how to report RSUs vesting

Hi, I am far out of my depth here and could use some help.

I work at a major international tech company, and started late last year. Part of my pay package is a stock grant of RSUs which are traded on the USA market. They vest over 4 years. My income is currently under the tax shield amount, but I expect it to be a little bit over it next year if we include vested stocks.

My first vesting period is coming up, and I have a few questions:
1) when it comes to tax reporting, is it just the amount vested that I will report, on my USA tax return *next* year?
2) Do I pay taxes on the vesting in the USA, or do I report the foreign taxes paid on it? Charles Schwab is automatically withholding for UK taxes.
3) If I don't sell at vesting, do I pay USA capital gains tax on my tax return next year?
4) If I *do* sell at vesting, do I owe USA taxes on that on top of the UK taxes?


thanks all! I'm trying to be financially responsible but grew up in a household with 0 financial literacy, so I'm struggling a little bit here.

This is definitely above my pay grade so I have to say that I don't know the answer to your question but hopefully someone will come along soon to give a definitive answer. It looks like the RSUs are given to you once they "vest" so you would pay the taxes on them the year you receive them.

https://carta.com/blog/rsu-restricted-stock-unit/

An RSU is a promise from your employer to give you shares of the company’s stock (or the cash equivalent) on a future date if certain restrictions are met. Unlike with stock options, with RSUs you don’t have to pay anything to get the stock. Instead, you are usually only responsible for paying the applicable taxes when you receive the shares.

Unlike ISOs (where you usually don’t pay taxes until you sell your shares) and NSOs (where you pay taxes both when you purchase and sell your shares), with RSUs, you usually have to pay ordinary income tax on their market value when the shares are delivered, which is usually as soon as they vest. Your company may allow you to sell a portion of your vested shares to cover the taxes. Then, you can choose whether to hold the remaining shares or sell them right away.

When you sell, you may also need to pay capital gains tax on the increase between the price you sell at and the fair market value of the shares when you vested. How long you hold the shares usually determines whether you will pay short or long term capital gains tax. If you sell right after your shares vest, you probably won’t experience a gain and may not have to pay additional tax.

This is definitely above my pay grade so I have to say that I don't know the answer to your question but hopefully someone will come along soon to give a definitive answer. It looks like the RSUs are given to you once they "vest" so you would pay the taxes on them the year you receive them.

https://carta.com/blog/rsu-restricted-stock-unit/

yeah, my company withholds some amount from the vesting to automatically cover UK taxes...I just don't know if I need to pay US taxes at the same time :-/

thanks for a reliable link! I'm never sure where exactly to get info from...

I know this isn't what you asked, but can your company pay for someone to provide you with tax advice? It's very common for tax prep from one of the big four to be part of the compensation package for an American working for a US tech company outside the US. And this is a very common scenario for the big four to see with US international individual returns.

yeah, my company withholds some amount from the vesting to automatically cover UK taxes...I just don't know if I need to pay US taxes at the same time :-/

thanks for a reliable link! I'm never sure where exactly to get info from...

The UK may well have a different timetable for taxing RSUs, I don't know.  However, when you do pay the US tax on your RSUs even if it is year(s) later you will be able to claim a foreign tax credit (FTC, form 1116) to reduce what you pay to the US, possibly to zero.

I know that I make sure I pay my UK taxes on my UK and US pensions before December 31st each year (they aren't due until January 31st when you file a self assessment) so that I can claim an FTC on my US return the following year knowing exactly how much UK tax I actually paid. This reduces my US taxes on those pensions to zero.

I know this isn't what you asked, but can your company pay for someone to provide you with tax advice? It's very common for tax prep from one of the big four to be part of the compensation package for an American working for a US tech company outside the US. And this is a very common scenario for the big four to see with US international individual returns.

yeah unfortunately my company only covers tax advisors if the company moves you out of the USA. if you were already abroad, it's not covered. (and deloitte is several thousand £s otherwise!)

we're...pushing to change that policy internally.