paperwork for stock cash-in

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I was working for a grocery company in Texas. They gave me stock options. I quit the company. They said I could cash in the Stocks after two years. I cashed in the Stocks: I got $6000. $1000 was withheld for tax purposes, I got a $5000 check for the difference.

I was told that in January 2027, I would get a form 1099 and instructions on how to fill out my taxes in regard to this cash-out.

What forms will I need? How do I enter this in my Taxes?

M-MTax

Level 15

To report your $6,000 stock option cash-out on your tax return, you will primarily use Form 1099-B, Form 8949, and Schedule D (Form 1040). Because tax was withheld, you will also need to ensure that the $1,000 withholding is accounted for so you don't pay it twice.

The exact workflow depends on whether the company considers a portion of that $6,000 to be regular ordinary wage income (reported on a Form W-2) or purely a capital gain (reported entirely on a Form 1099-B).

M-MTax

Level 15

When you file your taxes, you will gather or fill out the following forms:

Form 1099-B (Proceeds from Broker and Barter Exchange Transactions): This will be sent to you by the brokerage or platform that handled the cash-out. It will list your Gross Proceeds ($6,000) and should show the Federal Tax Withheld ($1,000) in Box 4.
Form W-2 (likely): If your stock options were "Non-Qualified" (NQSOs) or if you sold them early, the difference between your option price and the market value is treated as standard wage income. The grocery company may include this portion in Box 1 of your final W-2.
Form 8949 (Sales and Other Dispositions of Capital Assets): You will use this form to list the details of the stock sale (when you got it, when you sold it, what the cost basis was).
Schedule D (Form 1040): The totals from Form 8949 roll over into Schedule D to calculate your net capital gain or loss.

M-MTax

Level 15

How do I enter this in my Taxes?

TurboTax will walk you through these steps automatically.

Step 1: Enter the 1099-B Box 4 Withholding

Crucial Action: Ensure you enter the $1,000 from Box 4 of your 1099-B into your tax software.
This flows directly into Form 1040, Line 25b (Federal income tax withheld from Forms 1099). This tells the IRS you already pre-paid $1,000 toward your tax bill, protecting your $5,000 net check.

Step 2: Determine and Adjust Your "Cost Basis"

The broker will report your total proceeds as $6,000.
Watch out for the Cost Basis Trap: A common mistake with stock options is that the broker might report your "Cost Basis" (what the stock originally cost you) as $0 or a very low number on Form 1099-B. If you don't correct this, you could accidentally get double-taxed on the same income.
If part of the $6,000 value was already taxed on your W-2 as wages, you will use Form 8949, Column (g) to make an "adjustment" to raise your cost basis. This ensures you only pay capital gains tax on the actual growth of the stock, not the total amount.

Step 3: Classify Your Capital Gain

On Form 8949, you will input the stock sale details based on how long you held it:

Short-Term Gain: If you legally owned the actual shares for one year or less before cashing them in, it goes on Part I of Form 8949.
Long-Term Gain: If you held the actual shares for more than one year after exercising the options, it goes on Part II of Form 8949 and qualifies for lower tax rates.