Can you donate newly vested RSUs to avoid capital gains tax?

Yes, you can donate your newly vested RSUs directly to charity to avoid capital gains tax, but there's an important nuance here. When RSUs vest, they're considered income at that point and you'll owe ordinary income tax on the value at vesting - this happens regardless of whether you sell or donate them. The capital gains advantage only applies to any appreciation that happens AFTER they vest. If you donate them right after vesting, there's probably minimal appreciation, so the capital gains benefit is pretty small. If you want maximum tax benefit, consider holding the shares until they appreciate significantly, then donate them. This way you avoid paying capital gains on the growth. But if charitable giving is your main goal and you want to donate now, you can still get a charitable deduction for the fair market value at donation time.

I just went through this exact same situation last quarter! After researching options I found an amazing tool called taxr.ai (https://taxr.ai) that analyzed my RSU documentation and showed me the optimal strategy for my situation. It actually confirmed what I was thinking - that donating newly vested RSUs isn't as advantageous as letting them appreciate first. The tool showed me that I'd still be paying ordinary income tax on the vested value regardless, but helped me understand exactly how to maximize my tax strategies with my equity compensation. It also showed me some interesting alternatives I hadn't considered for my specific tax situation.

Came back to update - I decided to try taxr.ai after my comment the other day. I was pretty blown away by how different it was from regular tax software. I uploaded my RSU documents and got really specific guidance about tax implications based on my vesting schedule. For my situation, it actually showed that donating immediately after vesting did make sense because of my specific tax bracket and other deductions. It identified that I could bunch my charitable deductions this year to itemize, then take standard next year. The analysis saved me about $3,200 in taxes I would have otherwise paid. Definitely not the generic advice I was expecting.

If you're dealing with the IRS about RSU taxation or trying to get clarification on donation strategies, good luck getting through on the phone! After wasting HOURS trying to reach an IRS agent about a similar RSU donation question, I found Claimyr (https://claimyr.com) and tried their service. They actually got me a callback from the IRS in under 2 hours! You can see exactly how it works in this video: https://youtu.be/_kiP6q8DX5c - but basically they navigate the IRS phone maze for you. The agent I talked to confirmed that with RSU donations, timing is everything and explained some documentation requirements I needed to meet that weren't obvious.

I need to follow up on my skeptical comment. I actually tried Claimyr after posting because my situation with RSU donations was getting urgent. I figured it was worth a shot since nothing else was working. I'm honestly shocked to say it worked exactly as advertised. Got a callback from an IRS agent in about 90 minutes. The agent walked me through the exact documentation I needed for my RSU donation strategy and clarified some confusion about the holding period requirements that my accountant had gotten wrong. Saved me from making a pretty big mistake on my donation timing that would have cost me thousands. I've never been happier to be wrong about something!

Just wanted to add a personal experience - I donated some RSUs last year after holding them for 14 months. The key thing I learned is DOCUMENTATION. Make sure you have: 1. The fair market value on donation date 2. Records showing your basis (value at vesting) 3. Confirmation from the charity My accountant said the biggest issue with stock donations is people not having proper documentation, then getting flagged for audit. The longer you hold between vesting and donating, the bigger your tax benefit but also the more important documentation becomes.

Has anyone actually calculated whether it's better to just sell RSUs immediately upon vesting rather than hold them? My financial advisor keeps telling me to diversify away from my company stock because it creates risk concentration.

I actually just went through this exact scenario a few months ago! One thing that wasn't mentioned yet is the timing consideration for year-end tax planning. If you're already facing a big tax bill this year like you mentioned, donating the RSUs before December 31st could help offset some of that income with the charitable deduction. But here's what caught me off guard - make sure your brokerage can actually transfer the shares to your chosen charity efficiently. Some brokerages make it really cumbersome and it can take weeks to process. I almost missed my year-end deadline because of transfer delays. Also, if you're planning to donate regularly, consider opening a donor-advised fund account. You can dump all your RSUs there at once, get the immediate tax deduction, then distribute to charities over time. This gives you more flexibility than direct donations to individual charities.