Getting paid in stock - tax question

Question

Im getting paid a lot in stock. So, do I need to pay taxes on the stock they gave me or till I sell those?

Thanks

Handle · Accepted Answer

At Amazon, stocks at vesting are treated as income and you will pay income tax on the total dollar worth of stock at the time of vesting. There are multiple options on how you pay tax, e.g sell a portion of the stocks to cover tax, or pay cash to cover tax. For example, if you vest $100K worth of stocks and you chose option “sell to cover tax”, the broker will sell a portion of your vest for tax holding, says 20%. So, you will receive $80K worth of stocks after that.

For the $80K worth of stocks, if you hold them, you will pay tax on any capital gain when you sell them.

HR5HR · Answer

Assuming you're in the US, you'll pay capital gains tax when you sell the RSUs. If you just keep them and don't do anything with them when they vest, you can hold them and it'll effectively work as if you bought that number of RSUs yourself. So when you sell later on, you'll be taxed on any gains from that point on.

19g615l3awwikl · Answer

You pay taxes at the time they are sold. If they are worth less than they were awarded for at the time of sale, you can deduct the loss but still have to pay on the $ you got from it. It’s a bit of a mess.

bob123345678 · Answer

Stock/RSU eg in post-IPO public companies: yes. You actually owe taxes on the stock the moment it vests for the amount it was worth when it was given to you. It’s the same as if you were given cash from a tax perspective, it just happens to be transferred in stock. There are usually options you can select with your employer to sell a portion of those shares to cover taxes if you have RSU, even sometimes in pre-IPO companies. Of course you could also sell all shares the moment you get them and pay tax on the amount you got as if it were income, then buy whichever other stock or etf or whatever you want. Those are the same from a tax perspective. Feel free to double check this with an accountant or your HR. Stock options (eg pre-IPO startups typically): no in most cases. You should plan out when/if you want to exercise though. The tax situation there can get complicated and you can get stuck in situations where you want to leave a pre-IPO company but need to exercise, and that results in a large alternative minimum tax bill, but you can’t sell the stock because it’s private and maybe sales are controlled by the board. Definitely things to plan for if that’s your situation.

Getting paid in stock - tax question

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