Just the word alone can slump the shoulders and bring on a mixture of anger and anxiety. As a senior employee with Microsoft, your RSU (Restricted Stock Units) that form part of your remuneration package, while great and tying you to the success of the company, can have a large impact on your tax situation.
The extra tax that you pay of your RSU employee shares hurts your cash flow each year.
For more information on how RSUs work, read our definitive guide to Restricted Stock Units on Chris’ website – chrisnairn.com.au
When the tax bill does come, the last thing you want to do is fund the tax bill from your bank account or credit card. Or worst, draw money off your home mortgage.
So how do you plan and what are the best ways to Eliminate your Tax Surprises?
Essentially, it comes down to 3 steps. Estimate, Aside & Parcel
Estimate your Tax Bill based on the number and value of shares that are vesting this financial year.
Once you have Estimated the Tax, put Aside the funds required (sell shares is what we advise) to pay the tax bill when it is due.
Select the Parcel of shares to sell that has the least amount of gain (again, helping your future tax bills).
Sounds like a bit of work, but, creating a Tax forecast could save you thousands of dollars.