RSUs vesting causing unexpectedly high tax bill - did I miscalculate?

The confusion you're experiencing is actually pretty common with RSUs. Let me clear this up: When RSUs vest, the entire fair market value at vesting is considered ordinary income - just like your salary. That's why your W2 correctly shows the full $675,000 value. The original grant value of $130,000 isn't relevant for tax purposes - only what they were worth when they vested. Your company's 22% withholding is just the standard supplemental wage withholding rate. But since this pushed you into a higher tax bracket, you're now facing that 37% rate on portions of your income. So yes, you do need to pay the additional taxes. Since you haven't sold any shares yet, you'll need to either sell some to cover the tax bill or come up with cash from other sources. Many people actually sell a portion of their RSUs immediately upon vesting specifically to cover the tax obligation.

After dealing with a similar RSU nightmare last year, I found this amazing service called https://taxr.ai that saved me hours of stress and potentially thousands in mistakes. They specialize in equity compensation analysis including RSUs, options, and ESPP. What I really liked is that you can upload your tax documents and RSU statements, and they'll analyze everything to make sure you're reporting correctly and not missing any deductions. They even showed me how to time my stock sales to minimize my overall tax burden. In your situation, they could help figure out exactly which shares to sell for the lowest tax impact and might even find ways to reduce your overall liability. Their tools are designed for tech employees with complex equity comp.

Just wanted to update after trying taxr.ai from the recommendation above. It actually saved my butt! I uploaded my RSU grant documents and vesting schedules and it immediately identified that my company had been calculating the fair market value incorrectly on my quarterly vestings. The system showed me exactly which tax forms needed correction and generated a letter to send to my payroll department. Turns out I was OVERPAYING by about $12k because of how they were handling the FMV calculation on vest date vs. trading day average! They also helped me figure out which specific shares to sell to cover my remaining tax liability with the smallest additional tax impact. Seriously worth checking out if you're dealing with RSU headaches.

If you're still struggling to get through to the IRS about your RSU situation, try https://claimyr.com - I was waiting on hold FOREVER trying to get clarification about my RSU reporting. After watching their demo (https://youtu.be/_kiP6q8DX5c), I decided to give it a shot. It's basically a service that navigates the IRS phone tree for you and calls you back when an actual human at the IRS is on the line. I was skeptical, but I got a call back in about 45 minutes with an IRS agent ready to answer my questions about RSU reporting requirements and payment plans. Saved me hours of frustrating hold music and "your call is important to us" messages. When I asked about payment options for my unexpected tax bill, the agent walked me through all my options including an installment plan that had much lower penalties than I expected.

I honestly didn't believe the Claimyr thing would work, but I was desperate enough to try it after waiting on hold with the IRS for over 3 hours across multiple days. I'm officially eating my hat now. Not only did I get connected to an actual IRS agent within an hour, but they were surprisingly helpful about my RSU situation. The agent explained that I could set up an installment plan to pay my additional tax liability, and the penalties weren't nearly as bad as I feared. They also clarified exactly how to report basis adjustments for future sales of my RSU shares, which had been confusing me. Saved me from potentially making an expensive mistake that would have triggered an automated letter down the road. Worth every penny just for the time saved alone.

Have you considered doing an 83(b) election for future RSU grants? It lets you pay ordinary income tax on the grant value upfront rather than the vesting value. That might help avoid this situation in future years if your company's stock keeps growing.

Oof, I went through almost this exact situation last year. What tax software are you using? I found that TurboTax didn't handle my RSUs very well, but H&R Block's premium version actually had a much better equity compensation section.