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Step by Step directions on how to enter RSU’s on Turbo Tax Premier

April 6, 2008

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

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Step 2: Click On Step by Step Guidance

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Step 3: Click On RSU’s

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Step 4: Identify the Employer… this might not show up if you are single.

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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

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Step 6: You should click on “At the same time for the same price” that is the most general case.

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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.

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Step 8: Stock probably did not split, right?

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Step 9: No reinvested dividends, right?

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Step 10: This should say how much got sent to Uncle Sam which was 300 * 20 = 6000

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Step 11: You are almost done… one last thing

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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

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  • http://thefinancebuff.com TFB

    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.

  • mreddy

    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.

  • http://thefinancebuff.com TFB

    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.

  • Anonymous

    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!

  • Anonymous

    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).

  • mreddy

    Can you enter that in Step 7 – Purchase Commissions or Fees Paid?

  • NY

    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.

  • NY

    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?

  • KF

    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!

  • NY from Austin

    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.

  • gtt

    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.

  • hucqym

    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)

  • Mike

    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

  • VR

    Thank you very much for all your tips – I really learnt a lot. Here is my situation:

    89 shares vested on 05/27/2007
    24 shares were withheld by my company and sold on the same day for taxes
    65 shares were deposited into my e-trade account
    my company reported both income and taxes on the W2
    my company did not use the broker for the withheld shares
    i did not sell any of these shares in 2007 so, i just reported what was on W2 in 2008 tax year
    i did not report the withheld share sale by my company – am i in violation of something?

    i sold the 65 shares on two different days in 2009
    30 on 10/27/2009
    35 on 11/04/2009

    How do I report this sale in 2010 using turbo tax since they are nearly 3 years later and in multiple sales?
    Do I need to report the withheld shares also – if so how since 2 years have past?

    Any help will be much appreciated.

  • mreddy

    VR…

    This step is for reporting the withheld shares by your company…. I doubt you are in violation… because they withheld the share and put it as income on your w-2. But not sure… ask a tax professional.

    Now the shares you sold now are exactly similar to buying shares 2 years ago and selling them now. It’s not a RSU type of transaction… I believe. I have not sold any of my vested RSU’s so not sure about that.

  • Eazy

    Wow, this is a great page of information, as I am struggling with the RSU thing! I do have a scenario that TurboTax is not reporting correctly.

    On 9/15/09, I received 1500 RSUs, lets just say at $10 that day. On that day, my company withheld 489 shares for tax purposes, so I was left with 1011 shares. On 12/02/09, I decided to sell the 1011 shares, at a loss even for $9.50. In TurboTax I followed your directions above for the first transaction, as it is the same scenario. For the second transaction, I put in the relevant sale info, and the same vesting lot information. Now, TurboTax is showing me as having an investment loss as it should for the year, but in the section where it asks if the RSUs are reportes on your W-2, I say yes, but TurboTax is saying that the amount it calculates is exactly twice what is on my W-2. I’m guessing that this is because I have 2 transacations listed (which is the case) both with the same vesting lot information. How do I fix this? Any help would be GREATLY appreciated. Thanks again for this info!

  • Eazy

    Just FYI, I figured it out. I just had to put it in as one transaction, the day I actually sold remaining PSUs. When I did that, I could still specify the vest date, number taken out for taxes, etc.

  • Kevin

    Hi, I believe for Turbotax2009, the above method does not work under the following conditions:
    A) You got vested and did not sell all shares.
    B) For the shares you sold, the method described above works
    C) For unsold shares; You MUST enter “0″ shares sold and then your calculation will be correct. This will match your W2 totals.
    D) If you simply enter the RSU withheld as taxes in the calculation as a sale, then the calculation and the W2 total are going to be incorrect.
    Thank you again for the clarity.

  • http://www.website.com Fried

    I just went through the hassle of trying to figure this out for the third year in a row and think I may have. To enter an RSU sell-to-cover transaction, calculate the number of shares sold (not for taxes) as the Net Proceeds plus the Commission and SEC Fees divided by the sell price per share (not the market price needed later). Then, went entering the lot information, subtract this fractional number of shares (which may be one plus a fraction) from the number (whole number) of shares listed as sold to cover taxes from your broker and enter that amount as the number of shares sold to cover taxes in TurboTax. TurboTax Premier 2010 had strange behaviors when I tried zero shares sold. So, I finally tried this and things look much more correct. Good luck!

  • Mike in NJ

    Your comments above really helped me understand how to do this. I do have two questions:
    1. When I decide to sell my vested RSU’s, some time after (but in the same tax year) my sell to cover transaction, do I still fill in Step 7 (Vesting Information) exactly the same as I did for my sell to cover transaction? In other words, do I again fill in the shares witheld for taxes exactly as I did for my STC?
    2. If I sell my shares in a later tax year as my STC took place, is the procedure the same?
    Mike

  • KJ

    Getting involved with my taxes already and was reading your comments from this and prior years. My only comment about RSU and Turbo Tax is that TurboTax2010 does fine when you have vested and sold in the same year. It does not recognize a vested stock that you sell years later that you were taxed on your w2 for the “gift” or the “price” that day. The difference of course is capital gains but TurboTax wants to treat the cost as compensation. If you have been holding onto shares of a stock given to you years ago… you don’t want to be taxed twice. You think you can simply treat the sale as a regular stock sale and it prevents you from doing so because it asks you how you obtained the stock. The way around this is to say the “price” of the stock was what the price was the day you were released the stock. That was the price of couse that was used to compute your earnings which appeared in your w2 years ago..

    Does this make sense? Otherwise TurboTax2010 wants to treat the cost basis as compensation and you were already taxed on that .. years ago…

  • WestSeattle

    What if you get to the last step and the amount TT computes does not match the amount from your W2?

  • Ramkumar Vadivelu

    Thanks for the great tip. Was banging my head with Turbo Tax when the W2 info was not matching. You really saved the day. Thanks again.

  • MJK

    KJ:

    This is EXACTLY the problem that I’ve been running into. I had RSUs granted in 2006, vesting in 2007, 2008 that I sold in 2010. Approx 1/3 of vesting RSUs sold for tax. TT insists that there MUST be something on my 2010 W2 for these transactions, but there simply isn’t. I’ve decided to just treat them like a stock sale so that it will only take out capital gains tax since the RSU values already hit the 2007 and 2008 W2s.

    Very very frustrating and I’ve been beating my head against the (TurboTax) wall for the past several days trying to figure out why TT expects a W2 entry.

    ~mj

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