Name: An Often Forgotten Part Of Tech Pay - Don’t Mess Up Your Taxes!
Uploaded: 2022-05-02T18:12:20+00:00
Duration: 2 min 27 s
Description: This video segment offers critical tax advice for high-earning employees in big tech, particularly in the U.S

An Often Forgotten Part Of Tech Pay - Don’t Mess Up Your Taxes!

This video segment offers **critical tax advice for high-earning employees in big tech**, particularly in the U.S. It emphasizes the importance of understanding how taxes work with equity compensation to avoid severe financial consequences.

- **Set your withholding percentage close to your actual effective tax rate**, which for many tech workers is around 30%. This helps avoid massive surprise tax bills—sometimes exceeding $100K—during tax season.
- **RSUs (Restricted Stock Units) are taxed as income when they vest**, not when they’re sold. If the stock value drops after vesting, you’re still taxed at the higher initial value, creating a potential mismatch between tax owed and actual value retained.
- **Default withholding settings are often too low**, especially on platforms like E\*TRADE (commonly set at 22%). If not adjusted, this can lead to underpayment and steep penalties later.
- **If RSUs lose value and you’ve under-withheld**, you may be forced to sell more shares than expected just to cover your tax liability.
- **Some intentionally under-withhold to invest the difference**, but this is risky and should only be done with a clear financial strategy in mind.

This video segment offers critical tax advice for high-earning employees in big tech, particularly in the U.S

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- [Presentation Slides](https://docs.google.com/presentation/d/1MdJrfT-wBDI6p-3z2_4rNY8IJwlvj1X7n3E5bmYajFU/edit?usp=sharing)