Investors & landlords

I stopped answering tax questions a few years ago because I was unwilling to become a TurboTax "Champion" when TurboTax adopted that structure for their user-to-user help.  However I frequently receive emails from the TurboTax "community" when there are add-on posts to questions that I answered in the past as a SuperUser.   I have never responded to add-on posts, until now. 

 

The answer provided by @RaifH to @bkhinrichs is just too wrong to let it pass unaddressed. 

 

A "sell to cover" sale, or a sale of that same stock 10 years from now, WILL NOT result in a 1099-B showing taxes withheld BY THE BROKER.  The only situation where you'd expect to to receive a 1099-B with taxes withheld by the broker would be a situation where you're subject to "Backup Withholding."  You are subject to Backup Withholding if you fail to provide a correct taxpayer identification number to the broker, or have had Backup Withholding imposed by the IRS.

 

Absent the obligation for the broker to withhold taxes, all payroll taxes associated with the compensation created by an employer stock option program should be reported on the W-2.  The taxes will be scattered around the "taxes" boxes of the W-2 and, typically, are not identified separately to you.  IF you think that the taxes are not on your W-2 THEN you must get a corrected W-2 from your payroll department.

 

The cash raised "to pay the taxes" by a sale - that's the 50 shares in @RaifH 's example - is passed back to the employer, and the employer pays the taxes "for you", in the same manner that cash is withheld from your paycheck for taxes.

 

In my experience the most common reason users think that there must by withheld taxes reported on the 1099-B is that when they enter the sale their taxes go way up, they think they are being "double taxed", and conclude that the withheld taxes they think they'll see on the 1099-B will put things to right.  Usually the reason their taxes go way up when they record the sale is because they are using the wrong basis.