Investors & landlords

"1099b does not mention that sale of shares is 'for taxes' it just shows the transaction which my employer did to cover the taxes."

 

I didn't say the 1099-B would have a notation of "sale of shares for taxes."  In all respects it's just a regular 1099-B reporting your sale of stock.  Accordingly, it has to be entered in the income tax return.

 

Understand that share number entered in the box "Shares Withheld (Traded) to Pay Taxes" has only one effect.  It subtracts from the box above it - shares vested - to determine the number of shares available for sale.

The only way you can use the RSU step by step process - which is where you are are at when you see that "Shares Withheld (Traded) to Pay Taxes" box - is to report the shares sold for taxes as the number of shares vested, and leave the "Shares Withheld (Traded) to Pay Taxes" box empty.  But that can create its own problem for you because TurboTax calculates its compensation, just like your employer, on the gross number of shares VESTED, not sold.  So you have to make sure that you report at least one other sale - maybe even a 0 share sale, such that the number of shares vested reported to TurboTax equals the actual vesting.

There is no "income tax reporting" reason to use the RSU step by step interview except in two cases:

1) You don't know the basis for the shares sold or,
2) The employer didn't report the compensation income on your W-2.