Senior software engineer, age 33 · San Francisco, CA · Ongoing
San Francisco Tech Employee Built a Tax-Aware Plan Around RSU Vesting
Adjusted withholding and capital-gains planning around quarterly RSU vests; avoided over-withholding and bracket creep.
April tax surprise
+$12,000 owed−$1,000 refund
Challenge
Member's RSU vests were over-withheld at 22% supplemental rate while her marginal bracket was 35%, causing an unexpected April tax bill.
Approach
- 01Modeled annual income including RSU vests.
- 02Adjusted W-4 to cover the supplemental withholding gap.
- 03Scheduled estimated payments for the quarters of largest vests.
- 04Coordinated capital-gains harvesting around vesting dates.
Outcome
April tax-day balance moved from a $12K bill to a $1K refund. Estimated $4K in opportunity cost avoided through better cash deployment.
FAQs
How is RSU income withheld?
Default supplemental withholding is 22% up to $1M, 37% above. This is often well below an executive's marginal rate.
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