If you sold vested RSU shares and your 1099-B shows a cost basis of $0, don’t panic — but don’t file it that way either. That number, or a capital gain that suddenly looks bigger than it should, is the single most common reason tech employees end up searching “did I pay double tax on my vested stock” every filing season — and it has a specific, fixable cause.

Your broker isn’t wrong. It’s following a rule that leaves the correction entirely up to you.

Three quick checks tell you whether this article is about your situation:

• Did your shares vest and get sold in the same year, or a later one?
• Does your 1099-B show a cost basis of $0, or something lower than the value you already paid tax on at vesting?
• Have you not yet adjusted that number on Form 8949?

If you answered yes to all three, here’s the short version:

• The $0 is legal, not a mistake.
• Your true basis is the value already taxed on your W-2.
• The fix is one line on Form 8949.
• Past years can often still be corrected.

Want to see the size of it in your own numbers? See how much this might be costing you.

• I just sold RSU shares and see a $0 basis
• I want to know how to fix this on my return
• I think I made this mistake in a past year

Compare what your sale looks like using only the 1099-B basis against what it looks like using your true, already-taxed basis.

Enter your numbers above, then select “Compare the two numbers” to see the gain as filed next to your true, corrected gain.

This is an illustration of the mechanism, not tax advice, and doesn’t account for your personal tax rate or holding period.

Why Your RSU Cost Basis Shows $0 (and Why That’s Not a Broker Error)

When your RSUs vest, the fair market value of the shares on that date is added to your W-2 as ordinary income, with taxes typically withheld the same way they’d be withheld from a paycheck. That taxed amount becomes your cost basis in the shares — sometimes called your adjusted cost basis — the number that should be subtracted from your sale proceeds later to work out a capital gain or loss.

Your broker’s 1099-B usually doesn’t reflect that. Under a regulatory change to broker cost-basis reporting — generally traced to Treasury Regulation §1.6045-1, which took effect for equity compensation acquired after 2013 and first showed up on 1099-Bs sent for the 2014 tax year — brokers have been barred from folding the compensation-income portion of your basis into what they report to the IRS. They can only report what you paid in cash for the shares. For RSUs, that’s usually nothing, so the reported basis defaults to $0.

That isn’t a glitch in Fidelity’s, Schwab’s, Morgan Stanley’s, or E*TRADE’s systems, and it isn’t an error on your specific 1099-B. It’s the rule working as designed: the broker has no visibility into your W-2, so it isn’t asked to guess at your compensation income. The reconciliation is left to you, on your return.

Two different numbers describe the same shares, and this article keeps marking them the same way throughout: already taxed for the vest-date value that’s sitting on your W-2, and what the 1099-B shows for the broker’s reported number. Confusing the two is the entire mechanism behind the double-tax trap.

Finding Your Real Cost Basis: The Supplemental Statement

The number you need — the fair market value of your shares on the vest date — usually isn’t hidden. Most equity-plan platforms generate a supplemental information statement alongside the 1099-B specifically because the 1099-B is known to be incomplete for equity-comp sales. It isn’t part of the official IRS form, so tax software won’t pull it in automatically, but it’s typically sitting in the same account where you view your tax documents.

Where to look, by platform — these are how-to notes, not a comment on any company’s stock:

Fidelity NetBenefits

Supplemental cost-basis information for equity awards is typically provided alongside your 1099-B in the tax documents section of your NetBenefits account.

Schwab Equity Award Center

Supplemental information is generally included with your Schwab 1099-B tax package, or available separately within the Equity Award Center.

Morgan Stanley Shareworks / StockPlan Connect

A supplemental statement is typically provided alongside the 1099-B for shares administered through your company’s equity plan — this is usually where the “wait, am I being taxed twice?” moment starts for Morgan Stanley-administered grants, and where it gets resolved.

E*TRADE

A supplemental information sheet listing the adjusted basis for equity-award sales is typically included with, or downloadable next to, your 1099-B tax package.

These are ordinary, well-established features of equity-plan administration. Finding this document is a matter of knowing where to look, not a sign that anything went wrong with your specific grant.

Once you have it open, here’s how to read it: look for a row or section tied to your specific vest date and lot, then find three numbers — the number of shares that vested, the fair market value per share on that date, and the total ordinary income recognized (shares multiplied by that per-share value). That total is your true, adjusted cost basis for the shares from that vest. If you sold shares from more than one vest in the same transaction, you’ll need to match each lot to its own vest-date value rather than using a single blended number.

If your platform isn’t listed here, check the tax-documents or statements section of your account for anything labeled “supplemental,” or see the FAQ below for what to do if one was never issued.

How to Fix It: Form 8949 and Schedule D, Step by Step

The correction — arriving at your true, adjusted cost basis — happens on Form 8949, which feeds into Schedule D. Form 8949’s exact box letters and adjustment codes are set by the IRS each year; the sequence below reflects the current-year instructions as of the publish date, but confirm them against the live IRS instructions before you file.

1. Find your true basis. Pull the vest-date fair market value from your supplemental statement, or from your W-2 and vesting records, per the section above.
2. Choose the right box. If your 1099-B shows that basis was reported to the IRS — even if that reported basis is $0 — you’ll generally check Box A (short-term) or Box D (long-term) at the top of Form 8949. You’re not saying the number wasn’t reported; you’re saying it was reported wrong.
3. Enter the basics. Column (d) gets the proceeds from your 1099-B. Column (e) gets the basis exactly as your 1099-B shows it, even though you know it’s incomplete.
4. Add the code and the adjustment. Column (f) gets “B,” the code for an incorrect reported basis. Column (g) gets the adjustment, entered as a negative number in parentheses since your true basis is higher than what’s shown. Column (h) then reflects your corrected gain.
5. If your 1099-B instead shows that basis wasn’t reported to the IRS at all, the mechanics shift: Box B (short-term) or Box E (long-term) applies, and you generally enter your correct basis directly in column (e) rather than making an adjustment in column (g).

A worked example: say 100 shares vest when the stock is at $40. That’s $4,000 added to your W-2 as ordinary income at vesting — this is your true basis. Eight months later you sell all 100 shares at $55, for proceeds of $5,500. Your 1099-B shows a cost basis of $0. Filed as-is, using the net proceeds shown on the 1099-B against that $0 basis, the sale would report a $5,500 capital gain, taxing the entire vest-date value a second time. Corrected, the same sale looks like this on Form 8949:

The corrected gain of $1,500 reflects only the growth in the stock price after vesting — the part that hasn’t already been taxed.

If you imported your 1099-B directly into TurboTax, H&R Block, or similar software, don’t assume the basis got fixed along the way. Most import tools bring in the broker’s numbers as-is, including the $0, and rely on you to notice the gap and enter the supplemental-statement basis yourself, usually through a screen that asks whether the cost basis shown is correct. This is the exact moment an RSU sale ends up reported on TurboTax with the double tax baked in: the software carries the $0 forward silently unless you actively flag it and supply your adjusted cost basis.

Already Filed With the Wrong Basis? How to Amend a Past Return

If you’ve already filed one or more past returns using the $0, or otherwise incomplete, basis from your 1099-B, you may have overpaid — and the IRS gives you a real window to fix it.

Generally, you can file Form 1040-X to claim a refund within 3 years of the date you filed the original return, or within 2 years of the date you paid the tax for that year, whichever is later. If you filed on time, or early, for the year in question, the 3-year clock usually starts on the original filing deadline rather than the date you actually submitted it.

Whether it’s worth doing depends entirely on the size of the gap, illustratively speaking. A single large vest sold quickly — after a tender offer, an acquisition, or a big liquidity event — can involve tens of thousands of dollars of unadjusted basis. A small, routine vest sold months later might only be a few hundred dollars of difference. There’s no universal answer here; the estimator above can show you the size of the gap using your own numbers, and a CPA can help you weigh that against the cost and effort of amending a specific year.

Each amended year needs its own separate Form 1040-X — you can’t combine multiple years into one filing — so have your W-2, your original 1099-B, and the supplemental statement for that specific tax year on hand before you start.

A Note on Wash Sales and RSUs

A less common but real complication: if you sell RSU shares at a loss and a new tranche of RSUs vests within 30 days before or after that sale, the IRS can treat the new vest as acquiring “substantially identical” stock, which triggers the wash-sale rule and disallows the loss — rolling it into the basis of the new shares instead of letting you claim it. This mostly comes up for people on frequent vesting schedules (monthly or quarterly) who sell during a stock decline. Full wash-sale mechanics are their own topic; if you think this might apply to a specific sale, treat it as a signal to check with a CPA rather than something to work out from general rules alone.

FAQ

Why does my 1099-B show a $0 cost basis for RSUs?

Because of a broker-reporting rule that keeps compensation income out of the basis brokers send the IRS. Brokers can only report what you paid in cash for the shares, which for RSUs is usually nothing. This is also why TurboTax and similar software often display a $0 basis after import — they’re echoing exactly what the 1099-B reported, not calculating a new number.

Am I really being taxed twice on my RSUs?

Not if you correct the basis. You’re taxed once on the vest-date value as W-2 income, and once on any growth after vesting as capital gain — two separate things, each taxed once. Filing the 1099-B basis unadjusted is what creates the appearance of double taxation.

What is a supplemental tax statement, and where do I find mine?

A document from your equity-plan platform, separate from the official 1099-B, that lists the vest-date fair market value used to calculate your true basis. It’s usually available in the same account where you view your 1099-B.

How do I fix RSU cost basis on Form 8949?

Enter the 1099-B’s proceeds and basis as shown, add code “B” in column (f), and enter your adjustment in column (g) so column (h) reflects your true, corrected gain. See the step-by-step section above.

What is Code B on Form 8949?

The adjustment code entered in column (f) that flags a sale where the basis was reported to the IRS but is incorrect, paired with the correction amount in column (g).

I imported my 1099-B into tax software automatically — did it fix the basis for me?

Usually not. Most software imports the 1099-B numbers as-is, including the $0 basis, and expects you to enter the supplemental-statement basis yourself.

How do I report RSU sales in TurboTax or H&R Block without paying tax twice?

After the 1099-B import, look for a step that asks whether the cost basis shown is correct or complete — that’s where you say no and enter your true, adjusted cost basis from your supplemental statement. The software then applies code B and the adjustment for you; you generally don’t need to touch Form 8949 directly. Exact screen names change from year to year, so if you can’t find that step, search the software’s help for “incorrect cost basis” or “employee stock plan” for that tax year.

How far back can I amend a tax return for this mistake?

Generally 3 years from when you filed the original return, or 2 years from when you paid the tax for that year, whichever is later.

Is it worth amending a past return over this?

It depends on the size of the gap between the reported and true basis, and your tax rate. Larger, single-vest sales tend to be worth a closer look; small routine sales may not move the needle much.

Does a Section 83(b) election apply to RSUs?

No. 83(b) elections apply only to restricted stock awards — actual shares transferred at grant. RSUs are a contractual promise with no transferable property until vesting, so there’s nothing to elect on.

Is filing with the correct basis a form of tax evasion?

No — it’s the opposite. Filing with the broker’s unadjusted $0 basis means overpaying; correcting it just reports the accurate number.

Does this same issue affect ESPP shares?

It can. ESPP shares also have a compensation-income component that’s often left out of the broker-reported basis, though the details differ enough to deserve their own treatment.

Do stock options (ISOs/NQSOs) have the same cost-basis issue?

A similar basis gap can show up for NQSOs and ISOs, since exercise-related compensation income is often excluded from the broker-reported basis too. The specifics vary by option type and are beyond the scope of this guide.

Can a wash sale happen with RSU vesting?

Yes. A loss sale followed, or preceded, by a new vest within 30 days can trigger the wash-sale rule. See the note above.

What if my broker never sent a supplemental statement?

Check the tax-documents or statements section of your account, contact your plan administrator or your company’s equity or payroll team, or reconstruct the vest-date value yourself from your W-2 and vesting schedule.