I am trying to fill in my taxes and I imported the 1099-B so far so good. At the end with the 'smart check' feature, it says there is some information needed and it will ask me for a sold date, proceeds, and cost basis. After I enter cost basis my tax return goes down by a huge amount. Now I have few questions about this:
1. The stocks that are sold are for covering my taxes then why am I paying taxes on this amount too?
2. In my tax document there is 1099-B section and also a supplemental section. The 1099-B doesn't show cost basis value but the supplemental shows both proceeds and cost basis. Which one should I use?
3. In the 1099-B section where there is a value present for 'proceeds' the description there is 'Short-term transactions for which basis is not reported to the IRS'.
Thanks.
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If you are give the basis on any back up material, use it.
Please see this answer from Tom Young.
If the 1099-B reports the sale of shares that were for taxes then you need to report that sale. The cash from the sale of shares sold "for taxes" was passed back to your employer, who paid the government, and included those amounts in the "taxes withheld" boxes of the W-2.
Since it's a Box B sale - basis not reported to the IRS - you simply enter the correct basis as you enter the sale in the spreadsheet-like, "fill in the boxes" default TurboTax entry form. Press "Continue" when you've entered the 5 pieces on information. You are done.
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