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WILSONNNN · Oct 23, 2014, 08:59 AM

Working for UPS, they offer management RSUs i.e. stock grants that vest over a 5 year period. When each portion of the grant lapses, a portion of the grant is withheld for taxes.
Federal 25%, Social Security4.2%, and Medicare1.45%.

When I cash the Lapsed units I receive a 1099B.
IRS sends a CP2000 notice wanting to show this is income and collect taxes again on the funds.
I don't understand why I am taxed twice.
Cathy

ScottGem · Oct 23, 2014, 09:27 AM

Withholding is NOT tax, it is an amount set aside to be applied towards the tax you owe. So, when the grant lapses an amount is withheld for taxes. The amount of the grant is reportable income for the year, so you get a 1099B. So when you file your taxes, you add up all your income, subtract deductions and credits and this is the amount you owe in taxes. You then subtract from that, the amount withheld from income and the difference is either a refund or the amount you need to pay.

AtlantaTaxExpert · Oct 23, 2014, 03:58 PM

Actually, the Restricted Stock Unit (RSU) redemptions is a sale of stock which must be reported on Schedule D and Form 8949. This was probably not done in the year the RSUs were redeemed, so you need to amend the return for that year to submit the Schedule D and Form 8949.

Once the amendment is filed, the extra assessed tax will be removed.

I can help you with such an amendment. Please email me at the email address in my profile for a fee quote.