@@johnj4094 When RSUs vest, it's as if you received a cash bonus. The value of that cash bonus is the market value of the shares you received. The shares sold are to pay the payroll taxes on that "cash bonus." You are not paying payroll taxes twice. You are only paying payroll taxes on the market value of the RSUs (shares) you received on the date of vesting since it is similar to a cash bonus. This is also the reason why the gross amount shows on your W-2 and not the net.
Very concise and practical explanation of RSU's and taxation. Would like to see someone touch on dealing with the impending 1099-B that comes after the sale.
Is it correct to withhold 20% and additional flat 22% its like too much of Federal withholding. When it comes to supplemental income we should only consider on flat 22% was my understanding all these years. Please explain more on it.
@@ventureM but if I employee in a new business venture and give you shares, you are only taxed if you sell those shares in the future and it’s taxes as capital gains rather than income. Employees getting RSU’s should have the same tax benefits that the actual owners have (ie Taxed as capital gains).
ACap will not respond to comments seeking tax or financial advice. Please consult a CPA or CFP who is familiar with your individual circumstances.
@@johnj4094 When RSUs vest, it's as if you received a cash bonus. The value of that cash bonus is the market value of the shares you received. The shares sold are to pay the payroll taxes on that "cash bonus." You are not paying payroll taxes twice. You are only paying payroll taxes on the market value of the RSUs (shares) you received on the date of vesting since it is similar to a cash bonus. This is also the reason why the gross amount shows on your W-2 and not the net.
@@johnj4094 consult your CPA who is familiar with your individual circumstances.
Nicely done!
Thank you.
Very concise and practical explanation of RSU's and taxation. Would like to see someone touch on dealing with the impending 1099-B that comes after the sale.
That's a great suggestion. Thank you.
I love the info. Perhaps consider forgoing the music on these?
Good suggestion. I'll do that going forward.
Good educational materials on W2 & RSU
Thank you.
Is it correct to withhold 20% and additional flat 22% its like too much of Federal withholding. When it comes to supplemental income we should only consider on flat 22% was my understanding all these years. Please explain more on it.
Thanks for this!
It’s amazing how much these are taxed. I feel like RSUs should be capital gains so employees can get the same benefits as “real” equity holders.
RSUs are subject to more favorable capital gains tax rate if held more than 1 year.
@@ACapReCap yes but you have to pay income tax when you receive them (on the value of them when received) that ends up being 30-50% tax.
It's taxed the same as if you were instead given extra income and bought it on the open market. Seems perfectly fair.
@@ventureM but if I employee in a new business venture and give you shares, you are only taxed if you sell those shares in the future and it’s taxes as capital gains rather than income.
Employees getting RSU’s should have the same tax benefits that the actual owners have (ie Taxed as capital gains).