Get your taxes done using TurboTax

You should really check with your employer here, but typically amounts shown in Box 14 are "memo" notes telling you something about your W-2, usually amounts that are included in Box 1. 

I'd say with high confidence that this $358 is included in Box 1.  So, for example, if you have a salary of $30,000 per year, sold some stock acquired via an ESPP and that sale created compensation income of $358, then the Box 1  amount would be $30,358.  The note in Box 14 "explains" to you why you're not seeing "$30,000" in Box 1.

"Upon entering my 1099 and 3922 information from eight different lots I sold last year, TurboTax calculated my ESPP compensation income of $2,000 (nowhere close to $358)."

Yes, this isn't an uncommon occurrence IF you have a mixture of Qualified and Disqualified sales of the stock acquired via an ESPP AND the employer is only reporting the compensation relating to the Disqualified sales, which frequently is the case.

Up until 2014, (if I'm remembering correctly), TurboTax could handle this situation, properly.  That is the "Your Employee Stock Plan Results" page used to present the compensation it calculated ($2,000), asked you how much of this compensation was reported on your W-2 ($358), and then take the difference ($1,642) and include that amount in wages and salary line of the Form 1040. 

TurboTax changed that approach - claimed that too many people were confused here - and took away the option to tell TurboTax how much of the compensation was already reported on your W-2.   

Now that page presents a simple question of "Included on your W-2?" to which you can only answer "Yes" or "No" and either choice results in an error on your Form 1040.  Answer "Yes" and the missing $1,642 of compensation is not included as wages, (incorrectly), or answer "No" and the entire $2,000 is added to wages, (incorrectly).  There are some workarounds you can employ here.

The first way is to eliminate the Disqualifying trades.  Enter those trades on the default 1099-B entry form and simply correct the basis figure reported by the broker.  You do that by clicking on the "I'll enter additional info on my own" blue button.  On the next page enter the correct basis in the "Corrected cost basis" box.  The correct basis is (number of shares sold) x (correct per share basis, which includes the compensation per share)

TurboTax will report the sale on Form 8949 "as reported by the broker" but will put an adjustment figure into column (g) of the Form, a code "B" into column (f) of the Form, and the correct amount of gain or loss which includes the adjustment.  Those Disqualifying trades are now correctly reported: the compensation element is on the W-2 and you've used the correct basis for the sales.

That will leave only the Qualifying trades having been entered using  the ESPP step by step process and the compensation calculated by TurboTax will only encompass those trades.  Then when you get to that "Your Employee Stock Plan Results" page you would answer "No."  TurboTax will then make the correct adjustment to the wages line of the Form 1040 and those trades will have the correct basis reported on Form 8949.


The other way you could handle this is leave things as they are and answer "Yes" to TurboTax's question about the amount reported on your W-2.  TurboTax will make no adjustment to the wages line of Form 1040, but your trades will be correctly reported.  Then, you tell TurboTax about the wages adjustment needed by:

Starting the "Miscellaneous Income, 1099-A, 11099-C" interview.
Starting the "Other income not already reported on a Form W-2 or Form 1099" interview.
Answering "Yes" on the "Other Wages Received" page.
Entering $0 on the "Wages Earned as a Household Employee" page.
Entering $0 on the "Sick or Disability Pay" page.
Answering "Yes" on the "Any Other Earned Income" page.
Ticking "Other on the "Enter Source of Other Earned Income" page.
Entering a description and an amount on the "Any Other Earned Income" page.

Finally, you could report all the trades as you have, but use a slightly different version of the employer's name for Qualifying and Disqualifying trades.  You could answer "Yes" to the employer under which you reported the Disqualifying trades and answer "No" the employer under which you reported the Qualifying trades.

Tom Young