Restricted stock units - tax question

Did you file an 83B election to accelerate the recognition of income at the time of the grant?

Mine were taxed as regular income I believe

Restricted stock units can go one or two ways.

1.) They sell shares at the time of vesting to cover the tax burden. The total value (no. of shares vesting X price on that day) will be reported as income on your W2. Whatever value of shares they sold goes on your W2 as income tax paid. If you are under the SS tax limit at the time of vest they will take federal income tax, ss tax, and medicare tax and sell the number of shares required to cover it. Your cost basis is the price of the stock from the day it vested. When you go to sell the shares remaining, if it has been less than a year since vest any gains will be taxed as ordinary income. If over a year it will be taxed at the capital gains rate.

2.) The stocks vest and they sell no shares to cover the tax burden (you would have had to fill out a form for them to do this usually). At tax time the value of the vesting shares would have been reported as income on your W2 and you would be responsible for the entire tax burden. I doubt this happened or you would have known about it when you filed your taxes, especially if you have 40K worth. Same rules apply when selling for a gain, less than 1 year ordinary income tax rate. Over 1 year, capital gains rate.

#1 is by far the most common. I don't think it matters if the money will be used to buy a house, it is income just like any other.

Source: I've been receiving restricted stock grants for the past 9 years, sold a few, kept most. I'm not tax pro so if you still question consult a tax professional.