RSU Year-End Tax Checklist for Bay Area Employees

Why do RSUs create a surprise tax bill?

The IRS taxes the value of your shares when they vest, not when you sell. Withholding on this kind of pay can be a flat rate. That rate may be lower than your real rate, so the gap shows up in April.

Restricted stock units (RSUs) are a promise to deliver company shares later. Our glossary explains a restricted stock unit in plain terms. This post gives a year-end checklist. It is general education, not tax advice. Your CPA knows your full return.

How does the IRS tax RSU income?

IRS Publication 525 covers stock that comes with a risk of forfeiture. It says that when the property becomes substantially vested, “you must include its FMV, minus any amount you paid for it, in your income for that year.” FMV means fair market value.

In practice, vesting is the taxable moment. The shares’ value on that day counts as income for the year. Your holding period for the shares starts at vesting, too, according to the same publication. Gains or losses after vesting are a separate matter when you sell.

Check your plan documents and your W-2 with your CPA. Plans differ, and some include special elections.

Why does 22% withholding fall short for some people?

Publication 15 for 2026 says the federal withholding rate on supplemental wages is 22%, or 37% on supplemental wages above $1 million in a calendar year. Ask your payroll team whether your vests are withheld this way.

Your real tax depends on your total income. A bonus plus a large vest can push income into higher brackets. When your rate is above 22%, the withholding is too small. When it is below, you get a refund.

Here is how to think about it with round numbers, for example only:

The numbers above are not a forecast. Your CPA can run your actual figures.

What should you check before December 31?

Use this year-end list. Work through it with your CPA or planner.

Steps 3 and 4 are the most time-sensitive. A withholding change only applies to pay still to come this year. The IRS also offers a free Tax Withholding Estimator on its website.

Can you give shares instead of cash?

Possibly. The IRS has a rule for gifts of “qualified appreciated stock,” which is stock with readily available market prices that is capital gain property. A gift of shares held long enough may be treated differently than a gift of cash. Details such as holding period and income limits matter, so talk to your CPA first.

Giving shares can fit a plan that already includes tithing or gifts to ministries. Our post on gifting appreciated stock or selling first explains the trade-offs. A donor-advised fund is one way to give shares now and choose gifts later. See our guide to giving appreciated stock and bunching.

What if the shares are a large part of your wealth?

Many people with RSUs hold a lot of one company’s stock. That ties your income and your savings to the same employer. It is a question about risk, not a call to sell.

Ask your planner how much of your net worth rests on one company, and what happens to your plans if the price falls. Taxes belong in that talk, because selling shares can create a tax bill of its own. Write down your answer before the next vest.

Is there a faith angle to equity pay?

Luke 12:48 teaches that much is required of those who are given much. A large vest can raise real questions: how much to save, how much to give, and how much to spend. Our glossary on stewardship frames those choices.

A written plan helps you decide before the vest, not after. That is part of what year-end planning is for.

Where can you learn more?

Our guide to RSUs, ISOs and ESPPs covers the three main types of equity pay. If you hold options, see our post on ISO exercise and AMT questions. The tax planning page explains how Seek First works on taxes.

Next step

Seek First offers Tax Strategy & Filing with an in-house CPA team, or the team can work with your CPA. Book a free 20-minute call at /contact or call (866) 398-4044.