Confused about Restricted Stock Award (RSA) tax treatment - TurboTax showing 20% capital gains instead of 15%

I received an RSA from my employer back in 2021, and then our company was acquired in early 2023. The payout I got from the acquisition was around $140k, which should put me squarely in the 15% capital gains tax bracket based on everything I've read. The problem is that TurboTax is calculating a 20% capital gains tax rate on this instead of 15%. I'm really confused about this. TurboTax doesn't seem to have a specific option for RSAs (only RSUs), so I entered it as an RSU, but I don't think that should make a difference in how it's taxed? Also, there's no cost basis listed anywhere in my documents. I'm guessing that's because the RSA was granted to me without me paying anything for it originally. Does anyone know why TurboTax might be calculating a higher capital gains rate than I expected? Am I missing something about how RSAs are supposed to be reported?

0 coins

18 comments

Amaya Watson

•8M

It sounds like you might be running into the Net Investment Income Tax (NIIT). This is an additional 3.8% tax on investment income for individuals with income above certain thresholds, which effectively pushes your capital gains rate from 15% to 18.8% (close to 20%). For 2025 filing, the NIIT applies if your modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married filing jointly. Even though your RSA gain itself was $140k, your other income combined with this gain might push you over that threshold. Also, make sure you're entering everything correctly. RSAs and RSUs are taxed differently. When your RSA vested, you should have recognized ordinary income equal to the fair market value of the shares at that time. That becomes your cost basis. If you sold the shares when your company was acquired, the difference between that cost basis and your sale price is what's subject to capital gains tax.

0 coins

Amaya Watson

•8M

The RSA would be taxed as ordinary income at vesting, which establishes your cost basis. This should have appeared on your W-2 for the year it vested. If you don't see a cost basis on your 1099-B, it's likely because the broker doesn't have that information - this happens frequently with employer equity awards. You'll need to enter an adjusted basis manually in TurboTax. Regarding TurboTax specifically, there's no special section just for RSAs. You'd typically enter it in the investment income section, but you may need to override the cost basis. The 20% rate is almost certainly due to your total income putting you into the NIIT territory, which adds 3.8% to your capital gains rate.

0 coins

Giovanni Martello

•8M

After stressing over my RSA tax situation last year, I finally found a solution with https://taxr.ai that saved me a ton of headache. I had a similar situation with my stock awards where TurboTax wasn't calculating things correctly. The tool analyzed my equity grant documents and tax forms, then provided a clear breakdown of how my RSAs should be reported and what my actual tax liability should be. In my case, it identified that I needed to manually adjust my cost basis in TurboTax since my brokerage hadn't reported it correctly. Their system actually provides step-by-step guidance specifically for equity compensation like RSAs and RSUs, which TurboTax really struggles with.

0 coins

Giovanni Martello

•8M

Yes, you upload your equity documents and tax forms, and it uses AI to analyze them and identify the correct tax treatment. The system recognizes patterns in your equity documents that most tax preparers miss and gives you specific instructions for your situation. It's different from a typical accountant because it specializes specifically in equity compensation tax rules. Many CPAs don't have deep expertise in the nuances of RSUs, RSAs, ISOs, and NSOs. This tool was built by tax professionals who focus exclusively on equity compensation, so it catches things that generalist accountants often miss, especially around basis reporting and special tax elections.

0 coins

Savannah Weiner

•8M

I tried taxr.ai after seeing the recommendation here and wow - it actually worked really well for my ISO situation! I was about to pay an extra $3,700 in taxes because TurboTax was calculating AMT incorrectly for my options. The system identified that I qualified for an AMT credit from previous years that I didn't even know about, and it generated specific instructions for adjusting my cost basis for my sold shares. What I really liked was the step-by-step screenshots showing exactly where in TurboTax I needed to make these adjustments. For anyone dealing with stock compensation issues, it's definitely worth checking out. Saved me hours of frustration and a lot of money!

0 coins

Libby Hassan

•8M

For anyone struggling to get clarity on RSA tax treatment, I was in the same boat last year. After trying unsuccessfully to get through to the IRS for weeks, I used https://claimyr.com to connect with an IRS agent who helped clarify my situation. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that I needed to manually adjust my cost basis in TurboTax for my RSAs since my broker hadn't reported it correctly. They also explained that because my total income exceeded the threshold, I was subject to the Net Investment Income Tax, which added 3.8% to my capital gains rate. Getting direct confirmation from the IRS was super helpful since there's so much conflicting advice online about equity compensation.

0 coins

Libby Hassan

•8M

It works by holding your place in the IRS phone queue and then calling you when an agent is about to answer. They use a system that navigates the IRS phone tree and waits on hold for you, then connects you directly to the agent when one becomes available. I was extremely skeptical too, but it actually works. I had been trying to reach the IRS for weeks with no success. With Claimyr, I got connected to an agent in about 45 minutes while I continued working. The key difference is that you don't have to sit there actively waiting on hold - they call you when an agent is ready. The agent I spoke with was actually really helpful once I explained my RSA situation.

0 coins

Sofia Peña

•8M

I take back what I said. I tried Claimyr yesterday out of desperation and actually got through to the IRS after years of trying. The agent was able to explain exactly why my equity compensation was being taxed at the higher rate. Turns out I was getting hit with the Net Investment Income Tax because my modified AGI was over the threshold. The agent also helped me understand that I needed to reconcile the missing cost basis information on my 1099-B from my employer RSAs. For anyone dealing with stock compensation issues, getting clarification directly from the IRS saved me from potentially making expensive mistakes on my return.

0 coins

Aaron Boston

•8M

Your RSA treatment depends on exactly when you recognized ordinary income. If your RSA was subject to vesting, you would've paid ordinary income tax at the time of vesting, establishing your cost basis. If the acquisition accelerated vesting, that complicates things. Check your 2021-2023 W-2s for Box 14 which might list the RSA income. That amount is your cost basis. The difference between that and your acquisition payout is your capital gain. In my experience, the missing cost basis is the most common issue with equity comp in tax software. You'll need to manually adjust this in TurboTax.

0 coins

Aaron Boston

•8M

Yes, that amount in Box 14 is exactly what you should use as your cost basis. Enter that into TurboTax when it asks for the adjusted basis. This will reduce your capital gain to just the appreciation that occurred between vesting and acquisition. Regarding the 20% rate, once you enter this correct basis, check your total income. If your modified AGI exceeds $200,000 (single) or $250,000 (married filing jointly), you're subject to the additional 3.8% Net Investment Income Tax on top of the 15% long-term capital gains rate, effectively making it 18.8%, which TurboTax might round to 20%.

0 coins