How Does Moving Between States Impact RSU Taxation? Understanding Multi-State Tax Implications for Equity Compensation

This is actually pretty standard practice for RSUs and it makes sense when you understand how they work tax-wise. RSUs are typically taxed based on your work location during the vesting period, not just where you are when they vest. The way most companies handle this is by tracking your work locations throughout the vesting schedule and then allocating the tax liability proportionally. So if you received a grant in Colorado, moved to California for 18 months, then returned to Colorado, you wouldn't be double-taxed on the full amount in both states. Instead, the taxation would be apportioned based on your time in each state. For example, if you spend 25% of the total vesting period in California and 75% in Colorado, approximately 25% of your RSU income would be subject to California tax and 75% to Colorado tax. Each state has different sourcing rules for how they calculate this, but that's the general concept. Also, most states offer tax credits for taxes paid to other states to avoid true double taxation. You might end up paying the higher of the two state tax rates overall, but not literally both rates combined. The reason this is significant is because California has one of the highest state income tax rates while Colorado is more moderate. Moving there even temporarily could increase your overall tax burden compared to staying in one state.

After dealing with a similar situation last year, I found this amazing service called taxr.ai (https://taxr.ai) that saved me from a massive headache with my multi-state RSU situation. I was in Washington, moved to California for 14 months, then relocated to Texas, and my RSU tax situation became a nightmare with three states involved. I uploaded my documents to taxr.ai and they analyzed my specific situation, breaking down exactly which portions of my RSUs would be taxed in which states, and how the credits worked to prevent double taxation. They even created a personalized tax strategy document that I could take to my accountant showing exactly how to allocate everything. The coolest part was seeing the visualization of how my vesting schedule overlapped with my residency in each state - it made a complex situation so much clearer. They even had specific guidance for California's aggressive tax approach to RSUs since they consider them partially earned during the period between grant and vesting.

I was initially skeptical about taxr.ai when I saw it mentioned here, but I decided to give it a try since my RSU situation was getting really complicated after moving from Massachusetts to New York and then to Washington. I'm honestly shocked at how helpful it was. The system generated a detailed analysis showing exactly what percentage of each vesting event would be taxable in each state based on my residency timeline. It even identified a mistake in how my employer was planning to report my RSU income to Massachusetts that would have resulted in overreporting about $22,000 of income there. The document it created broke down the allocation method used by each state, which I forwarded to my company's payroll department and they actually corrected the W-2 withholding allocations before they became a problem. My tax preparer said it was the most helpful documentation she'd ever received for a multi-state equity situation. Just wanted to share my experience since I went from skeptic to believer pretty quickly!

I've been dealing with a similar RSU interstate tax situation for the past two years, and the absolute worst part was trying to get through to the California tax department (FTB) to get clarity on their sourcing rules. I spent literally weeks trying to get someone on the phone who understood equity compensation. If you're going through this mess, I'd highly recommend checking out Claimyr (https://claimyr.com). I heard about it from my tax advisor, and it's basically a service that navigates the phone systems for state tax departments and the IRS, then calls you when they've got a human on the line. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was able to get through to an FTB specialist who actually understood RSU taxation in less than an hour, compared to the 15+ attempts I made on my own. They helped confirm the exact allocation method California would accept for my situation, which gave me the confidence to file correctly without fear of an audit.

I was completely skeptical about Claimyr when it was mentioned here - it sounded like one of those "too good to be true" services. But after three frustrating weeks of trying to reach someone at the California FTB about my RSU allocation situation, I was desperate enough to try anything. I'm shocked to report that it actually worked exactly as promised. I submitted my request through their system, and about 40 minutes later got a call connecting me directly to a California tax specialist. The person I spoke with was able to confirm exactly how California would treat my RSUs that were granted in Washington but vested while I was temporarily working in California. What would have probably taken me another month of attempts took less than an hour. I've since used it twice more to get through to the IRS about a separate tax issue, and both times I was connected within about 25-30 minutes. I've become the person recommending it to everyone I know who's dealing with complex tax situations.

Just to add some additional context based on my experience as someone who's moved between 4 states in 5 years with ongoing RSU vesting: 1. Make sure your company's HR system accurately reflects your work location history. Some companies are sloppy about tracking this and might just use your current location for all tax reporting. 2. Keep extremely detailed records of your physical work location by day/week. If you're audited (which is more likely with multi-state situations), having a calendar showing where you physically worked can save you thousands. 3. If you're moving to California even temporarily, be VERY careful. California is notoriously aggressive about claiming tax jurisdiction over equity compensation and has special sourcing rules different from most other states. 4. Consider consulting with a tax professional BEFORE your move, not after. There might be strategies to minimize the impact, like timing your move right after a vesting event rather than right before one.

Has anyone used services like Taxr.ai or Claimyr in conjunction with TurboTax or H&R Block? I'm trying to decide if I need to bite the bullet and pay for a CPA this year because of my RSU situation. I moved from Washington to Texas midway through my vesting schedule and I'm worried about messing up the allocation.

I went through a very similar situation when I moved from Oregon to California temporarily for work. The key thing to understand is that your company's memo is actually being conservative and accurate - this is standard practice, not something unique to your employer. Here's what I learned from my experience: California will indeed claim taxation rights on RSUs based on your work location during the vesting period, but it's proportional. Since you're only planning to be there for 18 months out of your 4-year vesting schedule, roughly 37.5% of your total RSU value would be subject to California taxation. The good news is that you won't be double-taxed on the same income. Both Colorado and California have provisions to prevent true double taxation through tax credits. You'll likely end up paying whichever state has the higher tax rate on that income, but not both rates combined. My advice: definitely consult with a tax professional before making the move. They can help you understand the exact implications and potentially time your move strategically. Also, keep meticulous records of your work locations and dates - this documentation will be crucial for proper tax allocation and could save you thousands if there are any disputes later.