Sale of employer securities in TurboTax State return

[Grand-Pa]

Illinois State filing requires information about the sale of employer securities. It was already reported in the Federal return, but Turbotax did not transfer the data to the state return.

Is this an opportunity for improvement or I am missing something?

[DaveF1006]

At this point, i am not sure if it is a Turbo Tax issue but i would go ahead and supply whatever information it is asking for. It might be something that is Illinois specific that is not addressed in the federal return. We have no way of knowing this without looking at your actual return

[Grand-Pa]

Thank you DaveF1006,

In Illinois return it is form IL-4644 which is asking the same questions as the form 8949 in the Federal return. I think that would be nice if this data would be transferred automatically. Just a suggestion. Not a big deal to enter a few number manually.

On the other hand, because of that IL-4644 form, TurboTax could not e-file the state return and advised to print and mail it. That's a little of inconvenience, but for some reason I could not find any publication regarding this state requirement.

Any idea?

Thanks,

VL

[Moepuppy]

I'M TOO AM AN ILLINOIS RESIDENT.  I DON'T RECALL BEING PROMPTED BY TURBO TAX TO FILL OUT FORM IL 4644 IN PRIOR YEARS AND I HAVE NOT FILED SUCH FORM FOR PRIOR YEARS (EVEN THOUGH I MADE SALES OF SECURITIES FROM MY EMPLOYER'S STOCK BONUS PLAN).  IS THIS A NEW FORM? WHAT IS THE IMPACT OF REPORTING THESE SALES ON IL TAX RETURN (I WOULD THINK THEY WERE ALREADY INCLUDED IN THE STATE FORM AFTER PUTTING THEM IN THE FEDERAL FORM). 

[DaveF1006]

Here is a publication issued by ill.gov that addresses the Il-4644 form. Please select this link, to view the details of this publication. This form is to report the gains from only the sale or exchange of securities of an employer that you received in a distribution from a qualified employee pension, profit-sharing, or stock bonus plan.  According to this link from the State of Illinois,for awhile, this form has been around, at least since 2007. It is not a new form. 

[TaxedJake]

Any idea if "Qualified employee pension, profit-sharing, or stock bonus plan" includes sale of Restricted Stock Units issued by the employer after vesting? 

[MarilynG1]

@TaxedJake Yes, RSUs would be included as a stock grant.

Click this link for detailed info on reporting Sale of RSUs. 

[LLarsen]

Hello TaxedJake.  I have the same issue and question - Are vested RSU's considered "qualified employee pension, profit-sharing, or stock bonus plan"?  If could defer the gain on vested RSU's this would be very helpful!.  Like you, I have never seen or heard of this Form 4644.  Appreciate if you can share any conclusions you have come to.

[DaveF1006]

If your RSU's were vested this year, you cannot defer the gain to next year as these need to be reported this year. As far as the 4644, this is an Illinois form that is used to report the gains from only the sale or exchange of securities of an employer that you received in a distribution from a qualified employee pension.  Chances are, this isn't applicable in your case but you may need to check with your employer to verify this. .

To report this properly, you would report it like a stock sale and there will be questions that follow asking you if this is from a RSU.

1. Log into Turbo Tax
2. Go to federal>wages and income>investment income
3. Stocks, Mutual Funds, Bonds, other
4. Answer the information requested in the next few screens and then enter the information from the 1099B sent to your reporting this stock sale.
5. In the next two screens, this will ask if this involved the sale of employee Stock?  Here you will say yes.
6. What type of employee Stock is it? Here you will select it is Restricted Stock Sales (RSU)
7. Then it will ask you to identify the employer. If the employer was listed as a W2 employer, it will be listed. Select the employer that issued the RSU.
8. Then the program will inform you what pieces of paperwork you need to report this/these sale(s).
9. Then it will ask you to enter your sales information again.
10. There will be additional questions asked to finish out this section.
11. If stuck on a question, reach out if we can assist you further.

[Anonymous]

I'm not so sure the answers saying "Yes, you must submit this form for RSUs" are fully understanding the nature of this form. 

I'm still trying to figure out if I need to file this, but from what I can tell, this looks related to retirement/pension accounts, and it's unclear if this would apply to traditional RSU grants. 

[JCQ4]

Hello, I’m running into this as well with RSUs. Please help. Is Form IL-4644 just for pensions and stock plans for retirement? Meaning, you don’t complete this form for RSU sales?

I live in Illinois and sold RSUs. I reported 1099-B on Federal, do I still need to complete this IL “Sale of employer securities…” section? If I do, it says I’ll be completing Form IL-4644, and I won’t be able to e-file.

The question TurboTax here is confusing me. On one hand, this IL section is asking for sale of employer securities under pension, profit-sharing, or stock bonus plan. On the other, it says not to complete for sale of stock options from employee stock purchase plan. Which do RSUs fall under? It seems profit-sharing and stock bonus plan are more for retirement plan purposes, which RSUs don’t really fall under - or do they? But, RSUs aren’t really stock options either. And on IL-4644 itself, it says that it’s to report sales under qualified employee benefit plan, which seems to be more for plans around retirement. So, do you complete this IL section for RSUs? 

thank

[GeorgeM777]

@JCQ4  The reason why the TurboTax instructions indicate that the purchase of shares in a ESPP should not be included on Form IL 4644 is because the instructions to that form specifically state that ESPP shares should not be included.  Unfortunately, the instructions for Form IL 4644 do not specifically exempt RSUs from reporting as they do for ESPP shares.  In terms of what needs to be reported, the instructions state that the following:

"This form is to report the gains from only the sale or exchange of securities of an employer that you received in a distribution from a qualified employee pension, profit-sharing, or stock bonus plan."

Admittedly, RSUs do not seem to fall neatly into the categories listed above in which reporting is required.  RSUs are a type of equity compensation through which a company pays its employees in shares of stock. The stock is “restricted” because it is often accompanied by a vesting schedule before the employee has full ownership of the stock.  Because it is a form of employee compensation, the employer will likely sell some of the RSU shares to comply with its tax withholding obligation (sometimes referred to as "sell to cover.").  

Prior posts responding to the question you have raised suggest that reporting is the better option and that would appear to be the best advice we can offer.  Upon review of Form IL 4644, it is a type of informational return.  In other words, you will be entering information on this form regarding the basis (cost) of your RSUs and subsequent sale, and further including information about any gain or loss.  Information on Form IL 4644, is then transferred to your Schedule F and IL 1040.  

Here is a link to the instructions for Form IL 4644 that you might find helpful.  

Instructions for Form IL 4644

[JCQ4]

Thanks @GeorgeM777 , it does seem safer to complete the form. It doesn’t look like I can e-file my state return once I input my figures into this section. It says IL will start accepting mail return on 2/17, and then it says can’t e-file. Do you know why that may be, or if after 2/17 the e-file option will be available? 

Also, when I fill in IL-4644, it instructs me to input my gain amount on IL-1040 Line 5, which is the line for Social Security or Retirement. This makes me once again wonder if 4644 is just for those equity plans more for retirement. I’m concerned that if I put something on that line without any other forms/info that says I didn’t take social security or withdrew from retirement accounts, that would raise some alarm. What do you think?

[GeorgeM777]

@JCQ4   We understand the issue you have raised.  The instructions for IL 4644 state the following with regard to its purpose:

"This form is to report the gains from only the sale or exchange of securities of an employer that you received in a distribution from a qualified employee pension, profit-sharing, or stock bonus plan.  Do not use this form for the sale or exchange of securities received as the result of the exercise of a stock option under an employee stock purchase plan."

Based on the above, the three types of sales or exchanges that need to be reported on IL 4644 are: (1) a distribution from a qualified employee pension, (2) a distribution from a profit sharing plan, or (3) a distribution from a stock bonus plan, any of which result in a gain.  The instructions do not define, for purposes of IL 4644, what is a qualified employee pension, or a profit sharing plan, or a stock bonus plan.  Thus, we cannot provide any guidance apart from what we have already stated.  Your employer may be in a much better position to at least give you some guidance as to whether the RSUs issued under the company policy can fairly be characterized as the type of plan contemplated by IL 4644, and thus, would require the filing of that form. 

[Dan141]

I’m having the same issue. Why doesn’t Turbo Tax have this form in their system? Seems like a big missing if the proceeds from the sale of security cannot be submitted via e-file. 

My gain stems from the sale of RSUs.