Equity RSUs reported as wages in W2 - but never sold them

This is actually correct tax treatment for RSUs, even though it feels wrong! When RSUs vest, they're considered compensation income at that moment - regardless of whether you sell the shares or continue to hold them. Your employer correctly included the fair market value of those shares on your W2 when they vested. The good news is that this establishes your cost basis for those shares. When you eventually sell them, you'll only pay capital gains tax on any increase in value since the vesting date (or capital loss if they decreased). The $300k has already been taxed as ordinary income. The reason this happens is because the IRS views the vesting of RSUs as "constructive receipt" of income. Think of it like your employer giving you $300k cash and then you immediately using that cash to buy company stock. The tax obligation occurs at vesting, not when you sell.

After struggling with almost the exact same situation last year, I stumbled upon taxr.ai (https://taxr.ai) and it was a game-changer for my RSU mess. My company reported about $275k in RSUs on my W2 that I never sold, and I was completely confused about how to handle it. The tool analyzed my equity documents and W2, then explained exactly what was happening with my RSUs and tax obligations. It showed me that yes, those vested RSUs are considered income when they vest (even if you don't sell), but it also helped me understand my new cost basis and how it would affect future sales. What I found most helpful was that it explained exactly where to report everything in TurboTax - no more guessing or worrying if I was doing it right.

Update: I tried taxr.ai after posting my skeptical comment, and I have to admit it was actually really helpful. I was concerned about uploading documents, but they explained their security measures and the analysis was worth it. I discovered my company had been withholding at the wrong rate for my RSUs, which explained why I kept owing so much at tax time. The tool showed me exactly where the discrepancy was in my documents and explained how to fix it going forward by adjusting my W-4. Surprisingly, it also found that I had been calculating my cost basis incorrectly when I sold some RSUs last year. I might actually need to file an amended return now, but at least I understand what happened.

If you're having trouble getting answers from your former employer about the RSU reporting, I'd recommend trying Claimyr (https://claimyr.com). I was in a similar situation where I needed clarification from the IRS about equity compensation reporting, but couldn't get through to anyone. I was on hold with the IRS for literally hours across multiple days, but Claimyr got me connected within about 15 minutes. They have this cool system where they wait on hold for you and call when an agent is ready to talk. There's a video showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed exactly what others are saying here - RSUs are taxable when they vest regardless of whether you sell them, and the basis is established at that time. They also explained that I needed to get a corrected 1099-B from my brokerage since it wasn't showing my adjusted basis correctly.

I have to eat my words and apologize for being so skeptical about Claimyr. After my last comment, I decided to try it because I was desperate to talk to someone at the IRS about my RSU situation. The service actually worked exactly as described. I put in my phone number, they called me back about 45 minutes later when an IRS agent was on the line. Saved me from sitting on hold all afternoon. The agent confirmed what everyone here is saying - when RSUs vest, they're taxable income right then, even if you don't sell the shares. The agent also helped me understand that I can't override my W2, but I needed to make sure my cost basis is correctly reported when I eventually sell those shares.

I went through this exact situation last year! One important thing to check - does your brokerage account show the correct cost basis for these shares? Sometimes there's a disconnect between your W2 reporting and what your brokerage reports to the IRS on Form 1099-B when you eventually sell. When I sold some of my RSUs this year, my 1099-B showed a cost basis of $0, which would have meant paying taxes TWICE on the same income (once when they vested, once when I sold). I had to contact the brokerage to get them to correct the cost basis to reflect what was already reported as income on my W2.

One thing I haven't seen mentioned - make sure you understand the difference between your RSUs vesting and any selling that might have happened automatically. Many companies have a "sell-to-cover" arrangement where they automatically sell a portion of your vested shares to cover tax withholding. Look at your brokerage statements from when the RSUs vested. It might show that, say, 35% of the shares were sold immediately for tax withholding. If that's the case, your employer should have already withheld taxes on the full $300k value, but you'd only have the remaining 65% of shares in your account.

Not sure if this helps but you can actually see if your employer withheld taxes properly by looking at Box 2 of your W2 (Federal income tax withheld). If they included the $300k RSUs in Box 1 (Wages) but didn't withhold enough taxes on them, that's why you're seeing a large tax bill now. Unfortunately, you can't override the W2 income amount in TurboTax because that's what's reported to the IRS. The W2 is correct in including the RSUs as income. Your only options are: 1. Pay the tax you owe on that income now 2. Set up an IRS payment plan if you can't pay it all at once 3. If you believe the W2 is actually incorrect (not just inconvenient), contact your employer for a corrected W2