I have searched the forums, but can't seem to come across the answer, for what I'm guessing is a pretty simply operation in Turbo-Tax.
In prior years I was Granted RSU's, Some Vested in 2021.
In 2021ONLY shares to Cover Taxes were Sold, the balance simply transferred to Stocks that I have done nothing with.
How Do I enter this in Turbo-Tax, I am using the desktop Version, As I understand there may be some differences in Online vs. Desktop.
For this transaction, you only want to list the cost basis of the shares you sold. Since they were exercised and sold on the same day, the cost basis and proceeds should be just about the same number. You may have a small loss if any transaction fees were charged. In your example, the $50,000 is the cost basis of all the shares that were exercised. Since you only sold 25% of them to cover taxes, the cost basis is 25% of $50,000 or $12,500. The 75% you are holding does not need to be reported anywhere in the stock sales section until the year you actually sell them. When you do sell them their cost basis will be $37,500, 75% of $50,000.
The sales category should be listed on your 1099-B. It is definitely short-term. Covered or not is whether the basis is reported to the IRS. Usually, it is a short-term covered transaction.
Most likely the stock sale was included as income on your W-2 and reported on Form 1099-B. To avoid double taxation:
To enter your 1099-B form, see Where do I enter a 1099-B?
For additional information, see the TurboTax article: Non-Qualified Stock Options.
Do I Enter in TT in the 1099B Section, as shown in Pic.
If So using an Example as.
1000 shares granted
250 Sold for Taxes
Share Price at time of sale $50
Date Sold 01 Mar2021
What would go in 1d, 1e, and Sale Category, Assuming that I sold No shares other than those to cover Taxes?
Yes. Although 1000 shares were granted, they were not all sold. The only information that should be entered here is the actual number of shares that were sold. The value on the vesting date of those same shares will be your cost basis (check your W-2 and divide that total by the number of shares received on the vesting date). The amount reported as taxable income on your W-2 becomes your cost basis for all vested shares.
Summary:
Please update here if you need further assistance.
In your example you stated that you only sold 250 shares for taxes. Yet your screenshot indicates that you sold 1,000 shares. Did you copy these figures from an actual 1099-B?
Also, your per-share cost basis is the compensation you received at vesting (which is reported on your W-2) divided by the gross number of shares you received, including those sold for taxes.
So Would this be accurate using these Numbers? I’m just confused on the Sale Proceeds, and Sale Category (I think)…
1000 shares granted
250 Sold for Taxes
Share Price at time of sale(For Taxes) $50
Date Sold 01 Mar2021
Box1a Description: Company ABC
Box 1c Date Sold: 01Mar2021
Box1b Date acquired: 01Mar2021
Box 1d Sale Proceeds: $12,500
Box 1e Cost or other Basis: $50,000
Sale Category: ????
Sorry the Screenshot was just to show the boxes in TT, it was not related tot he example numbers I presented, Sorry to add tot he confusion.
For this transaction, you only want to list the cost basis of the shares you sold. Since they were exercised and sold on the same day, the cost basis and proceeds should be just about the same number. You may have a small loss if any transaction fees were charged. In your example, the $50,000 is the cost basis of all the shares that were exercised. Since you only sold 25% of them to cover taxes, the cost basis is 25% of $50,000 or $12,500. The 75% you are holding does not need to be reported anywhere in the stock sales section until the year you actually sell them. When you do sell them their cost basis will be $37,500, 75% of $50,000.
The sales category should be listed on your 1099-B. It is definitely short-term. Covered or not is whether the basis is reported to the IRS. Usually, it is a short-term covered transaction.
Agree with @RaifH. And Box 1a should show the number of shares sold. Example: "250 shares ABC".
Thanks for all your help, So only the “Sell to Cover” gets reported, got it….
it should look like this then?
1000 shares granted
250 Sold for Taxes
Share Price at time of sale $50 (Only Shares Sold for Taxes)
Date Sold 01 Mar2021
Box1a Description: Sold 250 Shares ABC Company
Box 1c Date Sold: 01Mar2021
Box1b Date acquired: 01Mar2021
Box 1d Sale Proceeds: $12,380 (Example, Cost Basis Less Fees if any)
Box 1e Cost or other Basis: $12,500
Sale Category: ???? I will look on the 1099B, hopefully it is marked
So the 1099B States:
Reported to IRS, Gross Proceeds
So is that Short Term Covered then?
Yes. Please keep track of those sold shares. I want to urge you to create a financial notebook that is kept separate from your tax return. Keep it safe and each year, add your year-end statements from all your financial accounts plus a copy of your W2’s, your carryover information, and proof of your basis in your various investments. You must keep tax records from the time you purchase until sold/ loss used plus 3 years. It is very easy to lose track of disallowed losses / carryforwards/ basis.
Thank you for this thread, it has been very helpful. I have a similar situation, RSU's that were vested and a portion was sold to cover the taxes, and I am still holding the rest of the shares. In my case, though, part of the tax was paid with "Dividend equivalents". The income noted for RSU on my W-2 includes both the sale of the stock and the value of the dividend equivalents. Where do I add these in TurboTax? I did not get a 1099-B., and the dividend equivalents are not on a 1099-DIV either.
For example:
Shares released 160
Shares traded to pay tax 55
Shares issued (and held) 105
Dividend equivalents $136.00
Market value per share $144.84
Total Tax $8,102.20
Trade value ($7966.20)
Dividend equivalents (136.00)
---------------------------------------
Amount due $0.00
Income reported on W-2. $8,102.20
Any idea where or how I should enter the $136?
The gross value of the vested RSU's and dividend equivalents are already included in Box 1 of your W-2.
So, a follow up question. I know the div equivalents are already included in Box 1 of W-2. What I cant figure out is if this could cause a double taxation on Trading site(whichever company it is used by the employers ). I have several dividends paid by Trading company XYZ for the same name as my employer. Dates of dividends distributed by Trading company XYZ do not match those of Vesting schedule. Could I be double paying taxes on these dividends? Or companies usually pay this without reporting those cash equivalents on Trading company XYZ?
Possibly. The dividends from your company may not match your vesting schedule. Dividends are generally paid quarterly, although some companies pay them once a year, and you can find your company's dividend schedule by reviewing third party financial/stock sites, such as Yahoo Finance. Then compare the dividend payments dates with your vesting schedule to see what differences there are.
RSU dividends should be included on your W-2 and if they are not, you need to add them to your wage income. If you report the dividends again in the dividend section of TurboTax, you will be paying tax twice on the same income, thus, you don't want to report the same income twice. Perhaps, you should check with your company to verify the amount you received as dividends from the RSUs and whether your company can issue you an amended W-2 if your current W-2 is not accurate.