Income Tax Restricted Stock Units

How your stock grant is delivered to you and whether or not it is vested are the key factors when determining tax treatment.

Income tax restricted stock units. With rsus you are taxed when you receive the shares. The amount you will need to report as taxable income would be. If you have received restricted stock units rsus congratulations this is a potentially valuable equity award that typically carries less risk than a stock option due to the lack of leverage. This means you pay taxes on the value of the stock at grant starting your capital gains holding period for later resales.

This is called the vesting period during. Restricted stock units are considered a total amount stock grant for the reason that the grant is worth the full value of the shares at the time of vesting. Your taxable income is the market value of the shares at vesting. Stock grants often carry restrictions as well.

Income tax treatments for restricted stock deferred stock. Upon vesting they are considered income and a portion of the shares is withheld to pay income taxes. When companies award employees stock the gift comes with certain restrictions. The restricted stock units are assigned a fair market value when they vest.

Deffered stock and restricted stock are interchangeable terms. Tax returns get complex when you have compensation income from restricted stock or restricted stock units. Those plans generally have tax. Alternatively you can make a section 83 b election with the irs within 30 days of the grant this choice is unavailable for restricted stock units.

Employees defer selling the shares during the restriction period. Restricted stock and rsus are taxed differently than other kinds of stock options such as statutory or non statutory employee stock purchase plans espps. As the name implies rsus have rules as to when they can be sold. Let s assume you have 1 000 restricted stock units that vest when the fair market value of the stock is 50 per share.

Number of shares 1 000 x fmv of the stock 50 50 000. Mistakes can lead to overpayment of taxes or unwanted attention from irs auditors.