Which RSUs Should I Sell to Minimize Capital Gains Taxes?

Thanks for the explanation! Quick question - doesn't OP also need to consider wash sale rules if they're planning to sell at a loss and then buy more company stock?

Wash sale rules typically apply when you sell a security at a loss and purchase the same or substantially identical security within 30 days before or after the sale. This prevents claiming the tax loss. However, in the case of RSUs, this is usually less of a concern if you're simply selling vested shares and not immediately repurchasing. But yes, if the plan is to sell some RSUs at a loss and then acquire more company stock (either through purchase or additional RSU vestings) within that 30-day window, wash sale rules could potentially apply and disallow the loss.

How accurate is this for state taxes too? I'm in California and they seem to have their own special rules for everything tax related...

Sounds interesting, but does it work if your company is private with RSUs that haven't gone public yet? Mine has a weird "double-trigger" vesting schedule.

It handles California's tax rules really well. I'm in CA too, and it correctly applied the state's higher rates to my calculations. It even flagged some differences between federal and state treatment of certain stock compensation that I wasn't aware of. For private company RSUs with double-trigger vesting, it absolutely works for that scenario. You can input your vesting schedule with both time-based and liquidity event triggers. It will show you the tax implications at each stage - when the shares vest and when they become liquid. Really helpful for planning ahead for a potential IPO or acquisition tax hit.

How does that even work? I thought you had to personally verify your identity with the IRS before they'll talk to you about your tax situation?

This sounds too good to be true. The IRS wait times are legendary. You're saying this service somehow jumps the queue or something?

You absolutely still verify your identity yourself. The service just handles the waiting part. When they reach an agent, you get a call, and then you take over the conversation and handle all the identity verification directly with the IRS. They don't have access to any of your personal information - they're just holding your place in line. It doesn't jump the queue at all - it waits in the same hold queue everyone else does. The difference is that their system waits on hold instead of you having to do it personally. Think of it like having someone stand in a physical line for you, then texting you when it's your turn so you can step in. Same wait time, but you're free to do other things instead of listening to hold music for hours.

How does this work practically speaking? Do you just transfer shares directly to a charity? Do most charities even accept stock donations?

Many established charities absolutely accept stock donations directly. You typically just need to contact their donor relations department for transfer instructions - they'll provide their brokerage account details, and you initiate a transfer of shares from your account to theirs. For smaller charities that might not have brokerage capabilities, you can use a donor-advised fund (like those offered by Fidelity, Schwab, or Vanguard). You donate the shares to the fund (getting the immediate tax deduction), and then the fund sells them tax-free and holds the cash for you to direct to charities of your choice over time.

This is such an important point! I actually discovered I had some "underwater" RSUs last year that were showing as a loss because the price had dropped since vesting. Was able to harvest those losses to offset some gains elsewhere in my portfolio.

This is such a helpful perspective on income timing! I hadn't even thought about the NIIT threshold. Quick question - if someone is right at the edge of that $200K/$250K limit, would it make sense to spread RSU sales across multiple tax years to stay under the threshold? Or does the tax you save not make up for the complexity of managing multiple sale dates?

@Isabel Vega That s'a really smart question! Spreading sales across tax years to stay under the NIIT threshold can definitely be worth it mathematically. That extra 3.8% adds up fast on large RSU sales. The key is to calculate whether the 3.8% tax savings outweigh any potential appreciation or (depreciation risk) of holding the shares longer. If you re'confident the stock will be relatively stable, then yes, spreading the sales can save significant money. For example, if you d'otherwise sell $100K worth of RSUs in one year and push yourself $50K over the NIIT threshold, you d'pay an extra $1,900 just in NIIT 3.8% (× $50K .)Splitting that sale across two years to stay under the limit saves you that $1,900, minus any brokerage fees for additional transactions. Most people find the tax savings worth the small administrative complexity, especially since you can set up the sales in advance with your broker.

@Isabel Vega That s'a great question! If you re'right at the NIIT threshold, spreading sales across tax years can definitely be worth it. The 3.8% additional tax on all your investment income can really add up, especially on larger RSU positions. For example, if you have $100K in capital gains and you re'just over the threshold, you d'pay an extra $3,800 in NIIT. By splitting that into $50K this year and $50K next year assuming (you stay under the threshold ,)you could potentially save that entire $3,800. The complexity is usually manageable if you re'just talking about timing when to sell different lots of RSUs. Most brokers make it easy to specify which tax lots you re'selling. Just make sure to track your overall income carefully throughout the year so you don t'accidentally push yourself over the threshold with other income sources. One thing to watch out for - RSU vesting itself counts as ordinary income and could push you over the NIIT threshold even before you sell anything!

@Isabel Vega That s'a really smart question! Spreading RSU sales across tax years to avoid the NIIT threshold can definitely be worth it, especially if you re'just slightly over the limit. The 3.8% tax on all your investment income adds up quickly. For example, if you re'single and would have $220K income in one year vs splitting it to $190K and $190K across two years, you d'save 3.8% on all the investment income in both years. On a $50K capital gain, that s'$1,900 in savings just from the NIIT alone. The complexity isn t'too bad if you re'just talking about timing RSU sales - most brokerages let you sell specific lots easily. Just make sure you re'not triggering wash sale rules if you re'planning multiple transactions with the same company stock. One caveat though - don t'let the tax tail wag the dog. If you think the stock price might drop significantly, it might be better to sell now and pay the extra tax rather than risk larger losses by waiting.

@Isabel Vega That s'a really smart question! The math can definitely work out in your favor if you re'close to those thresholds. The NIIT is 3.8% on top of your regular capital gains rate, so if you re'looking at long-term gains that would normally be taxed at 15%, you d'be paying 18.8% instead if you cross the threshold. For someone right at the edge, spreading sales across tax years could save thousands depending on the amount involved. The complexity isn t'too bad if you use a spreadsheet or tool to track which lots to sell when. Plus, it gives you more flexibility to optimize for other factors like matching gains with losses in your overall portfolio. The key is making sure you re'not sacrificing better long-term investment decisions just to save on taxes - sometimes it s'worth paying a bit more in taxes to get out of a concentrated position sooner rather than later for risk management purposes.

@Isabel Vega Great question! Spreading sales across tax years to stay under the NIIT threshold can definitely be worth it, especially if you re'right at the edge. That 3.8% additional tax adds up quickly on large RSU sales. The math is pretty straightforward - if staying under the threshold saves you 3.8% on, say, $50K in gains, that s'$1,900 in tax savings. Even if it means holding some shares a bit longer and dealing with more complexity, that s'often worth it. Just make sure you re'not sacrificing much better long-term capital gains treatment by waiting. If you re'close to the one-year mark on some shares, it might make sense to wait for that preferential rate AND spread the sales to manage the NIIT impact. A tool like the ones mentioned earlier could really help model these scenarios since there are so many variables at play!

Great question! If you're close to the NIIT threshold, spreading sales across tax years can definitely be worth it. The 3.8% savings on potentially tens of thousands in gains often outweighs the administrative complexity. For example, if you have $100K in gains and you're right at the threshold, staying under could save you $3,800 just on the NIIT alone. Plus, if spreading the sales keeps you in a lower capital gains bracket (15% vs 20%), the savings get even bigger. The key is to model it out - those tax planning tools mentioned earlier can help you see the exact numbers. Sometimes even a small timing adjustment (like selling in January vs December) can make a meaningful difference in your total tax bill.

@Isabel Vega That s'a really smart question about the NIIT threshold! The math on whether it s'worth it depends on how much you re'selling and how close you are to the limit. The 3.8% NIIT applies to the lesser of: 1 (your) net investment income, or 2 (the) amount your MAGI exceeds the threshold. So if you re'selling $50k in RSUs and it would push you $20k over the threshold, you d'only pay the extra 3.8% on that $20k - which is $760. Spreading sales across years could definitely save you money if you re'consistently near that threshold, but you also need to consider that delaying might mean missing out on favorable long-term rates if tax laws change, or if the stock price moves against you. The complexity is manageable if you re'already tracking your RSU lots anyway. I d'say it s'worth modeling both scenarios - the tax tools mentioned earlier should be able to help you see the actual dollar impact of timing the sales differently.

@Isabel Vega That s'a really smart question! Spreading RSU sales across tax years to stay under the NIIT threshold can definitely be worth it mathematically - that 3.8% is significant on large amounts. The key is to model it out. If you re'selling $100K worth of RSUs with $50K in gains, staying under the NIIT threshold saves you $1,900 3.8% (of $50K .)But you also need to factor in the time value of money and any dividend income you d'receive by holding longer. The complexity isn t'too bad if you re'organized - just track which lots you re'selling when. Many people already do this kind of timing with year-end tax loss harvesting anyway. Plus those tax tools people mentioned can help model different scenarios to see if the tax savings justify the extra planning effort.

Great question @Isabel Vega! Spreading RSU sales across tax years to stay under the NIIT threshold can definitely be worth it, especially if you're just slightly over. The 3.8% additional tax adds up quickly on large gains. For example, if you have $50K in capital gains and you're $10K over the NIIT threshold, you'd pay an extra $1,900 in taxes (3.8% x $50K). By timing your sales to keep income under the limit, you could save that entire amount. The complexity really depends on your situation. If you have flexibility in when you sell (no immediate cash needs, diversification isn't urgent), then yes, strategic timing across tax years can be very worthwhile. Many people use December/January timing to optimize this. Just make sure to factor in your other income sources too - salary, bonuses, other investment gains, etc. Sometimes it's not just about RSU timing but coordinating all your income recognition for the year.

Great question! Spreading RSU sales across tax years to stay under the NIIT threshold can definitely be worth it mathematically. That extra 3.8% tax on investment income adds up quickly - on a $50K capital gain, you'd save $1,900 by staying under the threshold. The complexity really depends on your situation. If you have flexibility on timing (no immediate need for the cash), it's often worth the extra planning. Many people batch their sales in January of the following year to give themselves more time to calculate their projected income and see where they'll land relative to the threshold. Just remember that RSU vesting income also counts toward your MAGI for NIIT purposes, not just the capital gains from selling them. So if you have large RSU vestings coming up, that could push you over the threshold regardless of when you sell existing shares.

@Isabel Vega That s'a really smart question about spreading sales across tax years! The math can definitely work in your favor, especially if you re'right at the threshold. The 3.8% NIIT adds up quickly on large RSU sales. For example, if you re'at $190K income and have $50K in RSU gains, selling all at once puts you at $240K under (the $250K married threshold ,)but if you re'single, you d'pay NIIT on $40K of gains. Splitting that across two years could save you over $1,500 just on the NIIT alone. The complexity isn t'too bad if you use a tool like the ones mentioned here to model different scenarios. Most brokerages also let you sell specific lots, so you can be pretty precise about controlling the gain amount each year. Just make sure to account for other potential income changes bonuses, (other stock sales, etc. when) planning.

@Isabel Vega Great question! Spreading sales across tax years can definitely be worth it if you re'near the NIIT threshold. The 3.8% additional tax is significant enough that avoiding it often justifies the extra complexity. For example, if you have $50K in capital gains and you re'right at the threshold, staying under could save you $1,900 in NIIT alone plus (potentially keeping you in a lower capital gains bracket .)The key is modeling it out - tools like the ones mentioned earlier can help you see if splitting sales between December and January, for instance, results in meaningful tax savings. Sometimes even a few weeks timing difference can save thousands if it keeps you under key thresholds. Just make sure to account for other income sources salary, (bonuses, other investments when) planning, since it s'your total modified AGI that determines the NIIT application.

@Isabel Vega That s'a really smart question! If you re'close to those NIIT thresholds, spreading sales across tax years can definitely be worth it. The 3.8% additional tax on all your investment income above the threshold can add up quickly. Here s'a simple example: If you re'single and would have $220K income with RSU sales this year, you d'pay NIIT on $20K of investment income. But if you could split those sales so you have $190K this year and $190K next year staying (under the $200K threshold both years ,)you d'avoid NIIT entirely. The complexity is usually manageable - most brokerages let you specify which tax lots to sell, so you can easily control the timing. Just make sure you re'not accidentally creating wash sales or missing out on long-term capital gains treatment while trying to manage the income timing. A tool like the taxr.ai mentioned earlier would probably help you model exactly how much you d'save versus the hassle of managing multiple sale dates!

@Isabel Vega That s'a really smart question! Spreading RSU sales across tax years to stay under the NIIT threshold can definitely be worth it if you re'right at the edge. The 3.8% savings on potentially tens of thousands in capital gains adds up quickly. The key is to model it out - if you re'at $190K income and have $50K in RSU gains to realize, selling $10K this year and $40K next year keeps you under the $200K threshold both years, saving you about $1,900 in NIIT 3.8% (of $50K .)The complexity isn t'too bad if you re'organized about it. Most brokers let you specify which tax lots to sell first-in-first-out, (last-in-first-out, or specific identification ,)so you can be strategic about which RSUs to sell each year. Just make sure to account for other income changes - bonuses, promotions, spouse s'income changes, etc. The tax modeling tools mentioned earlier would be perfect for running these what "if scenarios" across multiple years.