RSUs vested end of 2024 but shares sold to cover taxes in 2025 - how to handle this tax situation?

Thanks for the quick response! I didn't know this was common. Do you think I should adjust my W-4 for the rest of 2025 to try to make up some of the difference? I'm worried about owing penalties for underpayment in 2024. Also, roughly how much is the IRS payment plan? The amount I owe is around $9,000 which is really painful to pay all at once.

Adjusting your W-4 for 2025 is a smart move. You can increase your withholding to help cover the 2024 shortfall, though that won't eliminate any underpayment penalties for 2024. To avoid penalties, you generally need to have paid at least 90% of your current year tax or 100% of your prior year tax (110% if your income is over $150,000) through withholding or estimated payments. The IRS payment plan is very accessible. For amounts under $10,000, you can usually get approved online immediately with no financial disclosure required. The setup fee is around $31 if you pay online and agree to direct debit. The interest rate is federal short-term rate plus 3%, which changes quarterly but is much lower than credit card rates. You can take up to 72 months to pay, though I'd recommend paying it off faster if possible.

Does it work with all the major tax software programs? I use TurboTax and I'm wondering if this would help me before I submit my return. My company's RSU reporting is so confusing.

I'm a little skeptical about these AI tax tools. How does it actually know the tax code around RSUs? I've found that even human CPAs sometimes get confused about the proper treatment of equity compensation.

It works alongside any tax software you're already using. I used it with TurboTax and it helped me understand exactly which numbers needed to go where. It gave me screenshots showing the specific TurboTax screens where I needed to enter my RSU information. The AI is specifically trained on tax regulations including equity compensation rules. What impressed me was that it could look at my actual RSU statements and W-2 to identify the reporting discrepancies. It cited specific IRS publications and tax code sections when explaining the rules. I was skeptical too at first, but it saved me from making an expensive mistake with my RSU reporting.

How does this actually work? The IRS phone system is notoriously terrible. Do they use some special connection or something? Seems too good to be true.

This sounds like a scam. Why would I pay someone else to call the IRS for me? And if it did work, wouldn't the IRS just shut this down? I'm very wary of giving any third party my tax information.

It uses a combination of automated systems to navigate the IRS phone tree and secure your place in line. Instead of you sitting on hold for hours, their system does it for you. When they get to an agent, you get a call connecting you directly. No need to share any sensitive tax information with them - they're just getting you the callback. They're not calling the IRS "for you" - they're just holding your place in line. When the IRS agent comes on, you're the one who speaks with them directly. The IRS actually recognizes the service because it helps manage their call volume more efficiently. It's basically like having someone physically stand in line for you. I was skeptical too but it honestly saved me hours of frustration.

This is super helpful! I don't think I'll meet the safe harbor since my income went up quite a bit in 2024 compared to 2023. How complicated is the Form 2210 to fill out? And what kind of documentation would I need to provide to show this was an unusual circumstance?

Form 2210 is admittedly one of the more complex IRS forms, but you only need to complete certain parts depending on your situation. For the waiver request, you'll fill out Part I, check box A for "Request a waiver," and attach a statement explaining the circumstances (the timing of your RSU vest vs. the sell-to-cover transaction). You don't necessarily need formal documentation upfront, but keep your RSU statements and any communications with your company about the transaction timing. The key is to clearly explain that this was a one-time timing issue outside your control - the vest occurred in one tax year but the withholding happened in the next tax year. If you're using tax software, it should walk you through the process. The penalty itself is usually fairly modest compared to the tax owed, so some people just pay it rather than going through the waiver process, but it's worth trying if the amount is significant.

Our company actually adjusted our year-end bonuses to help offset the tax impact when this happened. Worth asking your HR department if they're aware of the issue and if they have any programs to help employees caught in this situation. Some companies offer tax advance programs specifically for equity compensation.