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Withholding

Tax an employer or payer takes out and remits on your behalf. RSU vesting is often withheld at a flat rate that undershoots the actual tax.

What is Withholding?

Tax an employer or payer takes out and remits on your behalf. RSU vesting is often withheld at a flat rate that undershoots the actual tax.

Why it matters on your return

Withholding is prepayment. When it falls short, the difference is due in April with a possible underpayment penalty. The common gaps: RSU vesting withheld at a flat supplemental rate below your bracket, two-income households, and self-employment or crypto income with no withholding at all.

Example

RSUs worth $120,000 vest and the employer withholds at 22 percent. Your marginal rate is 35 percent. The $15,600 shortfall is due with the return unless you adjust withholding or make an estimated payment.

How do I fix under-withholding mid-year?

File a new W-4 with additional withholding per paycheck, or make quarterly estimated payments. Both count toward the safe harbor.

Last reviewed September 10, 2026. Tax rules change; confirm current law before acting.

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