For many high earning professionals in San Diego, restricted stock units, or RSUs, are a major part of their compensation.
Whether you are working at Qualcomm, Dexcom, Illumina, or another biotech or tech company in Sorrento Valley or La Jolla, RSUs often represent a meaningful portion of your income.
But there is a common issue that shows up every tax season.
It is not obvious.
It is not always flagged.
And it could potentially quietly cost you thousands of dollars.
In some cases, the same RSU income is taxed twice.
The “Gold Bar” Concept Most People Miss
The easiest way to understand RSUs is to think of them like receiving a physical asset.
Imagine your employer hands you a gold bar as a bonus.
At the moment you receive that gold bar, the IRS treats it as income based on its fair market value.
That means:
- You pay ordinary income tax at the value on the vesting date
- That value becomes your cost basis
RSUs work the same way.
When your shares vest, the value of those shares is included in your W2 income and taxed as ordinary income.
This is the first layer of taxation.
From that moment forward, those shares are treated like any other investment.
If they increase in value and you sell them later, you pay capital gains tax on the difference between:
- The sale price
- The original vesting value, your cost basis
Conceptually, this is straightforward.
In practice, this is where things often break down.
The 1099-B Mismatch That Causes Double Taxation
At year end, your brokerage issues Form 1099-B reporting your stock sales.
However, in many cases, RSUs are classified as non covered securities for reporting purposes.
This means the brokerage may report the cost basis as $0 or leave it incomplete.
When that happens, the IRS sees:
- The full sale price
- Little or no cost basis
If this is not corrected, it appears as though you had gains on the entire value of the shares.
Even though:
- You already paid ordinary income tax at vesting
This is how double taxation occurs.
You pay:
- Income tax when the RSUs vest
- Capital gains tax on the same amount again when sold
For many high earners, this could potentially result in thousands of dollars in unnecessary tax.
Where the Correction Happens
The fix is not complicated, but it is easy to miss.
When reporting your stock sale on your tax return, the correct cost basis must be reflected.
This is typically done through Form 8949, where adjustments are made to align:
- The reported proceeds
- The actual vesting value used for income reporting
Without this adjustment, the numbers on paper do not reflect the economic reality of what occurred.
This is one of the reasons many high earners feel like their income is being reduced more than expected. If that sounds familiar, you may recognize the pattern discussed in why your San Diego salary feels like it is disappearing.
The Bigger Opportunity Some Professionals Overlook
While correcting the tax reporting is important, it only addresses the immediate issue.
A more strategic question is:
What should be done with RSU income after it vests?
For many HENRYs, RSUs create a pattern of concentrated exposure and ongoing tax liability.
Without a plan, shares are often:
- Held too long without diversification
- Sold reactively instead of strategically
- Reinvested without tax coordination
This is where planning shifts from reactive to proactive.
The $72,000 Opportunity
In some cases, RSU income can be coordinated with higher capacity retirement strategies.
For example, a structured 401(k) plan can allow for significantly higher contributions.
In 2026:
- Total 401(k) contributions can reach up to $72,000
- With catch up provisions, totals can increase further depending on age
For high income professionals, this creates a potential bridge:
- Convert equity compensation into long term, tax advantaged growth
- Reduce current tax exposure
- Diversify away from concentrated employer stock
Strategies such as the Mega Backdoor Roth may be part of that conversation, depending on plan design and income level.
The key point is not the strategy itself.
It is the coordination.
From Income Events to Integrated Strategy
RSUs are often treated as isolated income events.
They vest, taxes are withheld, and decisions are made after the fact.
Over time, this creates a fragmented financial picture.
A more effective approach looks at RSUs as part of a broader system that includes:
- Tax planning
- Investment allocation
- Retirement strategy
- Cash flow coordination
This is what we refer to as the Fortifying the Structure phase.
It is where advanced coordination begins to take shape.
If you want to see how this applies specifically to high earning professionals in San Diego, you can explore the financial planning framework for HENRYs.
Final Thought
The challenge with RSUs is not that they are complicated.
It is that the details are easy to overlook.
A missing cost basis adjustment can result in unnecessary taxes.
An uncoordinated plan can turn a valuable form of compensation into an inefficient one.
High income creates opportunity.
Coordination determines whether that opportunity turns into wealth.
Sources
Contact Us
BAS Financial
5405 Morehouse Dr, Suite 245
San Diego, CA 92121
📞 Phone: (858) 335‑4945
If you’d like to start with a conversation about your situation, goals, and whether working together makes sense, you’re welcome to reach out.
This material is for educational purposes only and is not intended to constitute a recommendation or the provision of financial, tax, or legal advice. It does not take into account any individual’s specific circumstances. Individuals should consult their own qualified advisors before making any decisions.