Why Facebook Gets a $429 Million Tax Refund

Photo (cc) by Thos003

A new report from the Citizens for Tax Justice (fun name) says Facebook didn’t pay “even a dime in federal and state income taxes” this tax year. It also highlights the $429 million the company will get refunded.

If that report were all you read, it would sound pretty outrageous. But what it minimizes is the reason behind the refund – the same reason many Americans get refunds. They overpaid their taxes. In our case, it’s often because we’re giving Uncle Sam an interest-free loan by having too much withheld from our paychecks. In Facebook’s case, it’s a one-off stock situation related to the company going public last year, according to Business Insider.

At that time, employees suddenly owed tax on restricted stock Facebook had been dishing out to them. Basically, they owed four years’ worth of taxes on vested stock all at once. Facebook handled the situation by withholding some of the stock it would’ve otherwise continued to grant employees – $2.86 billion worth – and paid that in taxes on employees’ behalf.

And as it turned out, after the expenses were added up, they had overpaid by about 15 percent: $429 million. Hence the refund.

It’s also worth noting CEO Mark Zuckerberg donated 18 million Facebook shares to charity in December.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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