Restricted stock units (RSUs) are a form of equity compensation that companies often grant to employees as part of their overall compensation packages. The taxation of RSUs in the United States is subject to specific rules, and the timing and amount of taxes owed can vary based on several factors. Here’s what you need to know.
Are restricted stock and stock options taxable?
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?
What is restricted stock?
Restricted stock is available to the employee under a graded vesting schedule that lasts for several years. Restricted stock units (RSUs) are similar to stock options in that they represent a promise to the employee that stock will be granted upon completion of a vesting schedule.
