Restricted stock unit, or RSU, refers to a form of compensation issued by an employer to an employee in the form of company stock units. Restricted stock units are issued to employees through a vesting plan and distribution schedule. RSUs give employees interest in company stock but no tangible value until vesting is complete. After RSUs are done vesting, they are given a fair market value and are considered income. Some of the shares are withheld for income tax purposes while the rest are given to the employee who can then sell them.
Companies often offer employees stock options that are issued to them or purchased through Restricted Stock units (RSU).
How do I report my RSU?
If you have RSUs the amount should be shown in box 14 of your W-2 copy. This amount should also be included in the wages (box 1) of your W-2. Box 14 is used by employers to list various items and there is not a standard list of codes, you can use the options for "Other Not Listed Here" in place of RSU Gain.
If you have not sold the stock units you do not need to report this information anywhere else. Most commonly these stocks are not sold in the year they are purchased so you will not have any further information to report. If you received a Form 3921 please save this form for your records.
If you have sold the stocks you will also report the sale of these stock options on Schedule D. You should have also received a 1099-B to report the sale of these stocks to you. You can enter this information on Schedule D by taking the following path:
- Income (select my forms)
- Stocks, Mutual Funds, Cryptocurrency, Collectibles, etc.
Please use the 1099-B information to report this sale. The only difference with reporting this sale is the Cost Basis. Your cost will be any amount you paid out of pocket for the stocks plus the amount included in your federal wages as the value of the stocks when vested. This is generally any amount you paid plus the amount that was include in Box 14 of your W-2 from the year the stocks vested. This information will be on your prior year W-2 and a Form 3921 from that year if your company issued you that form.
You can review more information on Restricted Stock Units in this IRS article.