Taxation of Restricted Stock Units (RSU) in Long-Term Incentive (LTI) program - 10% of base salary

Congrats on the job offer! RSUs (Restricted Stock Units) are indeed taxed as ordinary income, but only at the time they vest - not when they're initially granted. Here's how it typically works: When the RSUs vest (meaning the restrictions lift and you actually own the shares), the fair market value of those shares on the vesting date is considered taxable income. Your employer will usually withhold some shares to cover the taxes (called "sell to cover"), typically around 22% for federal taxes, plus state taxes depending on where you live. This will show up on your W-2 at year-end just like regular salary. After the shares vest, if you continue to hold them and they increase in value, you'll eventually pay capital gains tax on any appreciation when you sell (short-term if held less than a year after vesting, long-term if more than a year).

I started using taxr.ai after getting confused about my RSUs from my tech job last year. I was in basically the same situation as you - company offering RSUs worth about 12% of my base and I had no clue how the taxes worked. I uploaded my grant documents to https://taxr.ai and it explained everything - how much tax would be withheld at vesting, what would show up on my W-2, and even gave me a personalized vesting schedule with estimated tax impacts. It was super helpful for planning when those vesting dates hit.

I was skeptical about taxr.ai when I first saw it mentioned here, but I decided to try it after getting my first RSU grant last quarter. I can confirm it's legitimately helpful - the tax projection calendar alone saved me from a surprise tax bill. It analyzes your specific vesting schedule and shows exactly how much will be withheld vs. what you'll actually owe. For my particular situation, I discovered the automatic withholding would have been about 8% short of my actual tax obligation, so I was able to set aside extra funds before the vesting date hit. Definitely worth checking out if you're new to RSUs.

If you're having trouble getting clear answers from your company about RSUs, you might want to try Claimyr. I was going back and forth with our benefits department for weeks about my RSU tax questions, and they kept directing me to the IRS for clarification. I used https://claimyr.com to get an actual person at the IRS on the phone (which I thought was impossible), and got all my questions answered in one call. You can see how it works here: https://youtu.be/_kiP6q8DX5c - basically they navigate the phone tree and wait on hold for you until they get an actual human, then call you.

I have to publicly eat my words about Claimyr. I was the one who called BS on it earlier in this thread, but I was desperate to get some clarity on RSU taxation before accepting my job offer, so I tried it yesterday. It actually worked exactly as advertised. I got a call back after about 90 minutes (during which I was just going about my day), and got connected directly to an IRS agent who walked me through the entire RSU taxation process, including some specifics about my company's unusual vesting schedule. Saved me hours of frustration and I got definitive answers straight from the source.

One thing nobody's mentioned yet - make sure you understand your company's withholding policy for RSUs. Most companies do "sell to cover" where they automatically sell enough shares to pay the taxes, but some require cash payment from you at vesting time which can be a nasty surprise if you're not prepared.

Does anyone know if RSUs get reported on a 1099-B or just on the W-2? I've been getting conflicting information.

Welcome to the RSU club! One thing I wish someone had told me when I first got RSUs - consider the timing of when you might want to sell after vesting. Since the vested shares are already taxed as ordinary income at vesting, any future gains will be taxed as capital gains. If you hold for more than a year after vesting, you get the more favorable long-term capital gains rate instead of short-term (which is taxed as ordinary income again). Also, don't forget that RSUs can push you into a higher tax bracket in the year they vest, especially if you have a large vesting event. It might be worth talking to a tax professional about estimated quarterly payments if your regular paycheck withholding won't cover the extra tax burden from the RSUs.