Glad to hear it!

I appreciate it 👍

Excellent, glad it helped!

Thanks, I'm glad you found it helpful.

Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks

@@Dunker762 However, if you do not have access to a professional like JUDITH ANN PEACE, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments

@@Lourd-Bab Oh please I’d love that. Thanks!

@@Dunker762 Judith Ann peace is her name

Lookup with her name on the webpage.

It would be the same they would just purchase 55k worth of stock based on the price of when you start depending on their policy and just provide you those shares in the 4 year period.

A monetary value would just be money.

hello. Did you get a solid answer for this?

@@raradwan123 Example: 100k over 4 years Stock price on the day of the grant (or start date or previous month's average or whatever the company chooses) = $ 100 Number of RSUs allocated = 100k / 100 = 1000 When they grant you RSUs based on a monetary value, the number of RSUs are determined by the market value that has been chosen by the company. When they grant you RSUs based on a number, they just give you that many RSUs.

What company is offer that amount ?? I'm curious.

Generally, no. Private company stock needs some type of liquidity event (company goes public, does a purchase offer, is acquired, etc) in order to sell your shares. There are also secondary markets/platforms that you may be able to sell your shares, but that depends on possible restrictions by your company, the demand for the stock and possibly how much you have available for sale.

@javawealth thanks for your prompt response!

Yep, good point. I primarily focused on the tax consequence side rather than how the number of RSU granted is determined.

If you're actually in the 10-12% marginal bracket, then yes, more will be withheld than necessary & you'll get that $ back when you file. This assumes that enough is already being withheld from your regular paychecks. At the end of the day, all of your withholdings from pay & bonus is going to the same place & is reconciled against your overall tax liability.

That's right. It's taxed as income even if you don't sell your shares and you may have additional taxes owed if you're in a higher bracket and the default withholding doesn't cover it. Also correct that there would be capital gains / losses when you sell, relative to the price at vesting.

Although it may feel like you're taxed 3x, no money is ever taxed twice. It's treated the exact same as a cash bonus or paycheck, just the mechanics are slightly different. And when you sell, you pay capital gains taxes only on the gain if the stock price went up after it vested, just like you would with any other investment. Likewise if the stock went down & you sold, you can claim a capital loss & lower your taxes. Glad you enjoyed the video

@@JavaWealth But why do I get taxed when the RSU vests in the first place ? This sounds worse than stocks if anything because I'm initially paying tax on it when it vests and then again when I sell stocks on the vested amount 🧐

The same reason you're taxed on income or a cash bonus that is paid to you. Once an RSU vests & becomes a stock that you own, you have what's called "constructive receipt", meaning you now have full control & ownership of that asset.

Correct, which is why the question to ask yourself is whether you'd go buy your company stock w/ a cash bonus. Holding that stock carries all of the related investment risks with it. I just did a live stream around how falling company stock affects your equity comp, available here: kzfaq.info/get/bejne/jNqdlbGa37itj5c.html To your last comment, you can also use that loss to offset other capital gains that you'd realize in the same year. The $3K cap is for offsetting other types of income (e.g. wages)

@@JavaWealth thank you!

Generally, you'll give up your unvested RSUs if you voluntarily quit. There can be other outcomes depending on why you're leaving (disability, retirement, severance, etc.). Check the termination clause in your grant document to be sure.

@@JavaWealth thank you

I have the same question

First, clarification that this is not to be considered tax advice and to consult your tax advisor: Full disclaimer here: www.javawealth.com/disclaimer If your 1099-B shows the sell-to-cover shares, the IRS will also receive a report of the sale and your Form 8949 should match. The basis of that sale is the FMV of the shares on the vesting date. If your 1099-B shows cost basis of '0', it most likely also has something that says "basis not reported to IRS".

Yep, that's right. With RSUs, the amount of "bonus" income you realize each year is 100% tied to your company's stock price when it vests. So in your scenario, this year's bonus would be $20K (2,000 x $10) & next year's would be $30K (2,000 x $15).

The stock offset is usually the income realized from your vested RSUs minus what was withheld for taxes. It's just a way for payroll to reconcile the earnings being reported vs. what was actually paid to you through your paychecks. So in your example, you got $89K worth of your company stock, they sold $25K worth of that to withhold for taxes & the $64K came to you via the remaining stock in your brokerage account. Both the income and withholdings from RSUs would be included in the totals in your W-2. Hope that helps!

Cost basis is set when the RSUs vest (in this video's example, at $10/share). So if you sell them 2 years later still at $10/share, you'd have no capital gain/loss.

@@JavaWealth Thank you. Please help me in more detail. The company already got the tax (in this example $5k). If we don't sell the stocks in the same year; will $5k be returned to us when we file tax? If it is not, then 2 years later, when we sell the stocks, we have to adjust $5k ($10/share) as our cost basic since the 1099-B will give us 0 as the cost basic, right?

In that case, they'll use the stock price when the RSUs are granted (or some average of the last X days) to convert to a # of RSUs. E.g. - "You're awarded $50K of RSUs, vesting annually over 4 years" - The company stock price is $50/share - You'll get a grant of 1,000 RSUs. 250 RSUs will vest each year. - The actual value of those RSUs (& earned income) is driven by the stock price on the dates that they vest.

yes, both RSU wage income and the corresponding withholdings should be included in the same W-2 boxes.

VERY generally speaking, stock awards = RSUs, RSAs and option awards = ISOs, NSOs.

Because of this exact issue, many private companies issue RSUs that have "double trigger" vesting, meaning it's not realized income until it hits both the date requirement & some liquidity event (like going public or being acquired). That avoids the need to pay tax unless you're also able to sell the shares. It also may mean you realize a ton of income in one year... not the worst problem, but something to plan for. Here's my video on RSUs when you go public: kzfaq.info/get/bejne/bLKPnJZpp7bHaHk.html If they don't, then it could be tricky b/c you would have to pay taxes on money you can't get to. There is something called a 83(i) election that you can make to tell the IRS that you want to defer this RSU income for up to 5 years. The taxable value would be calculated using the FMV (often the 409A) when they vest.

@@JavaWealth Thanks for your answer, it was helpful. I am in the second category, it appears my company elected not to include a double trigger for the RSUs and staff leaving the company have to pay both the cost of the RSUs and the tax burden. In Australia there is no equivalent to an 83(i) election however RSU tax works the same. I have asked my company if they would consider extending a double trigger agreement to replace my current one - though they are under no obligation to and, given they have everything to lose, I would imagine they will decline. Crazy that the better the company does, the less I am able to share in their success - even if I contributed towards it.

Yes, one option is to sell some of your stock to cover the difference. You can also adjust your paycheck withholdings or use other cash. Whether you can keep the money until tax time vs. submitting an estimated tax payment to avoid an underpayment penalty depends on what's called Safe Harbor rules. I talk more about it in this video: kzfaq.info/get/bejne/rbZigsSYysy3lp8.html

You're right that your W2 will report the income related to your RSUs vesting. Your 1099-B reports the sales & any capital gain/loss. A common gotcha is the 1099-B will show a cost basis of $0, making it seem like your capital gain is the entire value of the stock & cause you to pay taxes twice on the same RSU money. Look for a Supplemental Information document, which will show an adjusted cost basis for you to determine your gain/loss.

Performance shares & PSUs are very similar to restricted stock & RSUs, but that vesting is tied to performance targets set by the company (shareholder return, sales goals, etc.). The difference between RS/PS vs. RSU/PSU mainly come down to whether you have voting rights and are paid dividends before they vest. Hope that makes sense!

@@JavaWealth thanks, what about TRSU. are they considered RSU or PSU?

I'll be honest, I've never heard TRSU. I would defer to your grant document on vesting details.

By RSU grant price, are you referring to the stock price when the RSUs vest? If so, then yes, selling the stock at a lower value would be treated as either short term or long term capital loss. The stock price when RSUs are actually granted doesn't come into play when talking about tax treatment.

Generally speaking, both the income and tax withholding related to your RSUs are included in the total W2 wages / withholding numbers. A big gotcha is that, when you sell your RSUs, your 1099 will show a cost basis of $0. If you use that $0, then you will get taxed twice on your RSUs bc it's also reported in your W2. But there is usually a supplemental document on your stock plan's account that shows the adjusted cost basis to use.

Yes, RSU income will show up in your W-2 wages. It gets taxed the same regardless of whether the company sells a portion to withhold for taxes or not. I didn't mention this in this video, but there is a common mistake that happens during tax prep that would cause RSU income to be double-taxed, and that's because it gets reported twice. I mentioned that RSU income is included in the W-2 wages. But taxpayers will also get a 1099-B that shows the stock sale & will show a Cost Basis of 0, and mistakenly report that as all capital gains. This article goes into more detail: www.forbes.com/sites/brucebrumberg/2019/02/27/five-tax-return-mistakes-to-avoid-with-restricted-stock-compensation

Answering the 2nd question first: The cost basis is set to the stock price the day that it vests. So if you hold onto the stock after it vests and then sell it for less than your basis, then it's a capital loss (long term if held > 1 year from the day it vests, short term if 1 year or less). I briefly mention it at 5:58. 83(b) elections apply to restricted stock awards, but you can't do it for RSUs. I plan on making a video that covers the 83(b) election (focusing more on early exercising ISOs since I honestly don't see restricted stock awards very often).

@@JavaWealth Thanks! This stuff is so confusing.

Correct. It's all based on when the RSUs vest. So if it's a "cliff" where they all vest at one time, that's when it becomes taxable income to you and when your company will withhold for taxes.

Your company may accept a withholding payment in cash. You can reach out to your stock plan admin for what options are available. Or if you used that cash and bought shares of your company in a brokerage account, you'd be accomplishing the same goal for all intents & purposes (which begs the questions: If you're bullish on the company, why wait for when RSUs vest? Why buy just enough to replace the # of shares withheld for taxes?).

Yes, you owe income tax & the applicable payroll (SS & Medicare) taxes on all of the RSUs. Just like you would for a cash bonus.

Yes, in this example, the $20K is all considered ordinary income & will show up on your W2, even if you don't sell any of the shares you receive. If you do keep your shares, your purchase date is the day they vested + your cost basis is $10. So from then on, it works just like any other investments where you'd create short-term/long-term capital gain/loss depending on when you sell & the price compared to your $10 cost basis.

I can speak to how it's generally done in the US, and it's similar to what you're saying. When RSUs are offered with a dollar amount, the number of shares that will be granted to you is determined using an average value of the stock in the days prior to the grant date.

Hey Lenny, your last line is on the right track. If you're projecting to be in the 35% marginal bracket, then consider putting aside (or paying estimated taxes of) another 13% of the total RSU income to cover additional taxes. Another way is to run a projection of your overall tax liability & estimated withholdings from paychecks, RSU income, etc. Then you'll have a better sense of any shortfall & whether you should pay estimated taxes throughout the year. You may consider hiring a tax professional to help with this.

@@JavaWealth thanks for the inputs. I'm going to talk with some tax professional and a financial advisor. I think I may be okay, but I'm going to make sure. I used the IRS withholdings calculator and determined that even with the sell, I shouldn't have additional withholdings required (unless the stock shot for the moon right after vest). My brokerage said that the RSUs should have the complete proper withholdings.

It'll usually be included in the withholding on your W2

Yes. The income from RSUs vesting is included on your W2.

Yes, when RSUs vest, they convert to shares that you own (& a % are sold to withhold taxes). So you still have access to the net shares if you quit. And just for completeness, unvested RSUs are forfeited.

Since the day they vest is technically when they are purchased, immediately selling them does mean that capital gains would be minimal. Just to clarify the question of "additional taxes", there is the possibility that the amount withheld by your company isn't enough to cover your income taxes (the thing I talk about at 4:15 of this video).

Your RSUs become taxable income when they vest, regardless of whether you sell them or not. From that point on, tax implications are just capital gains/losses the same as if you bought the stock outright on that day. Hope that makes sense!

@@JavaWealth ahh ok i see. since i payed tax already i dont have to in the future? unless if i made any capital gains right?

Sort of. The company will withhold taxes through selling some of your RSUs, but you may still owe more when you file your return if you're in a higher tax bracket. But outside of that, yes, the only other tax you'd owe is if the stock went up from there and you sell it for a gain.

When a company's stock, let's call it NVDA :), splits 10-for-1, the RSUs will also 10x. So you'd go from 2,000 to 20,000 RSUs.

@@JavaWealth thanks, I’ll follow your channel 👍

Hi Gary, technically you're taxed on all 2000 shares, and we used 700 of those shares to pay for the tax bill. To put it a different way, you got a $20K bonus, paid $7K in taxes, and take home $13K. There's no double-taxation going on or anything, just the way it works :).

Hi! This is super helpful. Thanks for the video. One Question - When I sale these 13k shares in future, will my basis for these 13k shares should be 20k (gross amount on my w2 that I paid taxes on) or will the basis be 13k only? Thank you so much!

Generally speaking, it's a way for companies to motivate employees to 1. stick around, and 2. have a vested interest in the company's success.