I have RSUs that vest in 2024 but will not release until 2025 to my brokerage account. When does the company pay and withhold tax?
When Restricted Stock Units (RSUs) vest, they are considered income and are subject to tax at that time. The company is generally required to withhold applicable taxes at the time of vesting, not when the shares are released to your brokerage account. Here's how it typically works: 1. **Vesting Date (2024 in your case)**: The fair market value of the RSUs at the time they vest is reported as ordinary income. Your employer will calculate the amount of income tax, Social Security, and Medicare taxes that need to be withheld based on the value of the shares at vesting. 2. **Withholding**: To cover the tax withholding, employers often either withhold the necessary amount of shares (a process known as "net settlement") or require you to provide funds in another way (such as cash or selling a portion of the vested shares). 3. **Release Date (2025 in your case)**: When the shares are actually released to you, there is no additional tax event if the shares are simply transferred to your brokerage account. However, any change in the share price between the vesting date and the release date does not affect the income tax you pay at vesting. Instead, it will impact the capital gains tax when you eventually sell the shares. Remember, the income from the vesting of RSUs will be included in your W-2 form from your employer, reflecting the taxes withheld. It's important to report this income on your tax return for the
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