first year with RSUs and had to pay an extra $1,200. Never again!

This is exactly why RSU taxation confuses so many people! You're absolutely right that it feels like double taxation, but you're not actually being taxed twice - it's just a reporting mismatch. Here's the key point everyone's touched on: your cost basis for tax purposes is the $5,200 that was already included on your W-2 as income, not the $0 shown on the 1099-B. When you adjust this in your tax software, you should see your refund go back to the expected amount. One thing I'd add - make sure you're looking at the right tax year. Since you mention 2023 RSUs, ensure the W-2 income and 1099-B sale are both from the same tax year. Sometimes there can be timing differences if shares vest near year-end but sell in January. Also, keep your vesting documentation! Your employer should have provided details showing the exact vesting date and fair market value. This becomes your cost basis and proves the adjustment is legitimate if the IRS ever questions it. The adjustment is standard practice and the IRS expects it for RSU sales. Don't stress about it looking suspicious - this is one of the most common stock compensation tax adjustments.