There's a tax mistake so common with RSUs that I'd bet a meaningful share of tech employees have made it without ever knowing. It quietly hands the IRS thousands of dollars you didn't owe. And it hides in one wrong number on your tax return: your cost basis.

Let me show you exactly where it happens, so you can check your own return and stop paying tax twice on the same shares.

First, how RSUs are taxed (the part most people do get right)

When your RSUs vest, the full value of those shares is treated as ordinary income — just like salary. It shows up on your W-2, and your employer usually sells some of the shares automatically to cover withholding. So far, so normal: you got income, you paid tax on it.

That vesting value becomes your cost basis in the shares — the amount you've already been taxed on. Remember that word. It's where everything goes wrong.

Where the double-tax happens

Later, you sell the shares. Your brokerage sends you a 1099-B reporting the sale. Here's the problem: for a lot of these sales, the broker reports your cost basis as $0, or leaves it blank.

If you (or your software) take that 1099-B at face value, the IRS thinks the entire sale price is a capital gain. But you already paid ordinary income tax on the vesting value. So now you're paying tax a second time on money you were taxed on the day the shares vested.

Quick example. 100 shares vest at $50 — that's $5,000 of income on your W-2, and your cost basis is $5,000. A while later you sell them at $55, for $5,500. Your actual taxable gain is $500. But if the 1099-B shows a $0 basis, your return reports a $5,500 gain. You just volunteered to be taxed on an extra $5,000 you'd already been taxed on once.

How to fix it

The fix is straightforward once you know to look. When you sell vested RSU shares, the cost basis should equal the value that was already taxed at vesting (the per-share price on the vest date × the number of shares you sold).

On your return, that means adjusting the cost basis on Form 8949 to the correct amount, rather than accepting the broker's $0. The information you need is on the supplemental statement many brokers provide alongside the 1099-B — it lists the "adjusted" or "true" cost basis even when the main 1099-B shows zero. Your tax software has a field for this adjustment; a CPA does it in their sleep.

If you've already filed past returns this way, it may be worth having a CPA look at amending them. This error is common enough that finding it once can pay for the review several times over.

The withholding gap — the other RSU surprise

While we're here, there's a second RSU tax trap that's less about double-paying and more about under-paying. Employers typically withhold federal tax on RSU income at the flat 22% supplemental rate. If your marginal tax bracket is higher than 22% — and on a tech income, it very likely is — that withholding doesn't cover what you actually owe.

The result: your RSUs vested, it felt like the tax was handled, and then you owe a chunk more at filing. This isn't an error like the basis problem — it's a cash-flow surprise. The fix is to estimate the gap during the year and set the money aside (or make an estimated payment), so April isn't a gut-punch.

A simple RSU tax checklist

• Confirm the vesting value hit your W-2 (it almost always does).
• When you sell, check the 1099-B cost basis — if it's $0 or blank, that's the red flag.
• Adjust the basis on Form 8949 to the vesting value so you're only taxed on the real gain.
• Remember the 22% withholding may not cover your real bracket — plan for the gap.
• If past returns used a $0 basis, ask a CPA whether amending makes sense.

None of this is exotic. It's just a place where the paperwork is genuinely confusing and the default settings work against you. Catch it once and you've likely saved more than a year of advisory fees.

Key takeaways

• RSUs are taxed as ordinary income at vesting — that value becomes your cost basis.
• Brokers often report a $0 basis on the 1099-B, which causes you to be taxed twice on the same shares.
• Fix it by adjusting the cost basis (Form 8949) to the vesting value — the number's on your broker's supplemental statement.
• Separately, the flat 22% withholding often underpays your real bracket — set aside the difference.

The move: Not sure whether you've been double-paying on RSU sales? Book a Clarity Call and we'll pressure-test how your equity is being taxed.

Educational only — not personalized tax advice. Confirm your specific situation with a qualified CPA (we partner with Jalada Tax Services).