Tax question

[BEG]

I found out what kind of stock we sold last year from my husband. I initially had it as incentive stock options (ISO). He told me today it was Restricted Stock Units (RSU). The taxes on the RSU was a lot less than ISO (like about $3,500 difference).

I know that ISO are taxed as capital gains and RSU are taxed as regular income (I think) but I thought capital gains rates were 15%(long term) and taxed at your normal income tax rate for short term. I guess I don't understand why our tax due is around $3,500 LESS after I corrected the type of stock from ISO to RSU.

Anyone who understand the difference between ISO and RSU stock, can you tell me why turbo tax calculated our tax so much less?  I know I entered everything correctly. I have double and triple checked it but I'm afraid to file it.

[CG6468]

TurboTax knows the difference. All the terminology just confuses most of us. I'd just go with what the program develops, if you're positive that things are entered correctly.

[BEG]

Ok, I figured it out. It was recorded as income on his W2 (box 1). His company withheld a number of the shares sold to cover taxes. There were three different "lots" that were sold together last November. They all vested at different dates. Some of them were treated as a long term sale (held over a year past the vesting date) and some as a short term sale (held less than a year after the vesting date). So we already paid taxes on the lump sum with the amount of stock the company withheld to pay taxes.  

The reason for such a large difference in the beginning was I entered the sale as additional income as an ISO stock because the 1099-B didn't have any detail.  Didn't have what type, the number of shares or any shares withheld by the company to pay taxes.  My husband had to get his paperwork from the sale to find that information.  

After I entered all the details of the sale the difference was over $5k. My husband told me we sold this type of stock the year before but that year we had a CPA do it so that is why I didn't remember ever having to deal with this type of stock before.  

Why do they make this crap so confusing?

Oh on a lovely side note, CA owes us over an $8k refund.  They decided to start withholding more of our money (over the 9.6% they already withhold) as a totally interest free "LOAN" from the people in CA. You get a refund when you file taxes but this seems almost criminal. I could be earning interest or invest that extra $8k yet the state of CA decided to "borrow" it against our will and doesn't even give you any interest or even a simple thank you.      

[Ralph Wiggum]

Why do they make this crap so confusing?

Because it keeps CPA's in business. 

[Ralph Wiggum]

Ok, I figured it out. It was recorded as income on his W2 (box 1). His company withheld a number of the shares sold to cover taxes. There were three different "lots" that were sold together last November. They all vested at different dates. Some of them were treated as a long term sale (held over a year past the vesting date) and some as a short term sale (held less than a year after the vesting date). So we already paid taxes on the lump sum with the amount of stock the company withheld to pay taxes.  

The reason for such a large difference in the beginning was I entered the sale as additional income as an ISO stock because the 1099-B didn't have any detail.  Didn't have what type, the number of shares or any shares withheld by the company to pay taxes.  My husband had to get his paperwork from the sale to find that information.  

After I entered all the details of the sale the difference was over $5k. My husband told me we sold this type of stock the year before but that year we had a CPA do it so that is why I didn't remember ever having to deal with this type of stock before.  

Why do they make this crap so confusing?

Oh on a lovely side note, CA owes us over an $8k refund.  They decided to start withholding more of our money (over the 9.6% they already withhold) as a totally interest free "LOAN" from the people in CA. You get a refund when you file taxes but this seems almost criminal. I could be earning interest or invest that extra $8k yet the state of CA decided to "borrow" it against our will and doesn't even give you any interest or even a simple thank you.      

This sounds like you calculated it correctly, BEG.  I don't do personal taxes anymore but I still keep up with a lot of the regulations.

[BEG]

This sounds like you calculated it correctly, BEG.  I don't do personal taxes anymore but I still keep up with a lot of the regulations.

Thanks Ralph, that seriously makes me feel better.

What do you think about CA borrowing money from us, against our will and give us nothing in return.  It was suppose to end this year but I think try are going to try to keep it.

[Ralph Wiggum]

Thanks Ralph, that seriously makes me feel better.

What do you think about CA borrowing money from us, against our will and give us nothing in return.  It was suppose to end this year but I think try are going to try to keep it.

Anytime BEG.

I don't know how the state can do that to you, but from all I know, the stupid state is broke.  I think they have changed the rules to essentially borrow from the taxpayers (without your approval) rather than borrowing more money from conventional lenders or issuing bonds. 

You guys could absolutely be using that money in another more productive way, but I don't think you can do anything.  Just your luck that your hubby got transferred there, sorry.

[Karin]

It seems criminal to me, BEG.  Almost no other state would stand for that.  What is that bullshit? 

Now that they have to pay it back after using it interest-free, I imagine the Treasurer is crying in his beer.  They get addicted to the money just like a powerful drug, and they'll pay it back kicking and screaming, possibly in the form of IOU's.  I don't understand why there hasn't been a revolution of sane people in California.   

I get a little back from NY this year, I filed on March 16, no sign of it yet.  Come on, Cuomo!  Cough up my meager pennies!