Understanding Stock Offset on Paystub from RSU Income - How is it Taxed?

What you're seeing is normal for RSU compensation! The "stock offset" on a paystub typically represents the value of RSU shares that were sold automatically to cover the tax withholding when the RSUs vested. When RSUs vest, they're considered taxable income right away, even though they're stock and not cash. Here's what typically happens: When your wife's RSUs vest, the company counts the full market value as taxable income. Since taxes are due immediately, most companies automatically sell a portion of the shares to cover the tax withholding (often at supplemental wage rates around 22% federal plus state taxes). This automatic sale creates this "stock offset" line item. The reason her net pay seems much lower than expected is because the gross income likely includes the full RSU value, but the "net pay" only shows actual cash paid, not the shares she kept. So if she received $10,000 in RSUs, maybe $3,000 worth was sold for taxes (showing as "stock offset") and she kept $7,000 in shares, but that $7,000 won't appear in "net pay" since it wasn't cash.

After struggling with similar RSU confusion on my paystubs, I discovered taxr.ai (https://taxr.ai) which helped me make sense of all this. I uploaded my paystubs and W2, and it identified that my "stock offset" was indeed shares sold to cover tax withholding, not additional income. Their analysis showed how my company was calculating everything correctly - the stock offset was just an accounting mechanism that balanced the books. What made taxr.ai helpful was how it explained the specific tax implications of my RSUs and flagged a discrepancy between my W2 and what was actually withheld. Basically showed that I wasn't being under-taxed, but the reporting was just confusing. They can analyze your documents and tell you exactly what's happening with no guesswork.

I tried taxr.ai after seeing the recommendation here and WOW it cleared up my confusion about stock offsets immediately! I uploaded my last paystub and W2, and within minutes it explained that my stock offset ($13,458) was exactly matching the shares that were sold to cover my tax withholding when my RSUs vested. The report even showed that my company withheld at a 37% rate (higher than my actual tax bracket), which explained why my net pay seemed so low! It also identified that some of my RSU income was being reported as supplemental wages but taxed correctly. The best part was the explanation of how my year-end W2 tied to my paystubs - something that had been driving me crazy trying to reconcile. Definitely worth checking out if you're dealing with RSU confusion!

After spending literally HOURS on hold with the IRS trying to get clarity on how RSU withholding should be reported (my company and I disagree on the reporting), I found Claimyr (https://claimyr.com). They got me connected to an actual IRS agent in about 20 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that "stock offset" entries on paystubs are industry-standard ways to show the shares sold to cover tax obligations, and that they should be reported as withheld taxes on your W2. The agent also explained that if my W2 doesn't match what was actually withheld, I should request a corrected W2 from my employer rather than trying to reconcile it myself on my tax return.

I was completely wrong about Claimyr! After my skeptical comment, I decided to try it myself since I was desperate to resolve my RSU reporting issue before filing this year. Within 25 minutes, I was talking to an actual IRS agent who specialized in employer reporting. The agent confirmed exactly what others here said - the "stock offset" on my paystub represents shares sold to cover tax withholding. She explained that my company should have included the full RSU value in Box 1 of my W2, and the withholding from the stock sale should appear in Boxes 2, 4, and 6. In my case, the company had incorrectly reported some of the withholding, and she advised me to request a corrected W2. Without this call, I would have filed incorrectly and potentially faced penalties later. Definitely worth it for complex tax situations like equity compensation!

Another thing to check is your brokerage statement where the RSUs are deposited. When RSUs vest, you should see both a deposit of shares and a removal of shares (for the tax withholding). The value of the removed shares should match your "stock offset" amount. Most companies withhold at supplemental wage rates (22% federal for amounts under $1M, plus applicable state/local taxes), which might not match your actual tax bracket. If you're in a higher bracket, you might need to pay additional tax when filing. If you're in a lower bracket, you'll get some back as a refund.

One thing that hasn't been mentioned - check if your company offers an ESPP (Employee Stock Purchase Plan) in addition to RSUs. Some companies use "stock offset" to refer to payroll deductions for ESPP contributions, which is completely different from RSU tax withholding.

Great question! I went through this exact confusion last year with my RSUs. The "stock offset" on your wife's paystub is most likely the value of RSU shares that were automatically sold to cover tax withholding when they vested. Here's what's probably happening: When RSUs vest, the full market value becomes taxable income immediately. Your wife's company automatically sells some of those shares to cover the required tax withholding (federal, state, FICA, etc.) - this sale creates the "stock offset" entry. The remaining shares go to her brokerage account. So if she had $15,000 in RSUs vest and $5,000 shows as "stock offset," she likely received $10,000 worth of actual shares while $5,000 was sold for taxes. Her W-2 Box 1 should include the full $15,000 as wages, and the $5,000 in taxes should appear in the withholding boxes. This explains why her net pay seems low - the paystub gross includes the full RSU value, but net pay only shows actual cash received, not the shares she kept. I'd recommend checking her brokerage statements to confirm - you should see both share deposits and "tax withholding" sales that match the offset amounts.

This is such a common source of confusion! I deal with RSU taxation frequently, and what you're seeing is completely normal. The "stock offset" represents shares that were automatically sold to cover tax withholding when your wife's RSUs vested. Here's the key thing to understand: when RSUs vest, they become taxable income at their full fair market value on that date. Since this creates an immediate tax liability, most companies automatically sell a portion of the vested shares to cover the required withholdings (federal income tax, state tax, FICA, etc.). This automatic sale is what shows up as "stock offset" on the paystub. The reason her net pay seems so low compared to her gross income is that the gross includes the full value of all RSUs that vested, but the net pay only reflects actual cash received - it doesn't include the value of shares she kept after the tax withholding sale. For example, if $20,000 in RSUs vested and $7,000 shows as "stock offset," she likely received $13,000 worth of actual shares while $7,000 was sold to cover taxes. Her W-2 should show the full $20,000 in Box 1 as wages, with the $7,000 in taxes appearing in the appropriate withholding boxes. You can verify this by checking her brokerage account - you should see transactions showing both share deposits and "tax withholding" sales that correspond to the offset amounts on her paystub.

This thread has been incredibly helpful! I had the exact same confusion with my spouse's paystub showing a "stock offset" that made their net pay look ridiculously low compared to gross income. Just to add one more verification step that helped us: we compared the "stock offset" amounts on each paystub throughout the year to the actual vesting schedule from the equity compensation portal (usually accessible through your company's benefits site). The dates and amounts matched perfectly, confirming that these were indeed the automatic tax withholding sales. Also, if anyone is still confused about whether their company is withholding correctly, most equity portals show a "tax withholding" or "shares sold for taxes" section in the transaction history. This was the final piece that made everything click for us - we could see exactly how many shares vested, how many were sold for taxes at what price, and how many we actually kept. One last tip: if you're in a state with no income tax, your RSU withholding might be lower than the standard 22% federal rate since there's no state withholding. This can actually create under-withholding if you have other income sources or are in a higher federal bracket.

Yes, it definitely gets easier to predict over time! After going through a few vesting cycles, you'll have a much better sense of how the withholding works and whether you need to adjust. For your W-4 adjustment question - if you're consistently getting large refunds due to the 22% supplemental withholding being higher than your actual rate, you have a couple options. You could increase your allowances/decrease withholding on your regular salary to roughly offset the RSU over-withholding. Or you could use the extra withholding box on the new W-4 to specify a smaller additional amount to withhold from regular paychecks. Just be careful not to under-withhold overall - you want to stay within the safe harbor rules (either owe less than $1,000 at filing, or pay at least 100% of last year's tax liability through withholding and estimated payments). I'd recommend tracking one full year of RSU activity first before making major W-4 changes, since vesting amounts can vary and you want to see the full picture. Many people also find it helpful to set aside some of their RSU shares specifically for tax purposes if they're worried about under-withholding in higher tax brackets.