Dual-Earner Amazon + Google: $600k Combined RSU and AMT Exposure
Two senior ICs, one at Amazon and one at Google, with combined $600k of annual RSU income face 37% bracket pressure. Here is how they coordinated withholding.
A Seattle couple: one an L6 engineer at Amazon, the other an L5 engineer at Google’s Seattle office. Combined W-2 wages for 2025 projected at $1.02M, of which $600k is annual RSU vest income. Their 2024 tax return showed a $38,000 April balance due, a penalty of $1,100 for underwithholding, and combined Roth contributions of $0 because neither knew their employer offered a Mega Backdoor. They asked us to fix the withholding gap and catch up on Roth.
Situation
Her Amazon position:
- Base: $240k.
- Target bonus: $40k.
- RSU vest 2025 projected: $345k (year 3 of 5/15/40/40 with a refresh layered on).
- Total 2025 W-2: $625k.
His Google position:
- Base: $215k.
- Bonus: $32k.
- RSU vest 2025 projected: $255k.
- Total 2025 W-2: $502k.
Actually the projected total is $1.127M, higher than initial estimate. Let us use that.
Their tax picture (MFJ, Washington residents):
- Combined AGI 2025: $1.127M.
- No state income tax (Washington).
- Federal marginal bracket: 37% above $751,600 MFJ.
- Additional Medicare Tax: 0.9% above $250k combined wages.
- NIIT: 3.8% on investment income above $250k MAGI.
Withholding on RSUs:
- Amazon: 22% federal supplemental, plus 1.45% Medicare.
- Google: 22% federal supplemental, plus 1.45% Medicare.
- Neither withholds Additional Medicare Tax from RSU events unless individual wages cross $200k at that employer (they both cross, so it is withheld).
The dual-earner withholding gap:
- Combined RSU income: $600k.
- Federal withholding at 22%: $132,000.
- Federal tax at 37% on the marginal $ above $751,600 plus 32% below: approximately $213,000 allocable to RSU slice.
- Gap: $81,000.
Plus the Additional Medicare Tax coordination issue. Each employer only withholds 0.9% on wages above $200k at that employer. But the MFJ threshold is $250k combined. If each earned $150k, no employer would withhold, but they would owe on the excess. Here, both individually cross $200k, so withholding is imperfect but not catastrophic.
What we modeled
| Strategy | Mechanism | 2025 federal tax cash paid |
|---|---|---|
| Status quo | Rely on 22% supplemental | Owe $81k April 15, penalty $3,200 |
| W-4 bump each spouse | +$1,700 per pay period each | $81,600 pulled in ratably, no penalty |
| Q4 estimated payment | Pay $85k on January 15, 2026 | No penalty if safe harbor met, but does not fix Q1-Q3 underpayment |
| Max Mega Backdoor Roth both accounts | Amazon + Google both allow | Reduces current-year AGI (via 401k pre-tax) and adds $69k Roth across both |
We combined the W-4 bump with the Mega Backdoor strategy:
- Her W-4 at Amazon: $1,800 per pay period additional, pulling in $43,200 across the remaining 24 pay periods.
- His W-4 at Google: $1,500 per pay period additional, pulling in $36,000 across the remaining 24 pay periods.
- Total extra withholding: $79,200, which closed the gap.
Mega Backdoor:
- Amazon 401(k): allows after-tax contributions up to the §415(c) limit. In 2025 at her comp, that allowed approximately $28,800 of after-tax (after her $23,500 pre-tax and Amazon’s match filled the remainder to the $70k §415(c) limit).
- Google 401(k): allows after-tax plus daily in-plan Roth conversion. Similar math yielded approximately $22,500 for him.
- Combined additional Roth for 2025: $51,300.
What they did
They executed the W-4 bumps in early April and made up the Q1 gap with a $14,000 Q2 estimated payment (this covered the January through April shortfall, since W-4 withholding is deemed ratable prospectively). They also enabled Mega Backdoor on both accounts (he had to call Fidelity to enable it for Google; she had to log in to Amazon’s benefits portal and opt in).
At year-end 2025 filing:
- Total federal withheld: $304,000 via W-4s.
- Q2 estimated: $14,000.
- Total tax liability: $316,000.
- Additional owed at filing: $2,000, inside safe harbor, no penalty.
Their Roth balance increased by $51,300. At 30 years of compounding at 7% tax-free, that single year’s catch-up represents approximately $390,000 of tax-free retirement wealth.
What they wish they had done differently
They had been at Amazon and Google for 3 and 4 years respectively without ever enabling Mega Backdoor. Roth contributions missed: approximately 7 total years x $45k average = $315,000 of missed Roth contributions. At 30 years compounding at 7%, the missed Roth corpus is roughly $2.4M of tax-free growth they will never recover. This is the single largest financial mistake they made, larger than the withholding gap by orders of magnitude.
They also did not coordinate their 401(k) vesting. Google’s match vests on a 3-year cliff; Amazon’s vests immediately. If he leaves Google before 3 years of service, he forfeits unvested match. This is not a technical equity issue but matters for career planning: the cost of switching jobs at month 33 of Google is higher than at month 38.
Third regret: they had been holding both sets of RSUs post-vest. Combined employer-stock concentration at the end of 2024 was $340,000 (approximately 25% of liquid net worth). Neither set was a considered investment, just accumulated through inattention. They set up auto-sell-at-vest in 2025 for both accounts.
Fourth: they did not open a Health Savings Account. Washington residents with high-deductible health plans at both employers can contribute up to $8,550 MFJ to HSAs in 2025, deductible on federal. Neither employer offers an HSA-eligible plan, but one could be selected at open enrollment. They did not know this was a lever.
Frequently asked
Why does dual-employer withholding create gaps?
Each employer withholds independently without knowledge of spouse income. Federal brackets, Additional Medicare Tax, and NIIT apply to combined MFJ income. Supplemental withholding at 22% assumes moderate income; at $1M+ combined, the real bracket is 37%. No employer can cover the gap alone.
Does the Additional Medicare Tax get withheld at both employers?
Only above $200k at each employer. If one spouse earns $190k at one employer, no withholding; the other spouse’s $300k produces $900 of withholding on the $100k above $200k. At filing, the 0.9% applies to combined wages above $250k, creating a reconciliation.
Should both spouses max their 401(k) if only one employer has a match?
Generally yes, because the pre-tax deferral itself is worth 37% tax savings at top brackets even without match. Employer match is additional.
Can Washington residents avoid state income tax on RSU income?
Yes, for work performed in Washington after any prior-state residency ends. However, a former California or Oregon resident with lingering workday sourcing may still owe those states on pre-move grant vests.
What is the 2025 §415(c) limit?
$70,000 for 2025 ($77,500 if age 50+). This is the combined cap on employee deferral + employer match + after-tax contributions to a single 401(k).
Composite scenario drawn from common patterns in our advisor network's casework. Names, companies, and exact numbers are illustrative. Not tax, legal, or investment advice.