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Tax Center › Restricted Stock Withholding

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Articles

Restricted Stock Taxation: What You Need To Know (Part 2) This is premium content

Restricted stock grants carry their own requirements and tax rules, which can significantly differ from those of stock options.

Decisions At Vesting With Restricted Stock (Part 1): Withholding This is premium content

Vesting is a crucial moment for making decisions about your restricted stock. This article series examines your alternatives. Part 1 discusses withholding.

IRS Guide To Auditing Techniques For Stock-Based Compensation

The IRS tips its hand on what its agents look for in audits related to all types of stock pay to ensure compliance, whether by corporations or executives.

FAQs

When my restricted stock or RSUs vest, will I need to make estimated tax payments? This is premium content

At a minimum, when the restricted stock vests your company will withhold taxes at the required federal withholding rate for...

UPDATES! How have recent tax laws changed the withholding taxes on my equity compensation? This is premium content

Tax rates for people in the highest ordinary income brackets rose under the American Taxpayer Relief Act and the Affordable Care Act. The table in this FAQ outlines the income levels that trigger changes in the withholding of federal and FICA taxes...

What, when, and how are the taxes withheld from my restricted stock? This is premium content

Restricted stock withholding is similar to withholding for most other forms of supplemental compensation. You can have different choices for paying taxes, or your company may automatically...
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How does my employer determine the amount of withholding due at the vesting of my restricted stock grant? This is premium content

Federal income tax is imposed on the value of the shares at vesting (or at grant if you made a Section 83(b) election, which is unavailable for RSUs). Tax is generally withheld at the flat rate of...

Too much Social Security tax was withheld. How do I recover the excess amount? This is premium content

When too much Social Security tax is withheld above the Social Security wage base during a calendar year, your recovery approach depends on whether...

What is backup withholding? How do I prevent it or recover it? This is premium content

Backup withholding is a form of tax withholding on income from stock sales, along with interest income, dividends, or other types of payments that are reported on Form 1099. Your brokerage firm is required to make backup withholding if you are...

UPDATES! How does a non-US resident reclaim US backup withholding? This is premium content

If you are a nonresident alien and do not complete and file Form W-8BEN with the IRS upon receiving stock-sale proceeds, such as those stemming from equity awards, your brokerage firm will assess backup withholding on the proceeds. To reclaim backup withholding, take the following steps...

What is a lapse election, and why do I need to make it before the restricted stock or restricted stock units vest? This is premium content

The "lapse" is the end of the restriction that prevented the shares from vesting and being transferred to you. The lapse election is the method by which you choose withholding methods and what will be done with the...

When my restricted stock vests, how does my company choose the stock price for calculating my W-2 reporting and my share withholding? This is premium content

This depends on how your stock plan defines fair market value (FMV). Some companies use the...

Form 8949 and Sch. D diagrams In the tax-return reporting for restricted stock, do I need to report shares that I sold for taxes or that my company used for tax withholding? This is premium content

You should definitely report a sale for taxes at vesting if you received a 1099-B that shows the proceeds. The IRS will...

What are the federal tax-withholding rates on stock compensation? Can my company use a different rate? This is premium content

Supplemental income, such as stock compensation, is subject to one of two flat rates that are linked to rates in the income tax brackets. The rate that applies to your supplemental income depends on the...

May I have my employer withhold more taxes upon the vesting of my restricted stock than the minimum required amount? This is premium content

This can depend on different factors. Whether you can withhold more or not, the mandatory federal withholding rate is...

How soon after my restricted stock vests must the IRS receive my withholding taxes? This is premium content

Companies are still uncertain about the exact timing. With NQSOs, the clock doesn't start ticking until you take action to exercise. However, with restricted stock and RSUs...

I'm no longer an employee, so why is there withholding on my restricted stock vesting? This is premium content

Former employees' transactions, regardless of the reason for termination, follow the same withholding and reporting requirements that apply to...

When someone dies with a restricted stock grant, do tax withholding and reporting apply if the vesting is accelerated or allowed to continue? This is premium content

The acceleration and vesting trigger ordinary income. Whether this is W-2 income and taxes are withheld, or whether it is 1099 income, depends on...