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I'm reviewing the year to date figures on my last paycheck stub for 2018. There's this entry for RSU Tax Offset I'm trying to discern here. I can trace it back as a line item of a check stub 6 months after I joined the company which is when the first batch of RSU's were issued. This is also corroborated by another section in the same originating check stub, titled Other Benefits and Information which lists RSU Vesting as a line item.

The thing that's confusing is that the RSU Tax Offset is enumerated in the Additional Deductions section along side other after tax deductions like life insurance, etc. The curious thing is that those other deductions are all given a negative sign to indicate deductions, but the RSU Tax Offset has no negative sign. Can anyone make heads or tails of this? What is an RSU Tax Offset meant to communicate precisely? What is being offset and why?

RSU Tax offset in check stub segment

UPDATE

I reexamined the check stub that the RSUs vested on, and I realized that the sum of all the taxes paid that check stub were equal to the RSU Offset exactly. So part of the puzzle is explained, it certainly has something to do with taxes due on the RSUs.

The next baffling thing I need to grasp is that the figures for the Total Net Pay on last check stub break down as

Net Pay = (Gross pay) - (YTD Taxes) + (RSU Tax Offset) - (Pre/Post Tax Deductions)

That RSU paycheck has a net contribution of zero in this Net Pay calculation, because the YTD Taxes break up as (Salary YTD Taxes) + (Taxes on RSU) and the (Taxes on RSU) is equal to the RSU Offset.

  • Can you determine where these numbers ended up on your W-2? One way is to look at your final December paycheck and Compare the YTD numbers to the W-2. – mhoran_psprep Mar 9 at 18:12
  • @mhoran_psprep, I dug into it more, there's a direct relation to taxes paid for the RSUs. There's some mysterious role in the year to date net pay I can't figure next however. – jxramos Mar 10 at 0:22
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After staring at the RSU Vesting check stub (aka an off-cycle payslip) and entering in the taxes paid information to my personal accounting software it occurs to me that this RSU Tax Offset may simply be an accounting trick.

The trick here is to factor out taxes paid to the government into the actual line items that properly reflect the actual taxes paid, and thus to provide a mechanism for those figures to accumulate toward the YTD figures that ultimately roll up into our W2s. However, this must be done without creating a net change to payroll (there is no check corresponding to this check stub, no deposit to an external account etc). Basically you need some mechanism to reflect that taxes were paid, but not from your salary earnings, and thus the need for an additional line item to balance this tax debit in the earnings column of the paycheck. Therefore you need an equal and opposite tax credit in the earnings column, and that is what we apparently call the RSU Tax Offset.

I don't think there's any rhyme or reason why its thrown into the Additional Deductions section other than it being a generic catchall for all the variable deductions a population of employees may present a company's accounting department to contend with.

I'm thinking this RSU Tax Offset is a form of double-entry bookkeeping

Accountants and bookkeepers record transactions as debits and credits while keeping the accounting equation constantly in balance. This process is called double-entry bookkeeping. Double-entry bookkeeping records both sides of a transaction — debits and credits — and the accounting equation remains in balance as transactions are recorded. https://www.dummies.com/business/accounting/knowing-your-debits-from-your-credits/

There's a discussion here "RSU Offset" on paystub by another name of RSU Offset. The relevant comment being...

Most likely income taxes were withheld in the tax section in an amount equal to that offset amount and only the net RSUs after withholding are listed under the RSU line.

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This is no different from the withholding on any other kind of income. When you get an RSU from your employer, it's just like getting salary from your employer. Some amount of it is withheld from you and paid to the government and the intent is for that amount to equal the taxes you would pay on that income.

  • I'd appreciate an explanation from the downvoter. If there's something incorrect or unclear about my answer, I'd like to improve it. – David Schwartz Mar 10 at 23:10
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    It is completely different from other withholding. To start with, it’s positive. See @jxramos’s answer for an explanation. – prl Mar 13 at 7:17

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