RSUs Vested in June. Your Preparer Won't Call Till March.

He is a principal engineer at a large public tech company. His RSUs vest every quarter, and the June tranche was a big one: about $180,000 of stock landed in his brokerage account in the middle of the month. His company withheld 22% for federal taxes and sold enough shares to cover it. Everything looked routine.

His tax preparer is good at what she does. She will call in March, ask for his W-2 and his brokerage 1099-B, and file an accurate return. But by March, every decision that could have changed the outcome of this year's vests will already be locked in. The withholding gap will be a bill. The shares he held will have either gained or lost value with no plan behind it. The year will be closed.

That nine-month gap between the June vest and the March phone call is where most of the planning opportunity lives. Here is what happens inside it, and what a mid-year review catches that a spring filing cannot.

The Withholding Gap Starts the Day Your RSUs Vest

When RSUs vest, the full value is ordinary income, the same as salary. Your employer withholds on it, but usually at the flat federal supplemental rate of 22% on the first $1 million of supplemental wages. If your total income puts you in the 32%, 35% or 37% bracket, that 22% is not enough.

On $180,000 of vested stock, the difference between 22% withholding and a 35% marginal rate is about $23,000 of federal tax that nobody collected. California adds its own layer: supplemental withholding on RSUs is 10.23%, while the top state rates run above 12%. Stack a few quarterly vests on top of a senior salary and the gap can reach well into five figures before the year is half over.

None of that shows up as a problem in June. It shows up in April, often with an underpayment penalty attached.

Why the Preparer's Calendar Does Not Fit Your Equity Calendar

A tax preparer's job is to report what already happened. That work is necessary, and a good preparer does it well. But the calendar is built around filing season, not around your vesting schedule.

Your equity runs on its own calendar. RSUs vest quarterly or monthly. Trading windows open and close around earnings. Estimated tax deadlines fall on April 15, June 15, September 15 and January 15. Each of those dates is a chance to adjust. A March conversation can only look back at them.

That is the core difference between tax preparation and tax strategy. One records the year. The other shapes it while there is still time to act.

What a June Review Actually Covers

A mid-year review after a big vest is not complicated. It asks a short list of questions while the answers can still change the result.

1. How big is the withholding gap, and how do you close it?

The first step is a projection: salary, bonus, every vest so far, and every vest still scheduled for the year, measured against what has been withheld. From there you can close the gap with a September 15 estimated payment, a January 15 payment, or extra withholding from your paycheck for the rest of the year.

Extra withholding has one useful quirk. The IRS treats withholding as paid evenly throughout the year, no matter when it actually came out of your paycheck. Increasing it in the fall can cover a shortfall from the spring without a penalty for the earlier quarters.

The target is usually a safe harbor. If your adjusted gross income is over $150,000, paying in at least 110% of last year's total tax, or 90% of this year's, generally protects you from the federal underpayment penalty. California has its own rules and a front-loaded estimate schedule, so the state side needs its own check.

2. Should you sell the June shares or hold them?

Once the shares vest, you have already paid ordinary income tax on their value. Holding them from that point is an investment decision, and it creates a second tax event later. If the stock rises, the growth is a capital gain. If it falls, you paid tax on value you no longer have.

Many executives hold by default, not by choice. A June review makes it a decision: how much of your net worth is already in this one stock, what selling now costs in tax (often very little, since your basis is the vesting price), and what holding exposes you to.

3. Is the rest of the year's selling on a schedule?

If you are an insider or subject to blackout windows, selling on short notice may not be possible. A 10b5-1 plan sets the schedule in advance, and that schedule decides which tax year each sale lands in. We have written more on how a 10b5-1 plan decides the tax bill. The point for June is simple: if a plan is going to shape this year's taxes, it needs to be set up well before the year ends.

4. What can offset the income before December 31?

A heavy vesting year is the right year to look at offsets, and most of them have a year-end deadline.

Retirement accounts. Maxing your 401(k), and using a mega backdoor Roth if your plan allows it, moves income out of the current year or into tax-free growth.
Charitable giving. If you give to charity anyway, donating appreciated shares you have held more than a year can beat writing a check. You avoid the capital gain and deduct the full market value, within IRS limits. A donor-advised fund lets you bunch several years of giving into a high-income year.
Health savings account. If you have a qualifying high-deductible plan, an HSA contribution is deductible and grows tax-free for medical costs.

None of these can be used in March for the year that just ended, apart from a few IRA and HSA contributions. They have to happen while the year is open.

5. Is a move part of the plan?

If you are thinking about leaving California for Texas, Florida or another state, the timing of your move and the timing of your vests are tied together. California can tax RSU income that was earned while you worked there, even when the shares vest after you leave. A June review is the right moment to line up a move date with your vesting schedule, rather than discovering the overlap on next year's return.

What Year-Round Planning Looks Like

The difference is not a single clever strategy. It is a few check-ins at the moments that matter.

After each major vest: update the income projection and the withholding gap.
Before each estimated tax deadline: decide whether a payment is needed, and how much.
Before the fourth quarter: set up or adjust selling plans, charitable gifts and retirement contributions while there is still time.
At year end: confirm the numbers, so the return in the spring is a formality rather than a surprise.

That rhythm turns the tax bill from something that happens to you into something you designed. It is what we mean by year-round tax planning, and it is the gap a filing-season relationship cannot close on its own.

The Bottom Line

Your RSUs do not wait for filing season, and your tax planning should not either. The June vest is already on the books. What happens next, from the withholding gap to the sell-or-hold decision to the year-end offsets, is still open.

A free 15-minute discovery call is a good place to start. We will look at where your year stands and tell you whether a full strategy session makes sense. Call (619) 280-2700 or email info@RoadmapTax.com.

FAQ

Why does my RSU withholding fall short?

Employers usually withhold federal tax on RSUs at the flat 22% supplemental rate on the first $1 million of supplemental wages. If your total income puts you in a higher bracket, the tax you owe on the vested shares is more than what was withheld, and the difference comes due when you file.

How do I avoid an underpayment penalty after a large RSU vest?

Make estimated payments or increase your paycheck withholding before year end. If your adjusted gross income is over $150,000, paying in at least 110% of last year's total tax, or 90% of this year's, generally meets the federal safe harbor. California has separate estimated tax rules.

Should I sell my RSUs as soon as they vest?

It depends on how concentrated you already are in your employer's stock and on your goals. You have already paid ordinary income tax on the value at vesting, so selling right away usually creates little additional tax. Holding turns the position into an investment, and any change in value becomes a capital gain or loss when you sell.

What is the difference between a tax preparer and a tax strategist?

A tax preparer files your return based on what already happened during the year. A tax strategist works with you during the year to plan withholding, estimated payments, stock sales, charitable giving and retirement contributions before the year closes, when those decisions can still change the outcome.

When is the best time to review my RSU taxes?

Right after a large vest, and again before the September 15 and January 15 estimated tax deadlines. A mid-year review leaves time to close a withholding gap, set up a selling plan and use year-end offsets.

Related reading on concentrated stock tax strategy: Why Holding RSUs After They Vest Creates a Second Tax Bill (and What to Do About It).

Your RSUs Vested This Quarter. Here's Why the Tax Bill Comes Due in January. covers tax planning for tech executives in more detail.

We go deeper into RSU tax planning in Moving to Florida With RSUs: When California Still Taxes Your Equity After You Leave.

Related reading on RSU tax planning: How California Still Taxes Your RSUs After You Move.

For more on concentrated stock tax strategy, see How to Diversify RSUs Without a Tax Catastrophe.

We go deeper into year-round tax planning in Planning Your Move Out of California: A Tax Timing Playbook for Tech Executives.

Related reading on RSU tax planning: Why Your RSU Withholding Didn't Cover the Tax Bill (And What to Do About It).

We go deeper into RSU tax planning in Your RSUs After a Layoff: Tax Deadlines You Can't Miss.

Want to talk this through? Book a free 15-minute discovery call