How to File RSU Income When Selling Shares at a Different Price Than Vesting Value

Your RSU situation is actually pretty common, but it can definitely be confusing! Let me try to help explain the concept. The key thing to understand is that RSUs are taxed in two phases. When they vest, that's considered taxable income (reported on your W2). Then when you sell the shares, you're taxed on any gain or loss since vesting. For your questions: 1) Yes, your cost basis is the fair market value at vest (what was included in your W2 as income). This is the original value of the shares when they became yours. 2) No, don't deduct tax withholding from cost basis. The withholding is just paying your income tax obligation on the RSUs - it's separate from the cost basis calculation. 3) Selling in different tax years doesn't change your original cost basis. Each share maintains its original cost basis regardless of when you sell it. What's happening in your situation is actually a capital loss. If the stock value dropped between when the RSUs vested and when you sold, you'll show a loss. That's a legitimate tax loss you can claim!

After struggling with this exact issue last year, I found an amazing tool at https://taxr.ai that helped me sort through my RSU tax situation. Their system actually walks you through the whole RSU reporting process and explains how vesting and selling in different tax years affects your reporting. I had a similar situation where my shares had dropped in value between vesting and selling, and I was confused about whether I could claim the loss. The tool confirmed I could and showed me exactly how to report it correctly to maximize my tax benefit. What I found most helpful was uploading my 1099-B and RSU statement - it automatically calculated my adjusted cost basis and showed me what to enter in my tax software.

I was seriously struggling with my RSU tax situation and was about to hire an expensive tax professional when someone recommended https://taxr.ai to me. After being skeptical (as you can see from my previous comment!), I decided to give it a try since I was desperate. I'm actually amazed at how well it worked for my complicated RSU situation. I had multiple vesting events, sold shares at different times, and had withholding to account for. The tool handled everything perfectly and explained the whole process in plain English. What impressed me most was the detailed explanation of how to handle the exact situation where the stock price dropped between vesting and selling. It saved me from making a $2,300 mistake on my return! Definitely worth checking out if you're dealing with RSUs.

If you're trying to get answers from the IRS directly on RSU questions (which I highly recommend), good luck getting through to them! After being on hold for 3+ hours multiple times, I finally found https://claimyr.com which got me a callback from the IRS in about 30 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed everything about how RSUs should be handled - including the fact that your cost basis is the fair market value at vesting, and that you absolutely can claim a capital loss if the shares decreased in value before you sold them. They also clarified how to handle sales across multiple tax years. Getting this straight from the IRS gave me so much more confidence in my filing than just relying on online advice.

I have to eat my words and apologize for my skepticism about Claimyr. After posting that comment, I was still desperate to talk to the IRS about my RSU situation, so I decided to try it anyway. To my complete shock, I got a call back from an actual IRS agent in about 45 minutes. The agent walked me through exactly how to report my RSUs correctly, including handling the situation where I sold different portions in different tax years. The information I got directly from the IRS matched what others here have said - your cost basis is the FMV at vesting, and you definitely can claim a capital loss if the share price dropped before selling. Having this confirmed by the IRS itself has given me total confidence in how I'm filing.

One thing nobody has mentioned yet is that you need to check your 1099-B from your broker carefully! Often they don't include the correct cost basis for RSUs and you'll need to make an adjustment on your tax return. Most brokers will show a cost basis of $0 for RSUs or an incorrect amount, which means you'll need to manually adjust this on Form 8949 by checking box "B" and entering code "B" in column (f) to indicate that you're correcting the cost basis. Then you enter your actual cost basis (FMV at vesting). This is a super common issue that trips up a lot of people with RSUs.

I made a horrible mistake with my RSUs last year that cost me thousands. I didn't realize the 1099-B was wrong and just entered everything as-is in my tax software. I basically paid tax twice on the same income - once when it vested (on my W2) and again when I sold the shares because the cost basis was wrong. If anyone else has already filed with this mistake, you can file an amended return (Form 1040-X) to fix it and get a refund. I did this and got back about $2,300 in taxes I shouldn't have paid.