How do I report the compensation income from an ISO sale that is not included on my W-2?

[anilk]

It is a disqualifying disposition and I have left the employer long ago so I don't get a W2 from the employer. For some reason, Turbotax online is not adding compensation income to the tax calculation.
In online turbotax edition, I add "An employer without a W-2 on this return" in ISO option interview but still, I see no change in tax. I don't see any page where online edition is asking me whether the amount reported on you W-2.

[ThomasM125]

You normally have a problem with the income not showing in wages if you didn't enter the proper dates for the acquisition and sale of the stock.

The stock must have been held at least one year and a day after your acquired it and at least two years after the original grant date for the gain on sale to be treated as capital gain income and for no ordinary income to be recognized. So, you need to make sure the dates you entered did not fall into that range for some of the income to be reported as wage income.

[anilk]

As part of the ISO interview, I entered 3921, which has accurate grant and exercise dates. The issue is that I have left the employer and Turbotax is assuming the income will be part of the W2. Is there a way to specify if the compensation part is not part of W2. Please note that it's a disqualifying disposition where I have to report short  term gain.

Thanks

[RaifH]

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:

1. With your return open, go to Federal > Wages & Income
2. Open the Less Common Income section and start or revisit the last entry, Miscellaneous Income, 1099-A, 1099-C.
3. Select Other income not already reported on a Form W-2 or Form 1099
4. Select Yes to Did you receive any other wages?
5. Leave household employee income and sick pay blank
6. Select Yes to Did you earn any other wages?
7. Select Other to Enter source of other earned income
8. 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:

1. Open or continue your return.
2. Select Tax Tools in the left menu (if you don't see this, select the menu icon in the upper-left corner).
3. 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
4. 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. 

[Tangmen]

Thanks @RaifH for the answer regarding where to put the disqualifying ISO exercise gain if it's not included in W2 already, very helpful. 

In my situation, when the exercise and sell happened the same day, broker also deducted tax such as federal tax, social security tax and medical tax at that time. Where should I put these tax? Without input tax, we are paying income tax twice for this exercise gain, right? 

[HopeS]

Assuming you received Form 1099B which shows the sale of the Stock, you would enter the Sale in the Investment Income section of your return.

Here's where you enter or import your 1099-B in TurboTax and enter the taxes withheld as shown in the screenshot below:

1. Open or continue your return, if you haven't already
2. Select Search, enter 1099-B, and select Jump to 1099-B
   1. You can also go to Federal, then Wages & Income, then Investments and Savings
   2. Select Start or Revisit next to Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
3. Select Okay! on the screen, Time to kick off your investments! OR Yes on the screen Did you sell any of these investments? then Continue
   • f you see Your investments and savings or Your investment sales summary, select Add investments or Add more sales
4. When you reach Let's Import your tax info, choose how you want to enter your 1099-B:
   1. To import your form, select your brokerage or a financial institution from the list. Enter your sign-in credentials for your account, then select Get My form
   2. If you want to enter your 1099-B manually, select Enter a different way, then select your investment type on the next screen

      5.  On the following screens, answer the questions about your 1099-B

     6.   When you reach the Review your Sales screen, the form you just entered should be listed

• If you need to add another 1099-B, select Add another sale. Otherwise, Continue

@Tangmen 

[Tangmen]

Thank you @HopeS . Just information that the Fed tax my broker deducted is not in the 1099-B I downloaded from them (means Box 4 is blank in the form), these tax information can be only found in the exercise confirmation form the day after the exercise. Is it still ok to enter the Fed tax in the Box 4 of above screenshot? 

[AbrahamT]

As long as you have the correct amount of federal tax withheld regardless of where it came from and you know for certain that this is the correct amount of taxes withheld, then you may go ahead and record it. Just keep the exerciose confirmation form for your records as backup incase you may need it for future reference.

[Tangmen]

Thanks!