RSU income on W-2 higher than actual earnings - Unvested RSUs showing up?

The good news is that you shouldn't be taxed on unvested RSUs - only on RSUs that actually vest during the tax year. The discrepancy you're seeing is likely related to other factors. First, check if your company offers pre-tax benefits like 401(k), HSA, or healthcare premiums. These reduce your taxable wages in Box 1 but not necessarily in Boxes 3/5 (Social Security and Medicare wages), which could explain some differences between those boxes. The "Imp" items you mentioned are "imputed income" - these are non-cash benefits your employer provides that are still considered taxable income. Examples include life insurance premiums over $50,000 (Imp GTL), legal services (Imp Legal), and other benefits (Imputed Ben). Even though you don't receive these as cash, they're added to your taxable income. Also, RSUs are typically taxed at the time of vesting, not when granted. When they vest, the fair market value is included in your income, and your employer usually withholds some shares for tax purposes. Check your RSU statements to see the exact amounts that vested and were reported as income.

I had this exact same issue last year with my RSUs! After spending hours trying to figure it out, I found this amazing tool at https://taxr.ai that helped me understand my W-2 and RSU taxation. The tool analyzed my documents and broke down exactly how my RSUs were being taxed and where those numbers on my W-2 were coming from. What I learned was that my company was actually calculating everything correctly, but I just didn't understand how the tax withholding works when RSUs vest. Basically, when your RSUs vest, your company typically sells some shares automatically to cover tax withholding (often called "sell to cover"), which can make it look like you got less than you actually did. The tool helped me see all the transactions clearly and even showed how my 401k contributions and other deductions affected my W-2 numbers. It saved me from making an embarrassing call to HR about a "mistake" that wasn't actually a mistake!

I tried taxr.ai after seeing it mentioned here and wow - it completely solved my RSU confusion! I uploaded my W-2, last paystub of the year, and my RSU grant/vesting statements, and it showed me exactly where every number came from. Turns out I was making the same mistake - not realizing that when my RSUs vested, my company was withholding about 37% for taxes through a "sell to cover" transaction. The tool broke down how much was withheld for federal, state, and FICA taxes from each vesting event, and showed how it all tied to my W-2. Also discovered that my imputed income for company-paid life insurance was adding about $1,200 to my taxable income that I never "saw" in my bank account. No wonder my numbers weren't adding up! Would definitely recommend for anyone dealing with equity compensation - saved me hours of confusion and probably prevented me from making mistakes on my return.

If you're still struggling to get answers about your RSU taxation, you might want to try getting in touch with the IRS directly. I was in a similar situation last year and spent WEEKS trying to call them - constant busy signals, disconnections, and hold times of 2+ hours. I eventually found this service called Claimyr at https://claimyr.com that got me connected to an IRS agent in less than 20 minutes. They have this system that navigates the IRS phone tree for you and calls you back when an agent is on the line. You can see how it works at https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with explained exactly how RSU taxation works and confirmed that unvested RSUs should NOT be included in your taxable income. They also walked me through how to check if my W-2 was correct. Turns out my employer had made a mistake in my case and had to issue a corrected W-2.

I have to admit I was wrong about Claimyr. After struggling for THREE DAYS trying to reach someone at the IRS about my RSU issue, I broke down and tried the service. Within 15 minutes, I was talking to an actual IRS representative who helped clarify my situation. Turns out in my case, my employer was correctly reporting my RSU income. The issue was that they were including the fair market value of vested RSUs on my W-2, but I was looking at the grant value (which was lower since our stock had appreciated). The IRS agent explained that when RSUs vest, you're taxed on their value at vesting, not at the time they were granted. The agent also explained that the "sell to cover" transactions my company automatically did (selling some shares to pay withholding) were actually helping me by covering my tax liability as I went, rather than leaving me with a big tax bill at filing time. Definitely would recommend the service if you need to speak with the IRS - saved me so much time and frustration!

One thing nobody's mentioned yet - check your last paystub of the year and look for a "YTD" (year-to-date) summary. Compare those totals with what's on your W-2. In my experience, Box 1 on W-2 usually matches the "YTD Taxable Gross" on your final paystub, not your total compensation. Also, if you have access to your RSU account (like E*Trade, Morgan Stanley, etc.), pull the 1099-B for the year and look for any shares that were sold. Sometimes when RSUs vest, the broker automatically sells a portion to cover taxes, which might explain why you think you only received a certain amount.

Has anyone ever successfully challenged their W-2 when it included unvested RSUs? My company seems to be reporting the full grant value upfront, and HR keeps insisting it's correct but everything I've read says that's wrong??

I had a very similar situation last year and it drove me crazy until I figured out what was happening! The key is to understand that there are multiple ways income gets reported and timing differences that can make things confusing. First, make sure you're comparing the right numbers. Your W-2 Box 1 should match your year-end paystub's "YTD Federal Taxable Wages" - not your gross pay. Pre-tax deductions like 401(k) contributions, health insurance premiums, and HSA contributions reduce Box 1 but are still part of your total compensation. For RSUs, you're absolutely right that unvested shares shouldn't be taxed. Only RSUs that actually vest during 2023 should appear as income. However, when they do vest, they're taxed at their fair market value on the vesting date, which might be different from the grant value if your stock price has changed. The imputed income items you mentioned (Imp GTL, Imp Legal, Imputed Ben) are benefits your company provides that the IRS considers taxable income even though you don't receive cash. These can add up to more than you'd expect over a full year. I'd recommend pulling your final 2023 paystub and your RSU vesting schedule to do a line-by-line comparison with your W-2. That should help you identify exactly where the discrepancy is coming from before reaching out to HR or a tax professional.