The short answer
RSUs are taxed as wages when they vest, at the stock's value that day, and that amount is already on your W-2. When you sell, your basis is that vest-day value. Many 1099-Bs show $0 or no basis, and if that isn't corrected, you pay tax on the same money twice.
Last reviewed: October 2026
This page explains how taxes and reporting work. It isn't a recommendation to buy, sell or hold any investment.
RSUs, step by step
- At vest: the value is added to your W-2 pay. Your employer usually sells or holds back some shares to cover withholding.
- When you sell: only the change in price since vesting is a gain or loss.
- On the return: if the 1099-B basis is $0 or blank, it's corrected on Form 8949 using the vest-day value from your supplemental statement.
Why people owe at tax time
Employers often withhold a flat 22% federal tax on RSU income. If your tax rate is higher, the difference shows up as a balance due in April. See Why do I owe this year?
ESPP shares
- You buy company stock at a discount, often up to 15%. Form 3922 records the purchase.
- When you sell, part of your profit, at least some of the discount, is taxed as ordinary income. How much depends on how long you held the shares.
- The same 1099-B basis problem applies, and it's fixed the same way.
Official source: IRS Publication 525, Taxable and Nontaxable Income.
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Disclaimer: This page is general information, not tax advice. Every situation is different, and tax rules change. Reading this page doesn't make you a client.