If you contributed to a 401-K retirement plan at work, that contribution would be subtracted from your gross wages as reported on your W-2 form, so that is one way your W-2 earnings would be less than your actual earnings.
When you receive the stock, it is taxable income to you, just like if you received a paycheck. So, there are payroll taxes and withholding taxes that have to be paid from it, so the company sells some of the shares to come up with the taxes due. So, you get less than the full amount of the shares awarded to you, since some of them were kept to pay your taxes, FICA, Medicare and income taxes.
Please use these menu tabs to enter your form 1099-B:
- Income and expenses
- Investment income
- Stocks, Mutual Funds, Bonds, Other
- Indicate that you sold investments
- Indicate that you received a form 1099-B
- Choose the "I'll type it in myself" option
- Enter the name of the investment company
- Choose "I'll enter a summary of each sales category"
- Enter the proceeds and cost basis listed on your form 1099-B
- Choose box A, short term covered
- Check the "I need to enter amounts from box 1f, box 1g, or other adjustments" box
- Subtract the cost basis reported on your 1099-B form from the income reported on your W-2 form for it and enter that amount as "Total adjustments to gain or (loss)" as a negative (-) amount and enter code "B"
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