However, RSUs are given for free and only have value after they have vested, differing from stock options. Both restricted stock and RSUs become taxable only when the vesting schedule has been completed. With restricted stock, the full amount of the vested stock has to be taxed as ordinary income in the vesting year. What Is Restricted Stock?
How are restricted stock units taxed?
The way you're taxed depends on whether you sell the stock at a higher price than its fair value at the time of vesting, and how long you held the stock. A restricted stock unit is a substitute for an actual stock grant. If your company gives you an RSU, you don't actually receive company stock.
Are restricted stock awards taxable?
Under normal federal income tax rules, an employee receiving a Restricted Stock Award is not taxed at the time of the grant (assuming no election under Section 83 (b) has been made, as discussed below). Instead, the employee is taxed at vesting, when the restrictions lapse.
