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I work for starbucks, and receive RSUs (shares) every November. I have also Netbenefits account for managing this shares. Even though I don't sell my shares, every December some amount of RSU gain paid in my payslip and I pay huge amount of tax over it.

Now, my question is, how can they transfer this RSU gain into my payslip even though I didnt sell any shares?

Is this kinda profit distribution?

Because My shares in netbenefits accounts stays same.

Thanks in advance.

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    An RSU isn't a share, but something that will, upon vesting, turn into a share. When that happens, you are taxed on the market value of the share. Typically, the withholding is handled by given you some fraction of the shares resulting from the RSUs, the rest withheld as taxes. For example, if you get 10 RSUs, when the vest, you'll see 6 or 7 shares added to your account, with the other 3 or 4 "sold" on your behalf and the proceeds being withheld for taxes. (If those proceeds are more than the tax owed on the original RSUs, you'll usually get the rest back on a future paycheck.) – chepner Jan 26 at 17:49
  • At the end of the vesting period, can I sell them? and If I sell, am I going to pay huge amount of tax again? – David Green Jan 26 at 18:39
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    Before the vesting period ends, all you have is a promise from the company to give you stock. It's not worth anything, so you pay no taxes on it. On vesting, the RSU is replaced with stock, on the value of which you pay tax immediately, but once. The stock is then yours to hold or sell as you please. When you do sell the stock, you will owe capital gains tax on the difference between the price when the RSU vested and the price at which you sold it (or, if the price has gone down, you can claim a capital loss to offset your income). – chepner Jan 26 at 18:42
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    In short, before they vest: it's a promise to give you stock. After they vest, it's treated as if you had received money to buy an equivalent amount of stock, then used the after-tax portion of that money to buy the stock. – chepner Jan 26 at 18:43

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