DawnC
Expert Alumni

Get your taxes done using TurboTax

You need to contact your employer and/or broker and get the 1099-B.   If your employer sold 3K of the stock to cover the taxes, there is a 1099-B out there for that transaction.  When you enter that 1099-B, TurboTax will calculate the gain or loss.   If the shares were sold on the same day, there will be next to no gain or small loss due to transaction fees.  

 

When you indicate that the 1099-B is employee stock, the program will have you confirm that the income was reported in Box 1 of your W-2.   The taxes are included in your withholding, but you are paying regular income tax on the income.   However, when you sell the stock, the amount added to your W-2 becomes the basis which will reduce the gains on future sales.   

 

How to Report RSUs or Stock Grants on Your Tax Return

 

Your employer is not required to withhold Social Security (FICA) taxes when you exercise the option to purchase the stock. Also, your employer is not required to withhold income tax when you dispose of the stock. But you still owe some income tax on any gain resulting from the sale of the stock.

 

You only have to report it if you sold stock that was purchased through an ESPP (Employee Stock Purchase Plan).  In that case, the sale will be reported on Form 1099-B, which you should receive from your brokerage around tax time (early February is typical).   Simply enter your 1099-B to report the sale on your tax return.    If you merely purchased (but didn't sell) ESPP shares, there's nothing to report.   However the stock that was sold to cover the taxes is a reported sales transaction.   

 

What are restricted stock units (RSUs) and how do I report them?

 

Employee Stock Purchase Plans

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