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How to report RSUs on tax return: Guide for Americans

Ucha Vekua

31.03.26

Read time 3 minutes

If your employer compensates you with restricted stock units, knowing how to report RSUs on tax return forms is essential for staying compliant with the IRS.

Luckily, most of the work is already done for you. Your employer reports vested RSUs on your W-2, and if you sold shares, your brokerage sends you a 1099-B.

Your main job is making sure that everything appears correctly on your return and that you're not paying more tax than you owe.

This guide walks through the reporting process step by step so that you can file your taxes accurately and on time.

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Table of contents
What are RSUs? How to report RSUs on tax return Common mistakes and how to avoid them

What are RSUs?

Restricted stock units are a type of employee compensation where your company promises to give you stock shares once you meet certain conditions. These conditions usually involve staying with the company for a set period, known as a "vesting schedule."

When RSUs are first granted, you don't owe any taxes because you don't own the shares yet. Taxes come into play when the shares vest and transfer to you.

At that point, the IRS considers the value of those shares as income, similar to your salary or a bonus. You'll pay ordinary income tax on the fair market value of the shares on the vesting date.

If you later sell the shares for more than they were worth at vesting, you'll also owe capital gains tax on the profit.

💡 Learn more about how RSUs are taxed.

How to report RSUs on tax return

Check your W-2 for vested RSU income

When your RSUs vest, your employer includes their value as wages on your W-2 form.

Look at Box 1 (Wages, tips, other compensation). The fair market value of your vested shares will be added to your regular salary in this box.¹

Your employer should also withhold federal income tax, Social Security, and Medicare taxes on this amount. You'll see these withholdings reflected in the appropriate boxes on your W-2.

Overall, this income gets reported on your tax return the same way your regular wages do.

Report stock sales on Schedule D

If you sold any of your vested shares during the tax year, you'll need to report the sale. Your brokerage will send you Form 1099-B showing the proceeds from the sale.¹

Use Schedule D (Capital Gains and Losses) to report the transaction.¹

You'll need to know your cost basis, which is the value of the shares when they vested. Since you already paid income tax on that amount, your cost basis prevents you from being taxed twice on the same value.

Calculate your gain or loss by subtracting your cost basis from the sale price.

If you sell within a year of the vesting date, the gain counts as short-term and gets taxed at the same rate as your regular income. If you held them for longer than a year, you'll pay the lower long-term capital gains rate on any profit.²

Double-check your cost basis

Your brokerage should report the correct cost basis on Form 1099-B, but they don't always get it right. The cost basis should be the fair market value of the shares on the vesting date, since you already paid income tax on that amount.

If the brokerage reports a cost basis of zero or a number that seems off, you could end up paying tax twice on the same income.

File estimated taxes (if needed)

If your employer didn't withhold enough tax when your RSUs vested, or if you had a large vesting event, you might need to make estimated tax payments throughout the year. The IRS expects you to pay taxes as you earn income.

Estimated tax payments are typically due quarterly on:³

April 15
June 15
September 15
January 15

If you receive a big RSU vesting in February, for example, you may need to make an estimated payment by April 15 to avoid penalties.

Common mistakes and how to avoid them

Here are a few common errors that can lead to overpaying taxes or triggering IRS notices:

Forgetting to adjust your cost basis: If your brokerage reports a cost basis of zero on Form 1099-B, correct it to the fair market value at vesting to avoid being taxed twice

Missing estimated tax payments: Large vesting events can push you into a higher tax bracket, and if your employer didn't withhold enough, you might owe penalties for underpayment

Confusing vesting date with grant date: You owe taxes when shares vest and transfer to you, not when they're initially granted

Selling without thinking about the holding period: Selling shares less than a year after vesting means paying short-term capital gains tax at your regular income rate instead of the lower long-term rate

Make sure to keep records of your vesting schedule, stock prices on vesting dates, and any tax withholdings because these documents will help you verify that your tax forms are accurate.

Bottom line

Generally speaking, you'll need to check your W-2 for vested share income and use Form 1099-B and Schedule D if you sold any shares.¹

Just don't forget to verify your cost basis so you're not paying tax on the same income twice!

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Sources

Fidelity - Filing taxes for your restricted stock, restricted stock units, or performance awards
Nerdwallet - How RSUs Are Taxed—And 3 Tax-Savvy Steps to Take
Turbotax - How to Report RSUs or Stock Grants on Your Tax Return

Sources checked 03/30/2026

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