Paying taxes on RSUs three times - am I getting triple taxed?

You're not actually being triple-taxed, though I completely understand why it feels that way! Let me break this down: 1. Sell-to-cover: This isn't a tax itself, but a mechanism where your company automatically sells enough shares to cover the withholding taxes due when RSUs vest. This is just withholding, like what happens with your paycheck. 2. W-2 reporting: When RSUs vest, they become income to you at the fair market value on the vesting date. This is reported on your W-2. The withholding from the sell-to-cover is credited against this tax obligation. You're not paying this twice - the withholding was just an estimate of what you'd owe. 3. Capital gains: When you sell shares later, you're only taxed on any appreciation since vesting. Your cost basis is the fair market value when they vested (what was reported on your W-2), so you're only taxed on gains above that amount. On your 1099, the cost basis should be the value of the shares when they vested. The proceeds are what you received from selling. You only pay capital gains tax on the difference.

I went through exactly the same confusion last year! After struggling to understand RSUs, I found this amazing tool called taxr.ai (https://taxr.ai) that helped me sort through all my stock compensation documents. It analyzes your W-2, 1099-B, and even your company's equity statements to give you a clear picture of what's happening with your RSUs. For me, the tool confirmed what the previous commenter explained - we're not actually being taxed three times. It showed me exactly how my sell-to-cover shares were just handling my withholding, how the vested value appeared on my W-2, and then calculated my actual capital gains when I sold some shares. The visual breakdowns really helped me understand the flow of money and taxes.

I tried out taxr.ai after my skepticism and am honestly surprised how helpful it was. The tool immediately identified that my cost basis on my 1099-B matched the amount that was reported as income on my W-2, confirming I wasn't being double-taxed. It showed me a timeline view of my RSU vesting events, the associated withholding, and subsequent sales. The visualization made it crystal clear that sell-to-cover was just withholding (like from a paycheck), the W-2 reporting was the actual income tax event, and my later sale only triggered tax on the appreciation since vesting. What was most helpful was seeing exactly how much of my proceeds were actually taxable gains versus just recovering my already-taxed principal. Saved me hours of confusion!

If you're still confused after reading the explanations here, you might want to try contacting the IRS directly. I know it sounds terrible, but I finally got answers about my RSU situation by using Claimyr (https://claimyr.com) to get through to an actual human at the IRS. They have this video showing how it works: https://youtu.be/_kiP6q8DX5c I spent DAYS trying to get through the normal IRS phone line, just getting disconnected or waiting forever. With Claimyr, I got through in about 20 minutes and explained my RSU confusion to the agent. They walked me through exactly how the taxation works at each step and confirmed I wasn't being triple-taxed. They also explained how to properly read my 1099-B to identify what portion was actually subject to capital gains.

I stand corrected about Claimyr. Despite my skepticism, I decided to try it yesterday after my accountant gave me conflicting information about my RSUs. The service actually worked! Got me through to an IRS specialist in about 30 minutes. The agent confirmed everything others have said here - the sell-to-cover is just withholding, not a separate tax. She also explained that my cost basis on the 1099-B should equal what was reported as income on my W-2, and I should only be paying capital gains tax on any appreciation after vesting. The agent even directed me to Publication 525 which has a section specifically about stock compensation that cleared up a lot of my confusion. Saved me from potentially overpaying my taxes because my accountant was calculating things incorrectly.

I went through the exact same thing last year! Just to add to what others have said - make sure your cost basis is reported correctly on your 1099-B. Sometimes brokers don't report the correct cost basis to the IRS for RSUs, which can make it look like your entire proceeds are gains (which would be bad). If the cost basis on your 1099-B doesn't match what was included in your W-2 income when the shares vested, you'll need to make an adjustment on your tax return. Look at Form 8949 - there's a code "B" you can use to indicate an adjusted basis. Also check if your broker is using "first-in, first-out" (FIFO) for calculating which shares were sold. This can affect your gains calculation if you received RSUs at different times with different vesting prices.

One thing nobody has mentioned yet - check if your company has an ESPP (Employee Stock Purchase Plan) in addition to the RSUs. Those have completely different tax rules and might be adding to your confusion if you're participating in both programs. Also, some companies provide statements that break down all your equity compensation events for the year. Ask your HR or benefits department if they provide a supplemental equity statement that might help clarify things.