Since you did not receive a W-2 for the bargain element of the ISO, you will need to report this as regular income. To do this in TurboTax:
- With your return open, go to Federal > Wages & Income
- Open the Less Common Income section and start or revisit the last entry, Miscellaneous Income, 1099-A, 1099-C.
- Select Other income not already reported on a Form W-2 or Form 1099
- Select Yes to Did you receive any other wages?
- Leave household employee income and sick pay blank
- Select Yes to Did you earn any other wages?
- Select Other to Enter source of other earned income
- Enter ISO Ordinary Income and for the amount, enter only the bargain element.
This will appear on Line 1 along with your other wages. To preview your tax return:
- Open or continue your return.
- Select Tax Tools in the left menu (if you don't see this, select the menu icon in the upper-left corner).
- With the Tax Tools menu open, you can then view your 1040 form: Select Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu
- Scroll down until you see Form 1040 Line 1 Wages salaries tips etc. The bargain element should be included along with your other wages on this line.
For more information on the reporting of ISOs and their tax treatment, see this article.
