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My Restricted Stock Units were included in my Income on my W-2 (Box 1) and End of Year Paystub. However, my company also deducted from my paystubs a substantial amount as After-Tax Deductions. I do not see this amount on my W-2. I'm just trying to figure out what that offset was.. It was Restricted Stock Net Gain After-Tax Deduction and RSU Vest Net After-Tax Deduction. Thank you for your help!

  • Was there also a substantial positive pre-tax credit? – GS - Apologise to Monica May 6 at 17:41
  • Yes, there was a substantial amount in income as RS Vest Cash and RS Unit Vesting amounts. – Amy May 6 at 18:13
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When RSUs vest, the value at the time generally becomes taxable income for you (if they aren't tax-exempt for some reason), and your employer is responsible for withholding tax just like with normal income. Often, what employers do is to make a rough guess about the tax liability and directly sell some of your RSUs to pay that liability, and give you the rest of them.

They then need to report what happened on the W-2. The way they do this is to report the total value of the RSUs as gross (pre-tax) income, the value of the RSUs they actually delivered to you as a net (post-tax) deduction from the payslip because you received them as shares instead of cash, and the value of the RSUs they sold as a tax withholding. These numbers gets added to the rest of your income figures for the year and any inaccuracies in the withholding will be corrected when you work out your final tax for the year.

  • Thank you. One question.....So, I should have in shares the amount of both After-Tax Deductions of the Restricted Net Gain and the RSU Vest Net? Or, is one amount the stocks held for withholding of taxes for when I eventually sell the stock? – Amy May 6 at 19:02
  • Or, is one the amount of stock sold to increase my federal withholding because I paid income on the full amount. And, I had to sell a portion of stock to pay taxes. – Amy May 6 at 19:07
  • @Amy hmm, I'd missed that you have two deductions. I'm not sure then. Can you match up what you actually got in shares with either of the numbers or the total? If "Restricted Net Gain" is quite small and "RSU Vest Net" is larger, then the first one might be the change in the value of the shares between them vesting and being delivered to you, or something like that. I'm from the UK so am not too familiar with the exact details of how these things are handled in the US, hopefully someone who is familiar will answer. – GS - Apologise to Monica May 6 at 19:28
  • Thank you for your help! – Amy May 6 at 19:52

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