RSUs and U - Don’t Get Burned

A beautifully restored NSU Prinz 4. Get it? NSU is kind of like RSU? I'm a genius, I know.

Restricted Stock Units (RSUs) are taxed as ordinary income when granted by your employer and are reported as wages on your W-2. Since they appear directly on your W-2, you can accurately report them when filing your taxes.

However, when RSUs are sold, brokerage statements often list the cost basis as zero ($0). This is a major red flag, as the cost basis for RSUs is almost never zero.

To ensure correct reporting, review the supplemental statement provided by your broker. This document will reflect the amount already reported as taxable income, which serves as the adjusted cost basis for the RSU.

Just two months ago, a client nearly overpaid $7,000 in taxes due to an incorrectly reported RSU basis. Today, after identifying and correcting another error, we are amending their prior tax return and securing a $10,500 refund.

Your tax preparer plays a critical role in avoiding costly mistakes. Zero basis should be a warning sign for any experienced tax professional—and now, it should be for you as well. Always review your tax filings carefully, and don’t hesitate to double-check your preparer's work. Even the best professionals can make errors.