RSU & Stock Option Planner
Tech employees lose thousands to RSU tax surprises: employers withhold a flat 22% federal, but high earners often owe much more. Enter your grants and vesting schedule to see your true after-tax value, your withholding gap, and the quarterly estimated payments that close it.
Your vesting
The IRS charges interest (about 8% annually, adjusted quarterly) on the underpaid amount. Rough estimate on your $17,300 shortfall: $692. Paying quarterly estimates below wipes this out.
Where the gap comes from
| Tax | Actually owed | Withheld | Gap |
|---|---|---|---|
| Federal | $35,000 | $22,000 | +$13,000 |
| State | $9,300 | $5,000 | +$4,300 |
The math, in words: $100,000 × (35% federal + 9.3% state) = $44,300 owed, but only $27,000 was withheld.
Quarterly estimated payments (1040-ES)
Close the gap before filing and dodge the underpayment penalty. Based on this vest's tax picture alone — if you have other income, your safe harbor is higher.
Required = min(90% × this year's tax, 110% × last year's tax) − already withheld = $33,000 − $27,000.
Sell at vest vs hold one year
The vest itself is ordinary income either way — the only question is how the next year's price move gets taxed.
Per vest event
How the math works
RSUs are taxed as ordinary income the moment they vest, on the full fair market value — there is no "gain" concept at vest. Employers are required to withhold, and almost always use the IRS flat supplemental rate of 22% federal (37% above $1M), regardless of your actual bracket.
The withholding gap is simply actual tax owed minus tax withheld, computed separately for federal and state. A positive gap means you'll owe at filing time — and possibly underpayment penalties, which is why the planner converts it into four quarterly estimated payments on the IRS schedule (April 15, June 15, September 15, January 15).
For options: NSO spread at exercise is ordinary income. ISO exercises owe no regular income tax, but a qualifying disposition requires holding 2 years from grant and 1 year from exercise; otherwise the spread is recharacterized as ordinary income.
Common questions
Why is my employer's RSU withholding less than what I actually owe?+
The IRS lets employers withhold a flat 22% on supplemental wages (which includes RSU vests) up to $1M. If your marginal rate is 32%, 35%, or 37%, that flat rate systematically under-withholds — the difference is your problem at tax time, plus possible underpayment penalties.
Should I sell my RSUs at vesting?+
Mathematically, holding vested RSUs is the same as taking the cash and buying your company's stock — you're making a concentrated bet either way. Most planners recommend selling at vest and diversifying, but it's a personal risk decision, not a tax one: the income tax is owed whether you sell or hold.
What's the difference between NSOs and ISOs?+
NSOs (non-qualified stock options) tax the spread between strike and market value as ordinary income when you exercise. ISOs (incentive stock options) owe no regular income tax at exercise, and if you meet the holding periods the gain is taxed at lower long-term capital gains rates — but exercising ISOs can trigger Alternative Minimum Tax.
Do I need to make quarterly estimated payments for my RSU gap?+
If you'll owe more than $1,000 beyond withholding, generally yes — the IRS expects tax to be paid as income is earned. The planner's quarterly schedule (April/June/September/January deadlines) is a starting point; confirm with a tax professional, especially with state requirements layered on.