Restricted Stock Unit (RSU)
Got RSUs? Let’s plan for the tax before it’s due.
Who we help
We work with employees who receive RSUs, whether the company is public or private:
Employees at public companies with regular vests
Employees at private or pre-IPO companies holding units that haven’t paid out yet
Anyone whose company just went public or was acquired
People changing jobs, leaving a company, or moving states with RSUs still vesting
Households where one or both spouses receive equity and the tax bill keeps coming in higher than expected
Optional, if you serve New Jersey: Many New Jersey residents work for New York employers. RSU income earned while working in New York is often taxed by New York, and New Jersey generally gives a credit for it. We make sure the income is split correctly so you aren’t taxed twice.
How RSUs are taxed
Your RSUs are taxed as pay on the day they vest, whether you sell the shares or not.
At vest: The value of the shares that day is added to your W-2, just like a bonus. It’s subject to income tax, Social Security, and Medicare.
Withholding: Your employer usually withholds federal tax at a flat 22%. If you’re in a higher bracket, the rest comes due when you file. For someone in the 35% bracket, a $100,000 vest typically has $22,000 withheld but about $35,000 owed, a gap of roughly $13,000 before state tax.
When you sell: Your cost basis is the value you were already taxed on. Selling soon after vesting usually adds little or no tax. If you hold, any later gain or loss is a capital gain or loss.
The most common mistake we see: Brokers often report a cost basis of $0 for RSU shares on Form 1099-B. If that isn’t corrected on your return, you pay tax on the same income twice. We check every sale against your vest records.
RSUs at a private or pre-IPO company
Most private-company RSUs don’t pay out, and aren’t taxed, until the company goes public or is sold.
They’re usually “double-trigger”: you need both time-based vesting and a liquidity event. When that event happens, every unit you’ve already earned pays out at once, and the whole amount is taxed as pay that year. That can mean:
One tax year carrying several years’ worth of RSU income
A lock-up, often about 180 days after an IPO, when you can’t sell shares even though the tax is due
Withholding that falls well short of what you owe
If your company is talking about an IPO or a sale, the best time to plan is before it happens.
How we help
We prepare your return correctly and plan ahead so the tax on your equity doesn’t catch you off guard.
Accurate tax returns. We reconcile your W-2, broker statements, and vest records so your cost basis is right and nothing is taxed twice.
Withholding and estimated tax planning. We project what your upcoming vests will cost and set up W-4 changes or estimated payments to help you avoid penalties and April surprises.
Sell-or-hold tax analysis. We show the tax effect of selling at vest, holding, or selling over time, so you and your financial advisor can decide with the numbers in front of you.
IPO and acquisition planning. We model the payout year, the lock-up period, and how much cash to set aside for the tax.
Multistate and move planning. We split RSU income between states when you’ve moved or work across state lines.
Year-end planning. We look at charitable gifts of appreciated shares, retirement contributions, and other ways to lower the tax in a big equity year.
Working with your other advisors. For larger positions, we coordinate with your financial advisor and estate attorney on strategies such as donor-advised funds, charitable trusts, and exchange funds.
What to bring
Bring these to your first meeting, or send them before we meet:
RSU grant agreements and your vesting schedule
Your W-2 and final pay stub of the year
Form 1099-B and the broker’s supplemental tax statement
Vest and sale confirmations from your stock plan account
Last year’s tax return
Your spouse’s W-2, if you file jointly
The dates you lived and worked in each state, if you moved or worked across state lines
Frequently asked questions
When do I pay tax on my RSUs?
When they vest and the shares are delivered to you, whether you sell or not. The value that day is treated as pay and shows up on your W-2.
Why do I owe tax when my employer already withheld?
Employers usually withhold federal tax at a flat 22%. If your bracket is higher, you owe the difference when you file. We can adjust your withholding or set up estimated payments so the bill doesn’t land all at once.
What happens if I have RSUs at a private company?
Most private-company RSUs pay out only after the company goes public or is sold. Until then, you aren’t taxed and can’t sell. When the event happens, all the units you’ve earned are taxed together that year.
When can I sell my private-company RSUs?
Generally only after the IPO or sale, and often not right away. After an IPO, there’s typically a lock-up of about 180 days. Some companies also run tender offers that let employees sell earlier.
Am I taxed twice when I sell?
Not if your return is prepared correctly. Your cost basis is the value already taxed on your W-2, but brokers often report it as $0. We correct it so you pay tax only on the real gain.
What happens to my RSUs if I leave my job?
Unvested units are usually forfeited when you leave. For private-company RSUs, some plans let you keep units you’ve already earned until the company goes public or is sold. Your grant agreement has the details, and we can review it with you.
Should I sell my shares when they vest?
That’s an investment decision, but the tax side is simple: selling at vest usually adds little or no tax. Holding is like taking cash and buying your employer’s stock. We’ll show you the tax effect of each choice.
Do I need to make estimated tax payments?
Often, yes. If withholding won’t cover your tax, estimated payments or higher withholding on your paychecks can help you avoid underpayment penalties. We’ll calculate what’s needed for your situation.
Why work with us
You get a CPA who understands equity compensation and takes the time to understand yours.
Geri Gjika is a Certified Public Accountant with over 10 years of experience in public accounting. Here we don’t believe in one-size-fits-all solutions. We review your grants, your timeline, and your goals, then explain your options in plain language so you can make confident decisions.
Ready to plan for your next vest?
Book a consultation and bring your latest RSU statements. We’ll review where you stand and what to do before your next vest or tax deadline.