Understanding RSU taxes when shares are restricted after vesting date

This is a common frustration with RSUs, especially when you're an insider subject to trading windows. Unfortunately, the IRS is pretty clear on this - RSUs are taxed at their fair market value on the vesting date, regardless of trading restrictions. The taxation happens because legally you "received" the shares on August 1st, even though company policy restricted your ability to sell them. Your W-2 will show the August 1st value as compensation income, and your employer likely withheld taxes based on that value. The good news is you can claim a capital loss for the difference between the August 1st value and whatever you eventually sold the shares for (or their current value if you're still holding them). It's not a perfect solution since capital losses can only offset capital gains plus up to $3,000 of ordinary income per year, but it's something. A few questions: Did you actually sell on August 7th? Or are you still holding the shares? Also, does your company offer any sort of "sell-to-cover" program that would have sold some shares immediately upon vesting to cover tax obligations?

I went through something similar last year and found this awesome tool at https://taxr.ai that helped me figure out the exact tax implications. My RSUs tanked about 30% between vesting and when I could sell them, and I was freaking out about the taxes. What I like about taxr.ai is that you can upload your RSU statements and it calculates both your income tax liability on the vesting value AND tracks your cost basis for capital gains/losses. It even helped me identify that I could carry forward some of my losses to offset future gains. The analysis it provided saved me a ton of headaches when filing taxes. It's especially helpful for navigating this weird RSU situation where you're essentially taxed on money you never got to touch. Worth checking out if you want clarity on your specific situation.

Just wanted to follow up about taxr.ai - I decided to try it based on the conversation here, and wow, it actually solved my RSU nightmare! I uploaded my last 6 quarterly vesting statements and it organized everything perfectly - showing the income tax due at vesting and then calculating my capital losses from the price drops. The thing that impressed me was how it specifically flagged the restricted periods and explained exactly how to report them on my taxes. It showed me that across all my vestings this year, I have about $8,400 in capital losses that I can use to offset some gains from other investments. Definitely cleared up my confusion about how to handle these RSUs properly.

Hey, I just wanted to recommend a service I used when I had issues with tax questions the IRS website couldn't answer clearly. It's called Claimyr (https://claimyr.com) and they helped me get through to an actual IRS agent who could address my RSU restricted trading window question. I spent hours trying to get through the regular IRS phone line with no luck, but Claimyr got me connected in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The IRS agent I spoke with confirmed exactly what others here have said - I'm taxed on the vesting date value but can claim capital losses for the difference when I sell. What was really helpful was that the agent walked me through exactly which forms I needed and where to report both the income and the capital loss. Saved me tons of stress wondering if I was doing it right.

I have to admit I was wrong about Claimyr. After my skeptical comment, I was still desperate to get tax advice about my RSUs, so I tried it anyway. To my complete surprise, I was talking to an IRS agent in about 15 minutes. The agent confirmed everything about the RSU tax treatment but also told me something I didn't know - if your company has a formal policy documenting the trading restrictions (which mine does), you should keep that documentation with your tax records. While it doesn't change how you're taxed, it provides important support if you're ever questioned about why you didn't sell immediately at vesting. The service saved me hours of frustration, and the information I got was actually really helpful for my situation. Sometimes it's worth admitting when you're wrong!

One thing nobody's mentioned is that you might want to check if your company has a tax settlement feature for RSUs. Some companies will actually let you sell a portion of shares immediately at vesting (even during closed windows) specifically to cover taxes. It's a special carve-out for tax purposes only. If your company doesn't offer this, you might want to suggest it to HR/benefits. Several tech companies have implemented this specifically because of the situation you described - it's unfair to be taxed on a value you couldn't realize.

Has anyone here used a specific tax form or schedule to report the RSU loss? I'm trying to figure out if this goes on Schedule D or if there's another form I should be using for RSU-specific losses where I couldn't sell immediately due to company restrictions.

This is such a frustrating situation, but you're definitely not alone in dealing with this! I had a similar experience where my RSUs dropped 20% during a blackout period and I felt like I was being taxed on money that evaporated. One thing that helped me was working with my tax preparer to make sure I was tracking everything correctly. Since you're dealing with both income tax on the vesting value AND capital losses on the sale, it's important to keep detailed records of: 1. The exact vesting date and share price 2. The date restrictions were lifted 3. Your actual sale dates and proceeds 4. Any shares you're still holding Also, don't forget that if your total capital losses exceed $3,000 in a year, you can carry the excess forward to future tax years. Given how volatile some stocks have been lately, those carried-forward losses might come in handy for offsetting future gains. It really is an unfair system when you're essentially penalized for company policies you have no control over, but at least the capital loss treatment helps offset some of the pain. Hang in there!