Yes, you do need to report the ISO activity on your tax return and you should have received a Form 1099-B reporting the sale of the stock.
The income from the discount you received upon exercise of the stock option should be listed on your W-2 form in box 1. If so, the box 1 income would be more than the box 3 social security income, as the social security income would not include the discount. You need to factor out any retirement plan contributions which would be excluded from the box 1 income however. Hopefully, you will find that the W-2 does report the discount, as then you only need to report the sale of the stock in addition to entering your W-2 form in TurboTax.
In either case, you need to enter an investment sale in TurboTax to report the sale of the stock. You enter investment sales in the Wages and Income section of TurboTax, then Investments Sales, then Stocks, cryptocurrency, Mutual Funds, Bonds, etc... Skip the section where it asks if you want to upload your tax documents. Choose Stock, Bonds, Mutual Funds as the type of investment you want to enter. You'll come to a screen where you can enter in your sales proceeds and cost basis. Choose ISO for the stock sale type.
The proceeds will be what you sold the stock for, $12,000 it seems here. The cost basis will be what you paid for the stock plus the discount on it's acquisition. You can determine that by looking on the W-2 form and/or the Form 3921.
If the discount is not reported on your W-2 form, you will need to report it as "Other Income" as follows:
You can make that adjusting entry in TurboTax as follows:
1. From the Federal menu in TurboTax find Wages and Income
2. Find Less Common Income
3. Choose Miscellaneous Income, 1099-A, 1099-C
4. Choose Other Reportable Income
5. Enter a description of the income and the amount
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