RSU VESTING issue - dealing with 24% backup tax withholding after failing to certify account

The good news is that you haven't permanently lost that money! The 24% backup withholding is just that - withholding. It's not an additional tax, just an increased amount held from your payment upfront. When you file your taxes for the year, all withholding (including this backup withholding) will be credited against your actual tax liability. The total withholding from your RSUs will be reported in Box 2 of your W-2 as federal income tax withheld. There won't be a separate line item specifically identifying it as "backup withholding" - it just gets lumped in with all other federal tax withholding. If more was withheld than you actually owe in taxes, you'll get the difference back as a refund. If the withholding wasn't enough to cover your tax liability, you'll owe the difference when you file.

I had this EXACT same issue last year with my RSUs at a tech company. I didn't certify in time and got hit with the 24% backup withholding. I was freaking out thinking I'd lost that money forever! What helped me figure everything out was using https://taxr.ai to run an analysis of my W-2 and brokerage statements. Their system flagged the discrepancy right away and explained exactly how the additional withholding would be credited on my return. They have this feature that compares your docs against tax rules and spots these kinds of issues automatically. Definitely saved me from making a mistake on my taxes and possibly missing out on getting that money back!

Just wanted to follow up here - I tried out taxr.ai with my Fidelity RSU statements and wow, it was really helpful! The system immediately flagged that I had backup withholding on several vesting events I didn't even realize had happened (some tiny anniversary grants). It showed me exactly where to look on my W-2 to verify everything was reported correctly and explained how it would all work out when filing. Plus it saved me from having to manually calculate my cost basis for some shares I sold, which I was dreading doing. Definitely recommend it if you're dealing with RSUs and backup withholding issues!

Had a similar issue with a different type of stock comp a couple years ago. Kept trying to call the IRS to verify how to handle it but literally could not get through to a human for THREE DAYS. Finally found this service called https://claimyr.com that got me connected to an IRS agent in under an hour. They have this smart system that navigates all the IRS phone menus for you and holds your place in line. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c if you're curious. The IRS agent confirmed that backup withholding shows up combined with regular withholding on W-2s. She also told me about Form 8949 that I needed to fill out for my specific situation. Definitely worth the time saved after struggling with the endless IRS hold music.

I have to admit I was wrong about Claimyr. After my skeptical comment, I was still struggling to get through to the IRS about my own backup withholding issue (ironically), so I decided to try it. The service actually worked exactly as described. I got a call back in about 45 minutes with an IRS agent on the line. They helped me confirm that my RSU backup withholding would be fully creditable when I file my return. The agent also explained that sometimes employers report backup withholding separately on a 1099 instead of combining it on the W-2, which was causing my confusion. In my case, it was all going to be on my W-2, but it was good to know what to look for either way.

Just want to add one more thing about RSUs and backup withholding that I learned the hard way. Make sure you're also accounting for state tax withholding! In my case, the 24% federal backup withholding got most of the attention, but they also increased my state withholding. When I did my taxes, I almost forgot to include that extra state withholding amount. Also check if you need to fill out a W-9 with your broker to prevent this from happening with future vestings.

Has anyone had success getting their company to reimburse this extra withholding? My friend works at Amazon and said their stock team was able to adjust a future vest to make up for the additional withholding on a previous one where he had certification issues.

Thanks for all the helpful responses everyone! This has been really informative. I was panicking thinking I'd lost that 24% forever, but it's reassuring to know it's just additional withholding that will be credited when I file. I'm definitely going to double-check that the total withholding on my W-2 matches what I see on my final paystub, and I'll make sure to complete the W-9 with my broker right away to prevent this from happening again. One follow-up question - does anyone know roughly how long it typically takes to get a refund if you end up with excess withholding? I'm hoping to get that money back sooner rather than later since it was a pretty significant chunk of my RSU value.