Understanding RSU Tax Implications When Relocating Between States

12 This is actually a common issue with RSUs when moving between states. You're not technically being "double taxed" in the way you might think, but you do need to file correctly to ensure you only pay the appropriate amount. What's happening is that your employer is required to report the RSU income on your W-2 for both states because the grant originated in California, but you were a resident of Washington when they vested. California has specific rules about taxing compensation that was earned or originated while you were a resident, even if you no longer live there when it vests. The good news is that you can usually claim a credit on one state return for taxes paid to the other state to avoid true double taxation. You'll need to file state returns for both California (non-resident) and Washington (resident). Since Washington doesn't have state income tax, this might be simpler than if you'd moved between two states that both tax income.

15 I dealt with this exact scenario last year when I moved from New York to Texas with unvested RSUs. I spent hours trying to figure it out until I found taxr.ai (https://taxr.ai) - it was a game changer for my situation. The tool analyzed my W-2s and RSU documentation, then showed me exactly how to allocate the income between states. What I found most helpful was that it broke down the vesting schedule against my residency timeline and created documentation showing which portions were taxable where. Super helpful because my HR department couldn't give me clear guidance on this specific situation.

3 Following up on my skepticism - I decided to try taxr.ai after all and have to admit it was worth it. My situation with RSUs across state lines was more complicated than I initially thought. The service generated a detailed report showing exactly how my RSUs should be allocated between states based on grant date, vesting schedule, and my relocation timeline. What really impressed me was the documentation they provided explaining the specific state regulations that applied to my situation. When I entered this information into my tax software, it made a significant difference in my California tax liability - about $3,200 less than what was initially calculated. Definitely recommend for anyone dealing with RSUs and state changes.

5 If you're still having issues getting clear answers from the state tax authorities, you might want to try Claimyr (https://claimyr.com). After spending weeks trying to get through to the California Franchise Tax Board for clarification on my RSU situation, I used their service and got connected to a real person at the FTB in less than 20 minutes. They have a demo video here: https://youtu.be/_kiP6q8DX5c showing how it works. I had a pretty similar situation moving from California to Nevada with vesting RSUs and needed official guidance on how to handle the allocation. Getting that direct answer from the tax authority gave me peace of mind that I was filing correctly.

18 I have to eat my words about being skeptical of Claimyr. After our exchange here, I decided to try it for my IRS question about RSU allocation after my state move. The service called me back in about 35 minutes with an IRS representative on the line. Honestly shocked it worked. The agent was able to confirm that I need to file both state returns and pointed me to the specific publication explaining how to claim a credit for taxes paid to another state. Would have taken me days of calling to get this information otherwise. For anyone dealing with complex multi-state tax situations, being able to actually talk to a human at the tax agency makes a huge difference.

11 Another aspect to consider is whether your company's payroll department correctly allocated your RSU income between states. I had a similar issue where HR applied California withholding to ALL my RSU income despite my move to Washington halfway through the year. I had to work with our payroll team to get corrected W-2s issued that properly allocated the income between states based on my residency during each vesting period. It's worth checking if your W-2 accurately reflects when and where you were working when each batch of RSUs vested.

4 Does anyone know if you need to apportion the RSU income based on days worked in each state, or is it strictly based on residency at vesting? My situation is complicated because I lived in California when the RSUs were granted, but was traveling between California and Texas for work during the vesting periods.

One thing I'd add is to make sure you understand the timing of when California considers RSU income to be "earned." California generally follows the rule that RSU income is earned ratably over the vesting period from grant date to vest date, not just on the vesting date itself. This means if you received RSUs in January 2022 while living in California, but moved to Washington in July 2022, and the RSUs vested in January 2024, California would typically claim tax on approximately 50% of that income (the portion earned while you were a CA resident). The key is documenting your exact move date and keeping records of your RSU grant agreements. I'd also recommend running the numbers both ways - allocating by days worked vs. strict residency periods - to see which method results in the most accurate tax treatment for your specific situation.