What is needed for a sale of stocks with too much taxes withheld at time of sale?

Forum|Forum|5 years ago
December 30, 2020
2 replies
11 views

If you sell shares of company stock and voluntarily withhold taxes to avoid owing in January, what form(s) are needed to report the sale correctly when filing your return to ensure that any taxes paid over the amount truly owed are returned? With those documents, does TurboTax software determine that too much was taken out for taxes at the time of sale and calculate the return?

Not A Product Question

Mike9241

Level 15

you need to report the sale. in step-by-step mode you should get to a question that asks about withholding not already reported.

TT will calculate your total taxes owed vs your total payments (and credits) if you have an overpayment it will be refunded unless you ask to apply it to next year

Mike9241

Critter-3

Level 15

All the info you need to enter will be on the 1099-B that the broker will issue sometime in February ... wait for that form.

jgcgAuthor

Level 2

Thanks!

MikeinSC

Level 5

I have re-read your question a few times - withholding is not normally done on stock sales thru a broker, so I will assume you had stock options you exercised then sold? If not, disregard my answer - if yes, you will have the income from the options and withholding reported on your W-2, so when you enter that information into the software, you will be recording the withholding. Then, assuming you sold the stock, you will report the sale on Schedule D - important to realize the basis in your shares will be the option exercise price that was included in your taxable income on your W-2 - if exercised at the current market price then immediately sold, you probably will have little gain or loss on this sale.