The 1099B does not show any tax withheld for RSUs sold in 2016, but the brokerage transaction details shows federal, state taxes paid. How to report this in TurboTax?

[rosewq]

My RSUs were sold in 2016. When I look at the brokerage transaction details, it shows federal, state taxes were already withheld. So I received a check for the total amount minus taxes. But the 1099B I received from the brokerage shows only the gross amount of the transaction and the federal/state tax boxes show 0. 

Also, on my W2, a slightly lesser amount is given with code V in box 12B, than what is reported on 1099B.

How do I report this on my tax return in TurboTax?

[TomYoung · Accepted solution]

As to your question "how to report this (federal, state taxes) in TurboTax?" the answer is "you don't because it's already been reported on your W-2."  You had a "same day" sale of stock (vesting/sale on same day) "for taxes" and that cash was passed back the the employer, who paid the government(s) and included those amount in the various "taxes" boxes on your W-2.  You can check with your payroll department. 

If the broker had withheld and paid the taxes - called backup withholding either because you didn't submit a W-9 or did submit a W-9 and said you were subject to backup withholding - it would be on your 1099-B.

"Also, on my W2, a slightly lesser amount is given with code V in box 12B, than what is reported on 1099B."

I assume what you are saying here is that the proceeds on the 1099-B is greater than the dollar amount of the W-2.  All that means is your employer used a slightly smaller per share "fair market value" (and reported slightly less compensation income) than you actually realized when you sold and it's no big deal.  Forget about it.  You'll use the Box 12 amount to determine the basis for the sale and realize a slightly higher short term capital gain.  Trying to get it "corrected" amounts to pushing small numbers between "compensation" and "short term capital gain" both of which get taxed at the same tax rate.

Tom Young

[tstaup]

Thank you Tom, I had the same question about my 1099. Being as the taxes were already withheld on my w-2, do I need to even report the 1099? I am afraid the IRS will see that and want more money!

[TomYoung]

If you got a 1099-B you do need to report the sale.  If you don't the IRS will ask about it at some point.

A typical "same day" sale will result in a small reported loss due to selling commissions and fees.

[jaeheec7]

Hi Tom, 

I'm in a similar situation. I've participated in a tender offer from a previous employer. I've received both a W2 (With the amount withheld in Box V) form and a 1099B form. The 1099B does not reflect the taxes withheld. If I enter both documents into Turbotax, I I owe a lot of money (I feel like I'm being double taxed here). Am I doing something wrong? 

[TomYoung]

@jaeheec7 

Yes, you are doing something wrong.  Namely, you're using the wrong basis, probably the basis being reported by the broker.  The taxes withheld not showing on the 1099-B are irrelevant here.  They are on the W-2, presumably, and you can't declare them again.

If this was a NQSO - suggested by the "V" code - then your basis per share is the per share exercise price + the per share compensation created by the exercise.  (That is Compensation = GROSS number of shares acquired x per share "fair market value" used by the employer.)

I'd expect you will report a small loss due to selling commissions and fees.

[Bigbecky70]

Where on the W2 are the taxes reported for the stock sale? Because I don't believe it's added in to the total fed tax withholding. 

[TomYoung]

@Bigbecky70

The taxes paid to the various taxing authorities are scattered around the various "taxes" boxes of the W-2.  They are not separately disclosed to you.  Check with your payroll department.

If the broker actually withheld the taxes they would be on the 1099-B.

If your taxes go way up when you enter the sale the you're using the wrong basis.

[knrichie]

I understand the income and taxes are both reported on the W2. But if I recieved a 1099-B, do I need to also report that in TurboTax? I have the same issue with a same day sale and no taxes reported on my 1099-B which makes my return jump pretty high to the negative. 

[AmyC]

Report the 1099B. The basis on the 1099B is either missing or probably wrong. The correct basis is the amount of money that was added to your W2 as wages plus any brokerage fees to buy/sell.

You used the word taxes for 1099B and I think you meant basis. If you enter the numbers for a sale that is on your W2 and 1099, it should be pretty close, maybe even a small loss. A big jump in what you owe sounds like the wrong basis.

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, 5498, and any 8606.

This will protect you down the road as proof of your basis in your various investments. As you go through life, rollovers, ESPP & RSU sales, and more will be captured for you. 

When you do sell, your notebook will be invaluable with knowing what was first, the order, the basis, and the lot size for stocks.

@knrichie

[bkhinrichs]

Did you ever receive a response about this that was helpful to you? We are in the same situation this year. W-2 doesn't show all of our federal income tax withheld, so I'm wondering where the rest of this is shown. Haven't yet received our 1099-b, so I'm hoping that anything our brokerage firm held back will show on this form. Any insights? 

[RaifH]

Edited to remove the original post, as @TomYoung is absolutely correct, the taxes withheld should be incorporated into your W-2. To the source of your confusion, if your employer is already withholding 22%, they may not have withheld extra if this compensation is considered a bonus. Bonuses below $1 million are taxed at 22% if your employer is using the flat rate of withholding.  

@bkhinrichs  [Edited 2/2/2022|12:08 PM PST]

[bkhinrichs]

Thanks so much! This was our assumption, but I wasn't able to get an answer from a Live expert. Perhaps I wasn't phrasing the question in the correct way. Appreciate the help!

Kerry

[TomYoung]

I stopped answering tax questions a few years ago because I was unwilling to become a TurboTax "Champion" when TurboTax adopted that structure for their user-to-user help.  However I frequently receive emails from the TurboTax "community" when there are add-on posts to questions that I answered in the past as a SuperUser.   I have never responded to add-on posts, until now. 

The answer provided by @RaifH to @bkhinrichs is just too wrong to let it pass unaddressed. 

A "sell to cover" sale, or a sale of that same stock 10 years from now, WILL NOT result in a 1099-B showing taxes withheld BY THE BROKER.  The only situation where you'd expect to to receive a 1099-B with taxes withheld by the broker would be a situation where you're subject to "Backup Withholding."  You are subject to Backup Withholding if you fail to provide a correct taxpayer identification number to the broker, or have had Backup Withholding imposed by the IRS.

Absent the obligation for the broker to withhold taxes, all payroll taxes associated with the compensation created by an employer stock option program should be reported on the W-2.  The taxes will be scattered around the "taxes" boxes of the W-2 and, typically, are not identified separately to you.  IF you think that the taxes are not on your W-2 THEN you must get a corrected W-2 from your payroll department.

The cash raised "to pay the taxes" by a sale - that's the 50 shares in @RaifH 's example - is passed back to the employer, and the employer pays the taxes "for you", in the same manner that cash is withheld from your paycheck for taxes.

In my experience the most common reason users think that there must by withheld taxes reported on the 1099-B is that when they enter the sale their taxes go way up, they think they are being "double taxed", and conclude that the withheld taxes they think they'll see on the 1099-B will put things to right.  Usually the reason their taxes go way up when they record the sale is because they are using the wrong basis.

[bkhinrichs]

Thank you! I'm a little confused, but hope that receiving the 1099-b and starting a discussion with my HR department will help clear things up. The reason the previous answer made sense is because we asked for an additional percentage to be held back in order to ensure we didn't get hit with a big tax payment at the end of the year. Meaning, we asked for a significant amount more than the usual 22%, which they did hold back. But this additional amount is not reflected on the W-2. So there seems to be some discrepancy. In the statements we can see on our brokerage website, the shares held represent a much higher percentage. So why is this not reported on the W-2? This is why we've assumed there must be something else that we'll see reported on the 1099-b, which won't be released to us for a couple of weeks.

I'm not sure what it means to use the "wrong basis," so I guess we'll have to look into that once we receive the 1099-b. At this point, I am only able to enter our W-2, since this is all I have, and as I said, the amount of taxes withheld doesn't even come close to what I can see on our individual sale statements. 

Not sure if this makes sense, but hopefully this at least clears up where my confusion/question is coming from.