Question 1

Are RSUs taxed twice?

Accepted Answer

No — but it feels that way. You pay ordinary income tax once, when the shares vest, on their full value. If you then hold the shares and they rise, you pay capital gains tax only on the additional gain when you sell. The original vest value isn’t taxed again; your cost basis is the FMV at vest.

Question 2

Why did my employer withhold so little on my RSUs?

Accepted Answer

Your employer almost certainly used the flat 22% federal supplemental withholding rate. If your marginal bracket is 32–37%, that’s 10–15 points short — plus any state shortfall. It’s not a mistake; it’s the default mechanics of supplemental wage withholding. The fix is updating your W-4 or making an estimated payment.

Question 3

How much tax do I actually pay on RSUs?

Accepted Answer

Your full marginal rate: federal (up to 37%), state (0–13.3%), and the 0.9% Additional Medicare Tax if you’re above the threshold. Enter your numbers above for a dollarized figure rather than a percentage.

Question 4

Should I sell my RSUs immediately?

Accepted Answer

That’s an investment decision, not a tax one. Because your basis is the vest-date price, selling immediately triggers little or no additional tax — you’ve already been taxed on the value. Holding exposes you to concentration risk in a single stock that also pays your salary. The calculator surfaces the numbers; the call is yours.

Question 5

How do I avoid an underpayment penalty?

Accepted Answer

Meet a safe harbor: pay at least 90% of this year’s tax, or 100% of last year’s (110% if your AGI was over $150k), through withholding and estimated payments. Closing the RSU gap with extra W-4 withholding or a quarterly estimate is how most people stay inside it.

Question 6

What is the $1M supplemental wage cliff?

Accepted Answer

Once your cumulative supplemental wages (bonuses + RSU vests) exceed $1,000,000 in a calendar year, federal withholding on the excess jumps from 22% to 37%. It’s relevant for senior employees with large grants and is cumulative across employers within the year.