Which RSUs Should I sell for lowest capital gains tax impact?
Title: Which RSUs Should I sell for lowest capital gains tax impact? 1 I recently received some restricted stock units (RSUs) from my employer and need to sell some for upcoming expenses, but I'm confused about the tax implications. I have two batches I'm considering: 1. Some RSUs that vested about 8 months ago, with a value pretty close to the current market price (maybe $2-3 difference per share) 2. Other RSUs that vested about 15 months ago, currently worth about 20% more than their value at vesting I'm trying to figure out which ones would result in lower capital gains taxes if I sell now. Do I look at how long I've held them? Does the difference between vesting price and current price matter? I'm completely new to stock-based compensation and taxes, so any guidance would be super helpful!
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Megan D'Acosta
8 The holding period is the most critical factor here. RSUs are taxed in two phases: When RSUs vest, you pay ordinary income tax on their value at vesting (this already happened for both your batches). Then when you sell, you pay capital gains tax only on any appreciation since vesting. Your 8-month RSUs would trigger short-term capital gains (taxed at your regular income tax rate) on that small $2-3 difference. Your 15-month RSUs would trigger long-term capital gains (typically 15% for most people) on that 20% appreciation. Even though the 15-month RSUs have appreciated more, the lower tax rate on long-term gains (15% vs. perhaps 22-35% for short-term) often makes selling the older shares more tax-efficient.
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Megan D'Acosta
•15 This makes sense, but I'm still a bit confused. If my income puts me in the 24% tax bracket, and my 8-month RSUs have only gone up $2 per share while my 15-month ones have gone up $25 per share, wouldn't I still pay less total tax by selling the newer ones even with the higher rate?
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Megan D'Acosta
•8 The absolute dollar amount definitely matters in your calculation. For the 8-month RSUs, you'd pay 24% on that $2 gain (about $0.48 per share). For the 15-month RSUs, you'd pay 15% on that $25 gain (about $3.75 per share). So yes, in your specific example with such a large difference in appreciation, you'd pay less total tax by selling the newer shares despite the higher tax rate. The key is to calculate both scenarios with your actual numbers - compare (gain amount × tax rate) for each batch.
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Megan D'Acosta
12 I struggled with this exact issue last year! I found this amazing tool at https://taxr.ai that helped me analyze which RSUs to sell. I uploaded my grant statements and played around with different selling scenarios to see the tax impact. Saved me from making a costly mistake when I was going to sell my oldest shares thinking that was automatically best.
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Megan D'Acosta
•6 Does it help with other equity compensation too? I have both RSUs and ISOs and it's honestly so confusing trying to figure out when to sell what.
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Megan D'Acosta
•19 Can this tool also help with calculating AMT for ISOs? That's been my biggest tax headache with stock compensation.
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Megan D'Acosta
•12 It definitely handles all kinds of equity compensation. I've used it for both RSUs and ESPPs, and it shows you the tax implications for different selling strategies. It absolutely helps with AMT calculations for ISOs. It shows you the potential AMT hit if you exercise but don't sell, and helps you understand the AMT credit you might get in future years. The visualization really helped me see the "AMT crossover point" where it made sense to exercise.
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Megan D'Acosta
6 Just wanted to follow up! I tried https://taxr.ai after seeing it mentioned here and it was exactly what I needed. I was overthinking the RSU selling strategy but the tool made it super clear with visuals showing the tax impact of different approaches. It showed me that in my specific case, selling my newer RSUs actually saved me about $1,200 compared to what I was planning. Thanks for the recommendation!
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Megan D'Acosta
10 If you need specific tax advice on this, definitely call the IRS directly to confirm your understanding. I tried for THREE DAYS to get through to someone knowledgeable about stock compensation before discovering https://claimyr.com which got me connected in under 20 minutes. There's also a video showing how it works: https://youtu.be/_kiP6q8DX5c - I was shocked it actually worked after wasting hours on hold myself.
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Megan D'Acosta
•3 Wait, does this actually work? I've literally never been able to reach a human at the IRS. How much does it cost?
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Megan D'Acosta
•22 Sounds like a scam tbh. The IRS doesn't offer some secret priority line that this service has exclusive access to.
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Megan D'Acosta
•10 It absolutely works! It uses technology to navigate the IRS phone system and wait on hold for you, then calls you when an agent is about to pick up. I was skeptical too but it saved me hours of frustration. I was told by the IRS agent that most people don't realize they have specialists who can answer questions about stock compensation taxation, but you need to request that department specifically, which is what this service helped with.
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Megan D'Acosta
22 Ok I have to admit I was wrong. I tried https://claimyr.com after posting my skeptical comment because I was desperate to resolve a question about my RSU taxation. The service called me back in about 25 minutes with an IRS agent on the line who actually knew what they were talking about! They confirmed exactly what I needed to know about my specific RSU tax situation. I've spent HOURS on hold with the IRS before and never got through. Consider me converted.
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Megan D'Acosta
7 One thing nobody's mentioned yet - remember you can choose SPECIFIC LOTS when selling RSUs. You don't have to sell entire batches. Many brokers default to FIFO (first in, first out) but you can typically select exactly which shares to sell. This lets you fine-tune your tax strategy even further.
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Megan D'Acosta
•13 How exactly do you select specific lots? Is that something you do through your broker platform or when filing taxes?
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Megan D'Acosta
•7 You do this through your broker at the time of sale. Most major platforms (Fidelity, E*TRADE, Schwab, etc.) let you choose "Sell specified lots" instead of the default FIFO method when placing a sell order. You'll see a list of your lots with their purchase dates and costs, and can select exactly which ones to sell. You need to do this BEFORE executing the sale - you can't change it when filing taxes. If you don't specify, your broker will use their default method (usually FIFO) and report that to the IRS.
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Megan D'Acosta
5 Just adding another consideration - if you've got other income/loss events this year, that might influence your decision. I ended up selling some underwater RSUs (at a loss) to offset gains from other investments. Tax-loss harvesting can be a powerful strategy!
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Megan D'Acosta
•17 Can you actually claim losses on RSUs? I thought since you're taxed on the value when they vest, your cost basis is that vesting price, so if they go down after vesting and you sell, you can claim that as a capital loss?
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Kennedy Morrison
•Exactly right! Your cost basis for RSUs is indeed the fair market value on the vesting date (which you already paid ordinary income tax on). So if the stock price drops after vesting and you sell below that vesting price, you can absolutely claim a capital loss. This is actually a common situation in volatile markets - you get taxed on the full vesting value as ordinary income, but then can offset other gains with the capital loss if the stock drops. Just remember the $3,000 annual limit on deducting net capital losses against ordinary income, though unused losses carry forward to future years.
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