RSU's partially reported on W2

[billklee]

I had two RSU releases & sales in 2022, both reported in 1099-B's. Tax was withheld in both sales events. However, only one of the sales was reported on my W-2. I asked my employer payroll department to correct the W-2 to reflect the second sale, but they are unwilling to change it.

I'm running into a problem with the step-by-step screen below. How do I indicate that only ONE SALE of my employee stock income is included in my wages? Then, how do I report the tax that was withheld from my second sale?

If I answer "No" to the question "Is this income included in wages?", then my tax liability increases drastically.

[DavidD66 · Accepted solution]

To properly report the two RSU release and sales, treat them and enter them separately.  For the transaction which is properly reflected on your W-2, answer Yes when you get to the screen that says "Was this a sale of employee stock?".  When you report the transaction not reflected on your W-2, when you get to that screen answer No, this is not employee stock. This will allow you to avoid all of the RSU related screens for that release.  In the 1099-B entry section, there is a page with "Any of these less common items on your 1099-B?"  Among those options are Federal and State tax withheld.  If the tax withheld from your "second" sale was reported on your W-2, you don't need to report it.  If it wasn't reported on your W-2, you can report it here.  If your company withheld Social Security and Medicare tax but didn't report it on your W-2, your W-2 will have to be corrected.  

[billklee]

Thanks @DavidD66 for the guidance. I followed your instructions about reporting the RSU release & sale excluded from my W-2: 1) selecting "No, this is not employee stock" and 2) entering the tax withholdings amounts. When I did this, my refund amounts increased dollar-for-dollar with the withholdings.

This makes me think that the income from this RSU release isn't captured in my 1040. Indeed, 1040 Line 1a (total amount from W-2) is the same as before, and 1b (employee wages not reported on W-2) and 1h (other earned income) are blank. 

How do I ensure that the income from my RSU release is captured in my 1040, if it wasn't included in my W-2 and I'm intentionally selecting "No, this is not employee stock"?

[TomD8]

The value of your RSU's on the vesting date should have been reported as compensation on your W2.  Could this have been a crossover year situation (the vesting took place in 2021 but the shares were sold in 2022)?  Did your payroll department explain why the compensation was not included on your W2?

[billklee]

@TomD8 the value of one batch of RSU's wasn't reported on my W-2. This is due to an error from the payroll department, and they have owned up to it. Unfortunately they haven't gotten around to correcting it.

Does anyone know of a workaround for reporting both the income and withholdings generated by a RSU release & sale that wasn't reflected in my employer's documents?

[TomD8]

I can't duplicate the screenshot from your original post on my computer - I have a different version of TT.  But I suspect that if you answer "No" to the screenshot question, and then click "Continue", then the program will add the income to the appropriate place on your tax return.  If you're not given the opportunity in that section to add the withheld taxes, you can go to the Estimates and Other Taxes Paid section of Deductions and Credits.  Click on "Other Income Taxes" and on the following page you will see a line titled "Withholding Not Already Entered on a W-2 or 1099".

[billklee]

This is the first of two long posts with many screenshots illustrating my scenario. This post describes the "normal" RSU release & sale that was included in my W-2.

[billklee]

This is the second of two long posts. Here I describe one "erroneous" RSU release & sale that was NOT included in my W-2. Nowhere in the workflow can I enter the Vesting & Release details, which are critical for calculating total income.

Finally here are screens that wrap up all the 1099-B's about my RSU's. The net gain/loss from my RSU sales below is correct and reflected in my 1040. 

However, the "Amount We Computed" below reflects only the "correct" RSU release & sale. This shows up in my 1040 through the W-2. But the total income from my "erroneous" RSU releases aren't included here, nor anywhere else in TurboTax that I can tell.

Does anyone know how to add this RSU income that wasn't included in my W-2 into TurboTax?