RSU records often show several different numbers. Federal tax rules explain why gross compensation, withholding, shares delivered, and later sale proceeds can differ.
CURRENT LAW
Federal tax materials distinguish compensation connected to services from later investment gains. Washington family-law analysis still requires separate attention to the state statutes and the facts of the award.
- IRS Publication 525 — equity compensation and withholding contextInternal Revenue Service · agency guidance · United States — federalSource checked: 2026-09-07. Federal tax source for compensation and withholding concepts; confirm tax-year application with a tax professional.
- IRS Publication 525 — Taxable and Nontaxable IncomeInternal Revenue Service · agency guidance · United States — federalSource checked: 2026-09-07.
RECORD THE EVENTS SEPARATELY
For each grant, record grant date, vesting date, delivery, gross shares, shares withheld or sold to cover taxes, net shares or cash, and any later sale. Payroll income can therefore exceed the cash deposited into a bank account.
- IRS Publication 525 — Taxable and Nontaxable IncomeInternal Revenue Service · agency guidance · United States — federalSource checked: 2026-09-07.
- In re the Parenting and Support of E.J.S., No. 80912-1-IWashington State Courts · published opinion · WashingtonSource checked: 2026-09-07. Published Washington Court of Appeals decision concerning vested and delivered RSUs in child-support income.
POLICY PROBLEM
A cash-flow shortfall after withholding may matter to budgeting, but it does not by itself answer whether compensation is income or property. Preserve the payroll and brokerage records for the professional reviewing the legal question.
- IRS Publication 525 — equity compensation and withholding contextInternal Revenue Service · agency guidance · United States — federalSource checked: 2026-09-07. Federal tax source for compensation and withholding concepts; confirm tax-year application with a tax professional.
- IRS Publication 525 — Taxable and Nontaxable IncomeInternal Revenue Service · agency guidance · United States — federalSource checked: 2026-09-07.
Questions for a qualified professional
- Which tax year and federal form report the event?
- What shares were withheld or sold to cover taxes?
- What is the cost basis for any later sale?
Frequently asked questions
Why is cash received lower than payroll RSU income?
Withholding and sell-to-cover transactions reduce the shares or cash delivered after the gross compensation event is reported.
Sources
- IRS Publication 525 — equity compensation and withholding contextInternal Revenue Service · agency guidance · United States — federalSource checked: 2026-09-07. Federal tax source for compensation and withholding concepts; confirm tax-year application with a tax professional.
- IRS Publication 525 — Taxable and Nontaxable IncomeInternal Revenue Service · agency guidance · United States — federalSource checked: 2026-09-07.
- IRS Topic 427 — Stock optionsInternal Revenue Service · agency guidance · United States — federalSource checked: 2026-09-07.
- In re the Parenting and Support of E.J.S., No. 80912-1-IWashington State Courts · published opinion · WashingtonSource checked: 2026-09-07. Published Washington Court of Appeals decision concerning vested and delivered RSUs in child-support income.
Educational information, not individual legal advice. Read our disclaimer.