Understanding FICA Taxes on Restricted Stock Units (RSUs) in USA - Who Pays What?

RSUs are considered supplemental wages for tax purposes, and the good news is that the FICA tax treatment is the same as your regular salary. Your employer is required to pay their portion (7.65%) of FICA taxes on the fair market value of RSUs at vesting, just like they do for your regular wages. You'll only be responsible for the employee portion (also 7.65%), not the full 15.3%. When RSUs vest, they're treated as ordinary income equal to the fair market value of the shares on the vesting date. This amount gets reported on your W-2 and is subject to federal income tax, state income tax (if applicable), and FICA taxes (Social Security and Medicare). The employer can't choose whether to pay their portion of FICA - it's mandatory. Keep in mind that if your income exceeds the Social Security wage base ($168,600 for 2024), you'll stop paying the Social Security portion (6.2%) on income above that threshold, but the Medicare portion (1.45%) continues regardless of income level. And if your income is high enough, you might be subject to the Additional Medicare Tax of 0.9%.

I've been using https://taxr.ai to navigate my RSU tax situation and it's been super helpful. My company started offering RSUs last year and I was completely confused about all the tax implications. The site has this document analysis feature where you can upload your RSU grant paperwork and it breaks down the exact tax treatment - federal, state, FICA, everything. What I found most useful was that it showed me exactly what my employer would handle versus what I needed to account for. Plus it calculated my net shares after taxes since my company does sell-to-cover for tax withholding. Definitely made tax season less stressful since I knew exactly what to expect.

Just wanted to follow up about taxr.ai - I gave it a try after our conversation and it was exactly what I needed. My situation with working remotely from Texas while my company is in California was perfectly addressed. The tool showed me that my RSUs aren't subject to California state income tax since I'm performing all work in Texas, which saved me thousands. It also confirmed what was mentioned earlier about FICA - my employer definitely pays their portion (7.65%) and I only pay my portion. The tool even showed me a breakdown of how much of my vesting would go to Social Security vs Medicare. Definitely recommend it to anyone dealing with RSU tax questions.

If you're struggling to get answers from your company's HR or payroll department about RSU tax treatment, I found a service called Claimyr that can actually get you through to a live IRS agent to answer these questions: https://claimyr.com I was getting frustrated with contradictory information online about my specific RSU situation, so I wanted to hear directly from the IRS. Normally you'd wait on hold for hours (or get disconnected), but I used their service and got connected to an agent in about 15 minutes. There's also a video showing how it works: https://youtu.be/_kiP6q8DX5c The agent confirmed all the FICA details - employer must pay their portion on RSUs just like regular wages, and clarified some questions I had about quarterly estimated tax payments for my RSU income. Worth it to get authoritative information directly from the source.

I take back what I said about Claimyr. I was super skeptical, but I tried it this morning and got through to an IRS agent in about 20 minutes. The agent confirmed everything about the FICA split on RSUs and even helped me understand how to report some weird RSUs I received that had a mix of time-based and performance-based vesting. I've literally spent days trying to get this information on my own, calling the IRS directly and giving up after 1+ hour hold times. This actually saved me a ton of time and stress. The IRS agent I spoke with was surprisingly helpful and patient with all my questions. Definitely changed my mind about being able to get clear tax info from the IRS.

One thing to remember about RSUs and FICA - if you're getting a large grant that vests in chunks throughout the year, make sure you're tracking the Social Security wage base limit ($168,600 for 2024). Once your total compensation exceeds that amount for the year, your employer should stop withholding the Social Security portion (6.2%) from your paychecks, but they'll continue withholding the Medicare portion (1.45%). However, I've seen payroll systems mess this up with RSUs because they sometimes process them separately from regular payroll. If you notice they're still taking out the full 7.65% FICA after you've exceeded the SS wage base, bring it to your company's attention - you can get that money back when you file your tax return, but it's better to not overpay in the first place.

Does anyone know if the employer portion of FICA on RSUs affects the value of the shares you receive? I'm trying to figure out if the 7.65% my employer pays comes out of my grant somehow, or if it's completely separate from my compensation.

Great thread everyone! As someone who's been through multiple RSU vesting cycles, I wanted to add one more important point about timing. The FICA taxes on your RSUs are calculated based on the fair market value on the actual vesting date, not when the grant was made or when you sell the shares. This means if your company stock has appreciated significantly since your grant date, you'll owe FICA taxes on the higher current value. For example, if you were granted RSUs when the stock was $50/share but they vest when it's $100/share, you'll pay FICA on $100/share worth of income. Also, if you're planning any major financial moves (like buying a house), remember that RSU vesting income counts toward your gross income for mortgage qualification purposes. The FICA treatment is straightforward as everyone mentioned, but the income recognition can sometimes catch people off guard when they're calculating their total annual income.

Thanks for all the detailed info everyone! I'm dealing with a slightly different situation - my company is doing a "net share settlement" where they automatically sell enough shares to cover all taxes (federal, state, FICA) and give me the remaining shares. Does this change anything about the FICA treatment? I'm assuming my employer still pays their 7.65% portion on the full vesting value, but I want to make sure the net settlement doesn't somehow shift more of the tax burden to me. Also, has anyone dealt with RSUs from a company that went public recently? My startup just IPO'd last year and I'm not sure if there are any special considerations for RSUs that were granted pre-IPO but are vesting post-IPO. The tax implications seem more complex than the standard RSU scenarios everyone's been discussing.

This has been an incredibly helpful thread! I've been putting off understanding my RSU tax situation for months, but reading through everyone's experiences has clarified so much. Just to summarize what I've learned for other newcomers: Your employer MUST pay their 7.65% FICA portion on RSUs (it's not optional), you only pay your employee portion (7.65%), and the taxes are based on fair market value at vesting date, not grant date. The additional Medicare tax of 0.9% is employee-only once you exceed the income thresholds. One question I still have - if I have RSUs vesting in multiple tranches throughout the year, does each vesting event get taxed separately, or does it all get lumped together on my W-2? I'm trying to figure out if I need to make quarterly estimated payments or if the withholding from each vesting will cover me for the year. Also really appreciate the tool recommendations - going to check out both taxr.ai and potentially use Claimyr if I need to talk to the IRS directly. Sometimes you really do need authoritative answers rather than trying to piece things together from random internet sources.

This thread has been incredibly educational! I'm in a similar situation as the original poster - first-time RSU recipient and completely overwhelmed by the tax implications. One thing I haven't seen mentioned yet is the impact of company stock buyback programs on RSU taxation. My employer has an active share repurchase program, and I'm wondering if that affects the fair market value calculation for FICA purposes when my RSUs vest. Does anyone know if stock buybacks create any special considerations for RSU tax treatment? Also, for those who mentioned using net share settlement - do you have any visibility into exactly how much your employer paid in FICA taxes on your behalf? I'd love to understand the total cost to my company when my RSUs vest, both for my own curiosity and to better appreciate the full value of the compensation package. Thanks again to everyone who shared their experiences and tool recommendations. This is exactly the kind of practical information you can't easily find in IRS publications!

This has been such a valuable discussion! I'm also dealing with my first RSU vesting and was completely confused about the FICA implications. Reading through everyone's experiences has been incredibly helpful. One additional consideration I discovered through my company's benefits team - if you're contributing to a 401(k), your RSU income counts toward the annual compensation limit for retirement plan purposes ($345,000 for 2024). This could affect your ability to make certain types of retirement contributions later in the year if you have large RSU vestings. Also, for anyone dealing with estimated tax payments, I learned that you can adjust your regular paycheck withholding to account for upcoming RSU vestings rather than making separate quarterly payments. This can be easier to manage if you know your vesting schedule in advance. The point about tracking the Social Security wage base limit is crucial - I'm planning to create a simple spreadsheet to monitor this throughout the year since I have monthly vestings. Better to stay on top of it than discover overpayment at tax time. Thanks to everyone who shared the tool recommendations. It's refreshing to find resources that can handle the complexity of equity compensation rather than just basic tax scenarios.

This thread has been absolutely fantastic - exactly what I needed as someone navigating RSUs for the first time! I've learned so much from everyone's experiences. One thing I'm still unclear about: if my company does automatic tax withholding on RSU vestings but doesn't withhold enough to cover my actual tax liability (since I'm in a higher bracket), can I request additional withholding specifically for future RSU vestings? Or do I need to handle that through my regular paycheck withholding or estimated payments? Also, I noticed some people mentioned performance-based RSUs - my company has a mix of time-based and performance-based grants. For the performance-based ones, is the FICA tax calculated on the original grant value or the actual shares that vest after performance multipliers are applied? I'm trying to plan for a potential scenario where performance targets are exceeded and I end up with more shares than originally granted. The tool recommendations have been super helpful - definitely going to try taxr.ai for my specific situation. It's refreshing to find resources that can handle complex equity scenarios rather than just basic tax calculators. Thanks to everyone who shared their real-world experiences!