Restricted Stock
Annotated diagram of Schedule DTax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.

Restricted Stock

Restricted Stock

Restricted stock, RSUs, and performance shares have become prominent forms of stock grant. Browse an overview of this section below, or explore the subtopics to the left.

In addition to the main areas about basic and advanced topics in all these types of grants, see the special subsections that are exclusively about restricted stock units and performance shares.

Selected Articles

Taxes Advanced

UPDATES! Restricted Stock & RSUs: 10 Mistakes To Avoid On Your Tax Return This is premium content

Tax returns involving income from restricted stock and restricted stock units (RSUs) can be confusing. The potential for mistakes is increased by new IRS reporting forms and rules for the 2019 tax season. This article explains errors to avoid when reporting stock compensation and stock sales on your tax return.
Basics

The Great Benefits Of Restricted Stock And RSUs

Podcast included! Restricted stock and restricted stock units (RSUs) offer more certainty than stock options (though less upside). Depending on your attitude toward risk and your experience with swings in your company's stock price, the certainty of your restricted stock's value can be appealing. This article explains these and other advantages of restricted stock and RSUs.
Taxes Advanced

How To Report Sales Of Company Stock On Your Tax Return

Form 8949 and Sch. D diagrams! If you sold in 2018 any shares that you acquired from equity compensation or an ESPP, you will need to report the sale on the federal tax return that you file in 2019. Learn here what you must know to avoid expensive mistakes and unwanted IRS attention. Our annotated diagrams of Form 8949 and Schedule D can help you make sense of the reporting rules.
Show More Selected Articles
Restricted Stock Units

Restricted Stock Units Made Simple (Part 1): Understanding The Core Concepts

Restricted stock units (RSUs) are the most popular alternative to stock options, but they work very differently. This article series explains the basic facts of RSUs, including vesting and tax treatment, that you must know to make the most of an RSU grant.
Basics

VIDEO! Restricted Stock & RSUs (Part 1): Key Aspects To Know

Presented by the editor-in-chief of myStockOptions.com, this engaging video covers the fundamentals of restricted stock, restricted stock units (RSUs), and performance shares to help you make the most of these grants. This video covers key concepts, such as vesting schedules and understanding your grant's value. Running time: 4:37
Taxes Advanced

Avoid Overpaying Tax On Stock Sales: Understand Forms 1099-B And 8949 For Tax-Return Reporting This is premium content

UPDATES! The stock-sale information provided by brokers on IRS Form 1099-B has changed. Cost-basis reporting, both for your broker on Form 1099-B and for you on your tax return, is now more complex, confusing, and vulnerable to errors. This article explains the crucial facts you must know to avoid overpaying tax or attracting unwanted IRS attention.
This is simply a selection of the many articles in this section.
Use the navigation to the left to explore all of the categories in this section.

Selected FAQs

Basics

What are the top 10 questions I should ask about my grant of restricted stock or RSUs?

You should know the answers to the following questions. Understanding the topics involved will help you make the most of your restricted stock/RSU grant and prevent costly mistakes...
Taxes

When and how is a grant of restricted stock or RSUs taxed?

The timing of taxation is different than that of stock options. You pay tax at the time the restrictions on the stock lapse. This occurs when...
Restricted Stock Units

What is the difference between restricted stock and restricted stock units (RSUs)? This is premium content

While restricted stock and RSUs are siblings, they have important differences, as explained by this FAQ, which includes a quick-reference table clearly presenting the comparison...
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Basics

My restricted stock will vest soon. What must I do and decide? This is premium content

When vesting occurs and the restriction on the shares lapses, you have some choices but fewer than you would with stock options, which require decisions about exercise timing and method. Restricted stock and restricted stock units do not...
Basics

What is restricted stock? Does it differ from restricted securities?

Don't confuse restricted securities and restricted stock. They are very different...
Basics

Does this website's content on restricted stock also apply to restricted stock units (RSUs)?

Generally, yes, with two exceptions. First, with RSUs you cannot...
Basics

Why do many companies grant restricted stock and RSUs instead of stock options? This is premium content

The compensation philosophies of companies are continually changing under the influence of many factors, from accounting rules to...
Basics

What advantages do restricted stock and RSUs have over stock options? How do the two grant types compare?

It's not easy to determine which type of grant is better for you...
Basics

Why do companies shift from granting stock options to granting restricted stock units, and then sometimes back again to granting at least some stock options? This is premium content

Surveys indicate that many companies use a variety of grants, including both stock options and restricted stock units (RSUs) in tandem. There are many possible reasons why a company might switch from options to RSUs...
Taxes Advanced

UPDATES! 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...
Taxes Advanced

The value of my restricted stock has fallen since vesting. If I sell my shares at year-end, do I get a credit for the income tax I paid at vesting, or do I net the loss against capital gains? This is premium content

The vesting and the sale are separate transactions and generate different types of income. Unless you made an 83(b) election to be taxed at grant, you were first taxed on the stock's value at vesting, which created ordinary income to you. With restricted stock units (RSUs), taxation occurs...
This is simply a selection of the many FAQs in this section.
Use the navigation to the left to explore all of the categories in this section.