OFF TOPIC Post: This was my doing tax weekend so here is some how to on something that really annoyed me.
I spent a considerable amount of time trying to figure out how to enter RSU’s (Restricted Stock Units) into Turbo Tax Premier. I did not figure it out, my friend Bentley (yes he is named after the car) showed me how to do it. I am passing on the information to you. The example is 900 shares vesting on 4/21/2007 at 20 dollars and 300 of the shares are withheld for tax purposes. You kept the other 600 shares and did not sell them. These are not real numbers… I made them up. Here is how you do it in Turbo Tax Premier. We both got lots of help from The Finance Buff.
Step 1: Go to Federal Taxes -> Income -> Investment Sales and click Add Investment Sale
Step 2: Click On Step by Step Guidance
Step 3: Click On RSU’s
Step 4: Identify the Employer… this might not show up if you are single.
Step 5: For date sold, enter the vesting date in this case 4/21/2007, Here is the key enter 300 shares sold, not the 900 that vested. You sold 300 for tax withholding. Then enter the sales price and it will automatically figure out your net proceeds
Step 6: You should click on “At the same time for the same price” that is the most general case.
Step 7: Enter vesting information. Here you enter first the total number of shares vested, which in this example is 900, then again date of vesting, Market price, commission, and the number of shares withheld for tax purposes which is 300.
Step 8: Stock probably did not split, right?
Step 9: No reinvested dividends, right?
Step 10: This should say how much got sent to Uncle Sam which was 300 * 20 = 6000
Step 11: You are almost done… one last thing
Step 12: Tell Turbo Tax if the amount is on your W-2. Most companies provide a W-2 breakdown. This benefit will be the total benefit received in this case its 900 shares vested times 20 = 18,000
13 responses so far ↓
1 TFB // Apr 7, 2008 at 12:51 am
Wow, a lot of steps for producing one line on Schedule D with a zero gain/loss. It seems the extra step-by-step guidance provided by TurboTax Premier created more confusion than it helped. I wonder whether you would be better off if you select Spreadsheet-Style Entry in Step 2. Enter 300 shares acquired on 4/21/2007 sold on 4/21/2007 for $6,000 with a cost of $6,000 and you are done.
2 mreddy // Apr 7, 2008 at 7:55 am
The only thing is doing the above ignores what is on your W-2. This way you properly account for the amount on your W-2 so that your tax benefit stays about the same.
3 TFB // Apr 7, 2008 at 9:47 am
No, the income on your W-2 is already accounted for when you enter the numbers from W-2 in the wages and salaries section. Your Step 12 above only tells TurboTax not to add $18,000 more to what’s already on the W-2. If you do it the short way, it will be the same. Try it.
4 Anonymous // Apr 8, 2008 at 1:25 am
In either case, THANK YOU for clearing up the confusion. The step by step does help. Thanks. One final question: does the sales commission also figure into the cost? My company’s stock has dropped so much that the tax withholding for one of the vesting periods was less than the commission!
5 Anonymous // Apr 13, 2008 at 7:02 pm
Hey, I have one addition/correction to make in Step 5: “Then enter the sales price and it will automatically figure out your net proceeds.” Actually, the calculated number is the gross proceeds. The brokerage & SEC fees (almost $20 per transaction in my case) are not figured in because the program does not ask for it. However, on my 1099-B box 2 that is luckily already figured in so I just deleted TurboTax Premier’s number and entered the number from the 1099-B box 2 instead. That comes out $160 in my favor (8 transactions over 2007).
6 mreddy // Apr 14, 2008 at 10:36 pm
Can you enter that in Step 7 – Purchase Commissions or Fees Paid?
7 NY // Apr 15, 2008 at 5:00 am
I don’t think so. TurboTax says that purchase commissions are not common. Besides, this would be commissions on the sale, not the purchase. TurboTax also appears clear that the Net Proceeds should be the box 2 amount.
8 NY // Apr 15, 2008 at 5:07 am
One other thing I found out: I do not believe that the # of shares withheld in “Step 7″ should be entered at all. I am still trying to understand why exactly. In your example, let’s pretend that the number of shares sold to cover taxes was more than half of the amount that vested. Why? Well, let’s assume that either the grant size or the share price is so low that the $20 commission takes up a significant portion of the number shares that get sold (pathtetic, yes, I know, don’t remind me).
So, for kicks, let’s assume that out of the 900 gratend shares, 500 were sold to cover taxes. When you do this and take the calculation to the end you’ll see that the cost basis is figured incorrectly. Can you look into this?
9 KF // Feb 25, 2009 at 11:02 am
Thank you for posting this, it is so helpful. The question that has kept me up at night is this: If my husband’s employer says that the ’sale of the restricted stock is not on the W-2 because the vesting has already been reported as income on the W-2′ does that mean that I have to answer No to Step 12, therefore reducing my refund?
Thank you!
10 NY from Austin // Apr 6, 2009 at 5:44 am
THANK YOU! This website (and TFB) really helped me out last year when I was doing my 2007 tax return.
This year, I found out something and I am not sure if it’s because of how TT Premier 2008 works or if it was this way last year too. In any case, here goes:
The last question of Step 7 (shares withheld for taxes?) should be answered as ZERO in your example. There are wo reasons why I say this:
1) My E*TRADE statement reports 0.00 for each such transaction where I only sold in order to cover taxes. The taxes paid are not reported on the 1099-B because they are reported already on the W-2. Otherwise, you are reporting the tax that was paid twice (comes out in your favor but it is not correct).
2) This second reason is what convinced me that this is how turbotax wants you to enter it. My situation is unique in that my company’s stock (very unfortunately) plunged to around $2 to $3 / share. In my first vesting, I had a batch of 17 shares vest, 12 of which were sold to cover taxes (and a disproportionate chuck of that was the $20 broker’s fee). Now, when I fill in all the information exactly as you laid it out (report sale of 12 shares (step 5, second question) and also list those 12 shares as being withheld for taxes in step 7, I get and error from TT that I need an additional 7 shares to cover the ones that were sold. This is because I (correctly reported 17 shares having vested but TT believes that I sold 12 shares after I also had 12 shares withheld (24 shares), so it’s asking me where the other 7 shares came from.
I did not have this problem last year but I believe that may be because this was the first time that I had to sell more than 50% of my shares to cover taxes (and the broker’s fee!) so this issue did not come to light before.
Could you please attempt to re-create a similar situation (> 50% of shares sold to cover taxes) and see if step 7 should be ammended? Thanks.
11 gtt // Apr 11, 2009 at 12:35 am
I get the same problem as someone who posted as “NY from Austin // Apr 6, 2009 at 5:44 am”
Any further clarifications would be greatly appreciated.
12 hucqym // Apr 15, 2009 at 1:31 am
ok I am probably missing a point somewhere?
My W2 lists 900*20 as fringe benefits (adding on to my taxable income) The above step-by-step example only accounted for the sale of 300 RSU withheld as net gain=0. But what about the fact that that sale was for tax.
In other words, where do I enter that the 900*20 has some statutory taxes already withheld (which dont appear on my W2)
13 Mike // Mar 5, 2010 at 11:28 pm
I REALLY appreciate your sharing how to handle RSU’s in TurboTax. I wish Intuit itself had such clear examples as a part of TT Premier.
Mike in Wimberley
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