He was pledge class president. It was hundreds of texts a day. Very much like a full time job (with overtime) on top of school. Learning moment for sure.
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S23 was back home last week for Spring Break, and now has just started spring quarter. Heās doing ok with classes (happily focusing on math, physics and astronomy) and is finally learning how to study at least to some extent (not something he ever did in high school).
Heās also got a part time job for the summer helping with public events at the local observatory. More parking attendant than astronomer but heāll take itā¦
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Transfer apps all submitted! And she just got a 3 week summer job with amazing pay as an RA/counselor at her boarding schoolās summer middle school program.
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Does anyone have experience with an RSU vesting?
We are in the income and asset range that previously put our EFC at around 30k. I had a company stock RSU vest last year and it shows up as income on my 2023 W2. The initial stock was given when at the very lowest in 2020. It has grown to about half of my annual income. So it looks like I earned way more than I did. Now I am freaking out about any financial aid for 2025-26 year.
I am looking for advice. Should I consider selling it and paying capital gains then using it to cover lost financial aid and hope that the next year weāll get more aid when the W2 shows a lower income and we no longer have that asset? Does this question even make sense? I can ask our tax guy but heās in the busy few weeks of taxes right now and I am losing sleep!
If you have to apply for aid each year and something is on your W2, of course itās going to impact your aid in regards to need. Box 1 shows what you madeā¦if it goes from $40K to $200K, wellā¦
I donāt have stock - but given what youāre describing (a W2) - then yeah itās going to change the equation.
Paging @kelsmom
I have no problem selling it, but then there are capital gains and what looked like an extra (example) 50k of income (depending on the actual value when I sell it which could be a lot less than when it was reported as income), is suddenly 30k. So then fine, I donāt get 30k of FA and I use it to pay tuitionā¦ then what? The following year the capital gains shows on my W2 as income (does it?) only now there is really nothing of that extra money left and will that second year be reduced FA?
Also, they no longer give us stock.
Capital Gains show on a 1099, not W2 - which is your employer payment to you.
Your wages show on W2 box 1. That appears on Box 1A of the 1040.
Capital Gains show on your 1099. Iām not sure thereās a # other than mutual fund distributions but your gains will be noted from things you get and sell. It goes on your 1040 Line 7.
Iām not a financial advisor but when you sell a stock youāve owned less than a year, youāll pay your normal tax rate vs. a reduced rate if you hold it more than a year. So Iām not sure how RSAs work (perhaps someone else can tell you or youāll hear from an advisor) but you may be costing yourself dearly by selling so quickly.
Then thereās the - you thought you were going to an inexpensive school and now it may not be - and are you willing or desiring to spend that much or should you find a school thatās less expensive up front - and where the cost can be potentially further reduced with merit aid.
Thatās a different question youād need to address.
In other words, if you paid $20K last year at your meets need school your daughter attended but given your new finances it might be $60K (if it was a later year) - or whatever the two #s are - are you willing to pay that $60K vs. wanting/needing to bank that money for you?
Thatās the type of questions I might have if I was in this scenario. And I would potentially adjust my application list based on the answer you give.
Just another thought - Then thereās the entire calendarization of aid - right - because 2023 taxes will impact not this upcoming year but next year.
Making money better than not making money - so congrats there - but how much one is willing to spend on a college out of their own pocket - well thatās an individual value judgement unique to all.
Hopefully it works out for you - and perhaps the aid equation wonāt be off as much as you think - although you can probably test it out in the NPC.
Best of luck.
Best of luck.
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Thank you! I guess I am worried that it wonāt adjust back down the following year when they see that is NOT my salary. The schools she applied to have merit aid and are also meets need so fingers crossed she gets max merit and then we should be able to swing one anomaly year.
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I hope someone else gives you a perspective as well - thatās just how I see it.
I know (it sounds like anyway) you are zeroed in on Macā¦but perhaps you should look deeperā¦just in case.
Up to you - but I get wanting your student to be happy but please donāt wreck your financial security. Not sure if Kalamazoo would share any similarities but itās also in the city (not a big city) or Beloit - but guessing theyād go deeper. I know thereās a special activity involved.
I wish you look no matter which way you go.
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Youāll only owe capital gains tax on any increase in value from the time of vesting to the time of sale. So if if you vested at $30 and sold at $40, youāre capital gains will be on $10/share, not $40/share (you already paid income tax on the first $30/share). If you transferred the shares from the company that your company used to administer them before you sold, just make sure the new holding company correctly established the cost basis as the vesting price.
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Thanks for that! That is one thing I was confused about.
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Hereās a website with more info - such as TAX IMPLICATIONS
What are the income tax implications of an RSA?
Under normal federal income tax rules, you are not taxed at the time of a restricted stock award, assuming you have made no election under Section 83(b). Instead, you are taxed at vesting, when the restrictions lapse. The amount of income subject to tax is the difference between the fair market value of the grant at the time of vesting minus the amount paid for the grant, if any.
For grants that pay in actual shares, your tax holding period begins at the time of vesting, and your tax basis is equal to the amount paid for the stock plus the amount included as ordinary compensation income. Upon a later sale of the shares, assuming you hold the shares as a capital asset, you would recognize capital gain income (or loss); whether such capital gain would be a short- or long-term gain would depend on the time between the beginning of the holding period at vesting and the date of the subsequent sale. Consult your tax adviser regarding the income tax consequences to you.
Fidelity.com Help - Fidelity.com Help - Restricted Stock Awards
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Hi, so yes rsuās hit your income when they vest. Hopefully, your company/brokerage went ahead and took enough shares out to cover the taxes when they vested (that is how it works at my company). You would only pay capital gains on the amount the share price has risen since the shares vested, not since you were awarded the rsuās. But sounds like income from selling the shares is a good solution to the gap in financial aid you will have.
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I would definitely wait to talk to you accountant. They can help you strategize around tax implications for your specific circumstances. There have been years when we have not sold our RSUs due to unfavorable tax implications and years we have sold because weāll have other losses to claim that can offset the capital gains.
In terms of FA, you file every year so they look at the salary from the previous tax year. It should adjust back down based on your W2, but if you were not in the collegeās original pipeline for aid it can be difficult to get a significant increase. I teach at a college that makes it clear that our first priority is to continue aid for existing students at the level they were originally awarded unless there is a significant change in finances. So if you do not get as much aid to start because of the anomaly, youāll want to be a bit proactive about contacting FA the next year you file to let them know there was a major drop in salary.
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Thanks. This fall should be fine, it would show up for the 2025-26 academic year. Will definitely ask our tax guy.
That timing should help. Better to go in with a certain amount of aid and have it drop a bit the next year than to start with little aid and then ask for a significant increase the final years.
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Gordon College?
Not familiar with it, sorry!
Well - rolling into the end of the year here! Itās been a good one. D23 loves Boston, settled right in, received solid if not stellar grades, and is very happy with her choice. (Suffolk University) As parents, we are happy enough. Lots of complaining on the parent FB page but I think we are lucky that D23 is a good communicator and we seem to have gotten set up for all the portals & emails that other parents are missing, so we know when the dorms open & close, etc.
Big week upcoming as it is her birthday and will be the first one weāve spent apart. Part of growing up, I guess. And then she is home by May 10th! For all that Iām sad about missing her birthday, Iām kind of dreading the long summer. I actually really like being an empty nester! Iāve freed myself from the tyranny of having to cook dinner every night since she left. I haaaaaate it when there is a bunch of food in the cupboard & fridge and I still hear there is nothing to eat. I also enjoy being free of having to keep a third persons schedule. Family logistics and all that. But who knows, maybe she will return home and those issues will have faded into the past?
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