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vesting rsu

Technical topics regarding tax preparation.
#1
zl28  
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Is it fair to presume that as soon as you vest with rsu, the employer processes the w2 and the withholding of some of the rsu
to cover the federal and state and payroll taxes?

Just spent 2 hours doing annualization method for client with a few thous in penalties....i though he told me
he got his paystub in Dec 2020.....now he's telling me he vested for 250k in March 2020.
 

#2
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My experience is usually the flat 28% federal withholding rate is not enough when the RSUs are worth several hundred thousand.
 

#3
zl28  
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Sounds accurate - is that the norm - to do a flat 28%.

Client has alot of alimony.

But he also had unexpected cap gains
 

#4
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28% in the mandatory rate. I will my clients to opt for a 35% rate if the employer allows.
 

#5
AlexCPA  
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Milkshake wrote:28% in the mandatory rate.


Are you referring to the 22% withholding rate?

Per IRS Publication 15 (emphasis mine):

Withholding on supplemental wage payments to an employee who doesn't receive $1 million of supplemental wages during the calendar year.

If the supplemental wages paid to the employee during the calendar year are less than or equal to $1 million, the following rules apply in determining the amount of income tax to be withheld.

Supplemental wages combined with regular wages. If you pay supplemental wages with regular wages but don't specify the amount of each, withhold federal income tax as if the total were a single payment for a regular payroll period.
Supplemental wages identified separately from regular wages. If you pay supplemental wages separately (or combine them in a single payment and specify the amount of each), the federal income tax withholding method depends partly on whether you withhold income tax from your employee's regular wages.

If you withheld income tax from an employee's regular wages in the current or immediately preceding calendar year, you can use one of the following methods for the supplemental wages.

Withhold a flat 22% (no other percentage allowed).

If the supplemental wages are paid concurrently with regular wages, add the supplemental wages to the concurrently paid regular wages and withhold federal income tax as if the total were a single payment for a regular payroll period. If there are no concurrently paid regular wages, add the supplemental wages to, alternatively, either the regular wages paid or to be paid for the current payroll period or the regular wages paid for the preceding payroll period. Figure the income tax withholding as if the total of the regular wages and supplemental wages is a single payment. Subtract the tax already withheld or to be withheld from the regular wages. Withhold the remaining tax from the supplemental wages. If there were other payments of supplemental wages paid during the payroll period made before the current payment of supplemental wages, aggregate all the payments of supplemental wages paid during the payroll period with the regular wages paid during the payroll period, figure the tax on the total, subtract the tax already withheld from the regular wages and the previous supplemental wage payments, and withhold the remaining tax.

If you didn't withhold income tax from the employee's regular wages in the current or immediately preceding calendar year, use method 1b.
Even more of my antics may be found on YouTube:
https://www.youtube.com/channel/UCXDitB ... sMwfO19h7A
 

#6
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22%, duh :)
 


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