RSU cost basis: how to avoid paying tax twice when you sell
Short answer: Your RSU cost basis is the fair market value of the shares on the vest date, which was already taxed as wages on your W-2. Brokerage 1099-B forms often show a basis of zero or leave it blank for RSU shares, so you need the supplemental statement to report the correct basis on Form 8949. Without it, you can pay tax on the same income twice.
Why the 1099-B is often wrong for RSUs
When RSUs vest, the value is included in your W-2 wages and withholding is taken, often by selling some shares. When you later sell, the broker reports the sale on Form 1099-B. For compensation shares, the broker frequently does not report the basis that matches what was taxed through payroll.
“typically there’s going to be a supplemental statement that’ll accompany that that’ll provide that information. But a lot of like self preparers don’t know that.”
— Doug Johnson
Doug said he sees the same mistake on CPA-prepared returns, not only self-prepared ones.
How to report it
- Find the supplemental or “tax information” statement from your equity plan broker for each sale.
- Use the vest-date value per share times shares sold as your cost basis.
- On Form 8949, report the 1099-B basis, then enter an adjustment with code B so the basis matches the supplemental statement.
- Shares sold right at vest usually show a small gain or loss from price movement and fees, not the full sale amount.
A quick example
Say 100 shares vest at $50. Your W-2 includes $5,000. You sell all 100 shares at $51. Your real gain is $100, minus fees. If the 1099-B shows a basis of $0 and you file it as-is, you would report a $5,100 gain on income that was already taxed.
When to get help
Multiple grants, sell-to-cover lots, moves between states, and ESPP shares in the same account make basis tracking harder. See RSU sell-to-cover situations, RSU state tax after a move, and the RSU tax calculator. If you also hold ISOs, try the ISO AMT calculator.
Take the quiz, or request quotes. Get a quote does not show matched firm names to visitors.
Frequently asked questions
What is the cost basis of RSU shares?
Generally the fair market value on the vest date, which was included in your wages.
Why does my 1099-B show zero basis for RSUs?
Brokers often do not report the compensation portion of basis for equity award shares. The supplemental statement shows the adjusted basis.
How do I fix RSU basis on my tax return?
Report the sale on Form 8949 with the 1099-B figures and use adjustment code B to correct the basis.
Are RSUs taxed when sold?
Only the change in value after vest is taxed at sale, as a capital gain or loss. The vest-date value was taxed as wages.
Can I amend a return where I double-counted RSU income?
Generally you can file an amended return within the refund statute period. Ask a CPA to review it.
A boutique CPA firm dedicated to responsiveness and a white-glove client experience. We're the CPA firm for growing businesses with 250K - 10M in revenue, and high earners with equity compensation.
See Doug Johnson CPA’s profileRelated reading: how RSUs are taxed, RSU planning questions, RSU and equity compensation advisor.
Some professionals on Sam’s List pay for visibility or leads. Inclusion and order do not rank professionals. This page is educational and is not tax, legal, or investment advice. Firm names are never shown on Get a quote matches.
Quotes and client examples are what Doug Johnson described; they are not a guarantee of results.