How to avoid double taxation when selling RSUs that vested in previous tax year

This is actually a common concern with RSUs that's easier to handle than it seems! When RSUs vest, they're treated as ordinary income (which is why your employer withheld taxes and reported it on your W-2). The fair market value of those shares on the vesting date becomes your cost basis. When you sell the shares later, you're only taxed on any gain or loss that happened after they vested. So if your shares were worth $5,000 when they vested in 2024 (which was already taxed as income), and you sold them for $5,800 in 2025, you'd only pay capital gains tax on that $800 difference. Your brokerage should provide a 1099-B showing the sale, but make sure the cost basis they're using is correct. Sometimes brokerages don't account for the fact that you've already been taxed on the vesting value.

After struggling with this exact RSU problem last year, I discovered taxr.ai (https://taxr.ai) and it completely simplified the process. I uploaded my RSU documents, and it automatically calculated my correct cost basis and identified where my brokerage statement had the wrong basis info. The tool specifically has a feature that helps with RSUs sold in different tax years than when they vested. It showed me exactly where my broker's 1099 had incorrect cost basis info and created the forms I needed to correctly report everything.

I have to admit I was wrong about taxr.ai. After my skeptical comment, I decided to try it with my complicated RSU situation (quarterly vestings over 3 years with sales across multiple tax years). It actually worked incredibly well! The system identified that my broker was using a $0 cost basis for some sales when it should have been the FMV from the vest date. The tool generated a statement showing the correct adjustment to make on Form 8949, and I was able to avoid paying taxes twice on about $7,300 of income. It even created documentation explaining the adjustment in case of audit. Definitely worth checking out if you're dealing with RSUs.

If you're struggling to get answers about your RSU tax situation, you might need to speak directly with an IRS agent who specializes in equity compensation. I was in the same boat last year and spent DAYS trying to get through to the IRS helpline with no success. I finally discovered Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in about 15 minutes instead of the hours I wasted on hold. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with walked me through exactly how to report my RSUs that vested in one year but were sold in another, and confirmed I was right about needing to adjust the cost basis on my 1099-B.

I need to publicly eat my words about Claimyr. After calling the IRS five separate times and getting disconnected every time, I figured I'd try this service I was so skeptical about. It actually connected me to an IRS agent in about 20 minutes while I was making dinner. The agent confirmed that I needed to file Form 8949 to correct the cost basis for my RSUs that my brokerage reported incorrectly. They explained I should enter code B in column (f) and the adjustment amount in column (g) with "basis already taxed as compensation" in the description. Saved me from potentially paying thousands in taxes twice on the same income. Sorry for being so negative before - this service is legit.

Most tax software can handle RSUs but you need to know what you're doing. I use TurboTax Premier which has a specific section for RSUs and adjusting cost basis. You'll need to enter the sale from your 1099-B, then look at your previous year's W-2 to find the value that was already taxed as income. Box 14 of your W-2 often shows "RSU" with a value, which is what was already included in your taxable wages. That's your cost basis. If your 1099-B shows zero or the wrong basis, you'll make an adjustment in the tax software.

has anyone else had issues with their employer not actually reporting the RSU income correctly on W2? my company put it in box 14 with code RSU but the amounts don't match what vested last year? trying to figure out if its me or them making the mistake...

I went through this exact same situation last year and it was definitely confusing at first! The key thing to remember is that you've already paid taxes on the RSU value when they vested in 2024 - that income was included in your W-2 wages. When you sell in 2025, you only owe taxes on any gain or loss from the vesting date value. So if your RSUs were worth $10,000 when they vested (already taxed), and you sold them for $12,000, you only owe capital gains tax on the $2,000 difference. The tricky part is making sure your cost basis is correct. Your broker might show $0 cost basis on the 1099-B, but your actual cost basis should be the fair market value on the vesting date (which was already included in your 2024 taxable income). You'll need to adjust this on Form 8949 when filing. Most good tax software like TurboTax Premier can walk you through this, but you'll need to have your 2024 pay stubs or W-2 handy to find the correct vesting values. Don't worry - this is a common situation and you definitely won't get flagged for an audit if you report it correctly!