The RSU figure in Box 14 of your W-2 shows how much of your wages came from restricted stock units that vested during the year. That amount is already included in your Box 1 wages, so it doesn’t add anything to this year’s tax bill. Its job is to document the cost basis of the shares you received, which you’ll need when you sell them so you don’t pay tax on the same income twice. On the 2026 W-2, the IRS split the old Box 14 into Box 14a and Box 14b, and your RSU amount now appears in Box 14a.1Internal Revenue Service. 2026 General Instructions for Forms W-2 and W-3
What the Number Actually Represents
Box 14 (now 14a) is the W-2’s catch-all field. Employers use it for items that don’t have a dedicated box, and the IRS doesn’t standardize the labels inside it. Your RSU line might read “RSU,” “RSU VEST,” “STK INC,” or just “RS.” The label doesn’t change the tax treatment.
Whatever the code, the dollar figure is the fair market value of the shares that vested and were delivered to you during the year, calculated using the stock price on the vesting or delivery date times the number of shares. That same amount is already baked into Box 1 (total wages), Box 3 (Social Security wages), and Box 5 (Medicare wages). Under federal tax law, RSUs become taxable as ordinary wages at vesting, when the shares are no longer at risk of forfeiture.2Office of the Law Revision Counsel. 26 USC 83 – Property Transferred in Connection With Performance of Services
So on this year’s return, you don’t enter the Box 14a number as a separate line anywhere on your 1040. Tax software asks for Box 14 codes during W-2 input and files the information without creating another tax event. The reason to care about it is what happens later.
Why Box 14a Matters When You Sell the Shares
When you eventually sell shares you received from an RSU vest, your brokerage reports the sale on Form 1099-B. Your taxable gain is the sale price minus your cost basis, and for RSU shares the correct cost basis is the fair market value on the vesting date, the same figure your employer put in your W-2.3Internal Revenue Service. Publication 551 (12/2025), Basis of Assets
Brokerages frequently report the wrong basis. Some show zero. Some show the net amount after sell-to-cover shares were withheld rather than the full fair market value at vest. If you file using that figure, you’ll pay capital gains tax on income you already paid ordinary income tax on at vesting. The Box 14a amount is your proof of what the basis should be.
A concrete example. You received 200 shares at $75 per share, and $15,000 was included in your W-2 that year. Two years later you sell them at $90 each for $18,000. Your real capital gain is $3,000, the appreciation since vesting. If the 1099-B shows a basis of $0 and you don’t correct it, you’d be taxed as though the gain were $18,000.
Fixing a Wrong Cost Basis on Form 8949
You correct an incorrect 1099-B basis on Form 8949. Enter the basis exactly as the 1099-B shows it in column (e), even though it’s wrong. In column (f), enter adjustment code B, which flags the reported basis as incorrect. In column (g), enter the adjustment needed to bring the basis up to the right figure, pulled from your Box 14a amount.4Internal Revenue Service. Instructions for Form 8949
Using the numbers above, you’d enter $0 in column (e), code B in column (f), and a $15,000 positive adjustment in column (g). That reduces the reported gain from $18,000 to $3,000. Tax software usually walks you through the entries, but it can only produce the right answer if you give it the original vesting value.
Hold on to your W-2 and any confirmation statements from your employer’s stock plan administrator for as long as you own the shares, plus three years after you sell. If you have multiple vesting dates in the same stock, each tranche has its own basis. Tracking them separately matters when you choose which lots to sell.
Why the Tax Withheld at Vest Is Often Too Little
RSU income is treated as supplemental wages, so your employer withholds federal income tax at a flat 22%. If total supplemental wages for the year top $1 million, the rate on the excess is 37%.5Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide – Section: 7. Supplemental Wages FICA taxes (6.2% Social Security up to the wage base, 1.45% Medicare with no cap) come out on top of that.6Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
The 22% rate is a convenience figure, not a prediction of what you’ll owe. For 2026, the 32% bracket starts at $201,775 single and $403,550 joint; the 35% bracket starts at $256,225 and $512,450.7Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 If your marginal rate is 32% and only 22% was withheld on a vest, you owe the 10% gap at filing. On a $100,000 vest, that’s $10,000 before you’ve touched any state tax. Larger vests, or several vests in a year, compound the shortfall.
A high-earner Medicare surcharge adds to the gap. Your employer must withhold an additional 0.9% Medicare tax on wages above $200,000 in a calendar year, regardless of filing status; the joint-filer threshold is $250,000 when you reconcile at filing.8Internal Revenue Service. Topic No. 560, Additional Medicare Tax A big RSU vest can push you across that line even when your base salary alone wouldn’t.
The usual fixes are quarterly estimated payments on Form 1040-ES (due April 15, June 15, September 15, and January 15 of the following year) or a new W-4 that increases withholding on your regular paychecks.9Internal Revenue Service. 2026 Form 1040-ES To avoid an underpayment penalty, you generally need to pay at least 90% of your current-year tax or 100% of last year’s total tax through withholding and estimates. If your prior-year adjusted gross income was over $150,000, the safe harbor rises to 110% of last year’s tax.10Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty
Watch the Wash Sale Rule Around Vest Dates
A less obvious trap: if you sell shares of your company’s stock at a loss and receive new shares of the same stock through an RSU vest within 30 days before or after that sale, the IRS disallows the loss under the wash sale rule.11Office of the Law Revision Counsel. 26 USC 1091 – Loss From Wash Sales of Stock or Securities A vest counts as acquiring substantially identical stock, even though you didn’t choose when it happened.
The disallowed loss isn’t lost forever; it gets added to the basis of the newly vested shares. But you lose the immediate deduction and the bookkeeping gets messier. Before harvesting a loss on company stock, check your vesting schedule. A 31-day gap on both sides of the sale keeps the deduction.
If You Work at a Private Company
Section 83(i) lets some private-company employees elect to defer the income from vested RSUs for up to five years after the vesting date, which can help when there’s no public market to sell shares into to cover the tax.12Internal Revenue Service. Guidance on the Application of Section 83(i) Notice 2018-97 The eligibility rules are narrow (the company’s plan must cover at least 80% of U.S. employees, and senior officers and 1%+ owners are excluded), the election must be made within 30 days after shares transfer, and the full vest-date value still becomes taxable when the deferral ends. If you’re pre-IPO and facing a large vest, it’s worth evaluating with a tax advisor.
One Note About Other Box 14a Entries
Box 14a can hold more than one item. Some states use entries there to calculate state-specific deductions or credits, such as state disability insurance contributions. If your Box 14a has both an RSU entry and a state-related entry, treat them separately in your software: the RSU figure flows to cost basis tracking, while a state entry may generate a state tax deduction. Follow the prompt for each code on its own terms.