Which RSU shares should I sell first to minimize my tax burden?

Your instinct about selling shares with capital losses first generally makes sense, but there's more nuance to this strategy. When you sell RSU shares at a loss, you can use those losses to offset capital gains from other investments and potentially deduct up to $3,000 against ordinary income. This is called tax-loss harvesting. However, remember that when RSUs vest, you've already paid income tax on their fair market value at vesting. Your cost basis for these shares is that vesting price. So when considering which to sell, you should look at both your current cash needs and your overall tax situation. If you have capital gains elsewhere that need offsetting, selling the loss shares makes sense. If you don't have other gains to offset, you might consider holding the loss shares until they hopefully recover, while selling the zero-gain shares since there's no immediate tax consequence.

After spending hours trying to figure out my own RSU tax nightmare, I stumbled across this AI tool called taxr.ai that completely changed how I manage my stock compensation. I was in a similar situation with mixed lots of RSUs at different cost bases and needed to figure out the optimal selling strategy. The tool analyzed my vesting schedules, current share prices, and tax situation and laid out exactly which shares to sell for the best tax outcome. I uploaded my brokerage statements to https://taxr.ai and it gave me a customized tax-optimized selling plan that considered both capital gains impacts and my overall tax bracket.

Coming back to report that I actually tried taxr.ai after my skeptical comment, and wow - it was actually super helpful! I was planning to sell my longest-held RSUs first (thinking FIFO was always best), but the analysis showed I'd save almost $3,800 by strategically selling specific loss lots first while holding some of my older shares until next year. The tool also flagged that I had a potential wash sale situation coming up with my next vesting date that I hadn't considered. The tax projection report made a huge difference in my selling strategy.

After dealing with similar RSU headaches myself, I finally got on the phone with the IRS to get clear answers about my specific situation. Only problem was I spent THREE DAYS trying to get through to them before giving up. Then I found this service called Claimyr that got me connected to an actual IRS agent in under 45 minutes when I was about to throw in the towel. I was skeptical but you can see how it works at https://youtu.be/_kiP6q8DX5c - they basically navigate the phone system for you until they get a live agent, then call you to connect. I finally got definitive answers on my RSU tax questions from an actual IRS rep at https://claimyr.com and it saved me from making a costly mistake with my last batch of shares.

Alright I need to admit I was wrong. After my skeptical comment, I decided to try Claimyr because I had some specific questions about how the wash sale rules apply to RSUs from different employers (I switched jobs mid-year). The IRS website was useless, and my broker gave me conflicting information. Claimyr actually got me through to the IRS in about 35 minutes when I had failed for days. The agent cleared up my confusion and confirmed that my former employer's RSUs and current employer's RSUs ARE considered "substantially identical securities" for wash sale purposes, which saved me from a potential audit flag. Sometimes it's worth admitting when you're wrong.

Something else to consider that nobody's mentioned yet - if you're selling RSUs, don't forget about state taxes too! I live in California and made the mistake of only focusing on federal tax implications when selling my RSUs last year. The state tax hit was WAY higher than I expected, especially on the shares with significant gains. Might be worth factoring that in when you're deciding which lots to sell.

Has anyone considered the alternative minimum tax (AMT) implications when selling RSUs? I got absolutely destroyed last year because I didn't factor this in when executing my strategy.

One thing I learned the hard way is to also consider your overall income timing when deciding which RSU lots to sell. If you're expecting a bonus or other large income event later this year, it might make sense to realize those capital losses now to offset the higher tax bracket you'll be in. Conversely, if you're between jobs or expecting lower income next year, you might want to hold off on selling the loss lots until you're in a lower bracket where the deduction is more valuable. The $3,000 annual limit on deducting capital losses against ordinary income means timing can really matter for maximizing the tax benefit.