First-time filing with RSU income - reported on W2 and 1099 with 0 cost basis... how do I file this correctly?
I just started a new job last year and received RSUs (Restricted Stock Units) as part of my compensation. I'm totally confused about how to handle this on my taxes. My employer included the RSU grants as income on my W2 with appropriate withholding, which makes sense. But now I also received a 1099 from my brokerage showing all my stock sales with a cost basis of ZERO! It seems like the same income is being reported twice. The brokerage did send me some supplemental paperwork showing the actual cost basis for each sale, but it's not reflected on the 1099 itself. I'm completely lost on how to handle this correctly. Do I need to manually subtract the cost basis from whatever gains are reported on the 1099, and only include that difference on my return? Has anyone dealt with this before? I don't want to pay taxes twice on the same income!
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Mason Kaczka
This is actually a common issue with RSUs. Here's what's happening: when your RSUs vest, they're considered compensation and included on your W-2. Then when you sell those shares, your broker reports the sale on a 1099-B, but often without the correct cost basis. The key is that you need to report the sale on your Schedule D and Form 8949, but you'll manually enter the correct cost basis from your supplemental statement. This prevents double taxation. When you input this into tax software, look for options to adjust the cost basis. The difference between your sale price and your cost basis is your capital gain/loss. Since the cost basis is usually the fair market value on the vesting date (which was already taxed as income), you're typically only paying capital gains tax on any appreciation that happened after vesting.
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Sophia Russo
•So if the shares went down in value between vesting and when they were sold, would that actually result in a capital loss that could offset other gains?
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Mason Kaczka
•Yes, exactly! If your shares decreased in value between vesting and when you sold them, you would report a capital loss. This loss can offset capital gains from other investments, and if your total losses exceed your gains, you can deduct up to $3,000 against your ordinary income. Any remaining losses can be carried forward to future tax years. For your second question, the supplemental statement from your broker is crucial because it contains the correct cost basis information you need. Without adjusting the cost basis on your tax return, you would indeed be taxed twice on the same income.
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Evelyn Xu
I went through this exact nightmare last year and wasted so much time trying to figure it out. Finally used https://taxr.ai to analyze all my RSU documents and it saved me from double-paying taxes on over $30,000 of income! The system automatically identified the RSU vesting dates, original cost basis, and calculated the actual capital gains correctly. What would've taken me hours to manually figure out took like 15 minutes.
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Dominic Green
•How does this actually work? Does it just explain what to do or does it actually fill out the forms for you? I've got a similar situation but mine also includes ESPP so it's even more confusing.
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Hannah Flores
•I'm skeptical. I've used three different tax software programs and none of them handled RSUs correctly without manual adjustments. How is this any different?
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Evelyn Xu
•It analyzes your documents and gives you the exact numbers to enter in your tax software. You upload your W-2, 1099-B, and any supplemental statements, and it identifies the RSUs, calculates the correct cost basis for each lot sold, and tells you exactly what to enter on Form 8949. For ESPP shares, it handles those too - it can distinguish between the discount portion (which is W-2 income) and any capital gains or losses from post-purchase price changes. What makes it different is it's specifically designed for equity compensation like RSUs and ESPP rather than general tax preparation.
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Dominic Green
Just wanted to update - I tried out taxr.ai after seeing it mentioned here. Uploaded my documents yesterday and it actually worked really well for my RSU/ESPP situation! It identified each transaction and separated the compensation element from the capital gains portion. Saved me a ton of headaches trying to calculate everything manually. My tax liability ended up being about $4,200 less than what my regular tax software was showing before I made the corrections!
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Kayla Jacobson
If you're still confused after trying to fix this yourself, you might want to just call the IRS directly for guidance. I know it sounds crazy, but I had a similar RSU issue and eventually just needed to speak with someone. I used https://claimyr.com and their video demo at https://youtu.be/_kiP6q8DX5c shows how it works. They got me through to an IRS agent in about 20 minutes when I had been trying for days on my own. The agent walked me through exactly how to report RSUs with the zero cost basis issue.
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William Rivera
•How does this service even work? The IRS phone lines are notoriously impossible to get through. Are they somehow jumping the queue or something?
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Grace Lee
•Yeah right. No way they can get you through to the IRS that fast. Last time I called I was on hold for over 2 hours before giving up. Sounds like a scam to me.
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Kayla Jacobson
•It uses an automated system that navigates the IRS phone tree and waits on hold for you. When an agent actually answers, you get a call connecting you directly to them. It's basically like having someone wait on hold for you. They use the same public phone numbers anyone else would use - no special access or queue jumping. The difference is their system can wait on hold indefinitely while you go about your day, and only calls you when there's an actual human on the line.
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Grace Lee
Came back to say I was totally wrong about Claimyr. After struggling with this RSU issue for another week, I got desperate and tried it. Got connected to an IRS agent in about 35 minutes (was told the wait would be 2+ hours). The agent confirmed exactly what others here said - I needed to report the sales on Schedule D/Form 8949 with the correct basis from my supplemental statement. She even emailed me some documentation about RSU reporting. Saved me from a huge headache!
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Mia Roberts
I've been dealing with RSUs for years and the way I handle it is: 1) Report the W-2 income as normal 2) On Schedule D and Form 8949, report each stock sale as shown on 1099-B 3) For each sale, check box "B" for "Basis reported to the IRS" and enter an adjustment code "B" to indicate that you're correcting the basis 4) Enter the correct basis amount from your supplemental statement 5) Calculate gain/loss using the corrected basis The IRS knows this is a common issue with RSUs and broker reporting.
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The Boss
•Do you know if it's the same process for handling ISOs? I have some Incentive Stock Options I exercised last year but haven't sold yet.
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Mia Roberts
•ISOs are handled differently from RSUs. With ISOs, you don't have any taxable income when they vest or when you exercise them (except for potential AMT implications). When you exercise ISOs, you'll want to keep careful records of your exercise price and the fair market value at exercise. No income shows up on your W-2 at this point. When you eventually sell the shares, you'll report the sale on your tax return, with your cost basis being the exercise price you paid. If you held the shares for both 1 year after exercise and 2 years after grant, the gain qualifies for long-term capital gains treatment.
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Evan Kalinowski
Has anyone used TurboTax for handling RSUs? It's giving me fits and I've spent like 3 hours trying to figure out how to enter this correctly.
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Victoria Charity
•I used TurboTax last year for my RSUs. When entering the 1099-B information, there should be an option to adjust the cost basis. Look for something like "This sale involves shares where the reported cost basis is incorrect" and it will let you enter the correct amount from your supplemental statement.
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Isabella Ferreira
This is exactly the situation I'm dealing with right now! My company's HR department told me that the RSU income would be "handled automatically" but they didn't explain that the 1099-B would show zero cost basis. I was panicking thinking I owed taxes on the full sale amount. Just to clarify for anyone else reading - the key thing to remember is that when RSUs vest, you already pay ordinary income tax on their fair market value at that time (shown on your W-2). That fair market value becomes your cost basis for the shares. So when you sell, you only owe capital gains tax on any appreciation above that vesting-day value. The zero cost basis on the 1099-B is just because many brokers don't track the correct basis for employee stock compensation. Always keep those supplemental statements they send you - you'll need them every year you have stock sales!
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