1099-B vs W2

[tjellis]

I see that my stock transaction shows that Federal, State, Medicare, and SS Taxes were withheld - so my W2 includes all the income and taxes for that transaction. After I filed my taxes, I received a 1099-B from my brokerage firm and it shows an accurate cost basis and proceeds. When I subtract my basis from my proceeds, it shows the income I received. But box 4 of the 1099-B says $0 Federal Income Tax withheld. So during amending my return (2022), when I add my 1099-B info as it exists on the form, it appears that I had income and no Federal taxes withheld. It adds the same income from this transaction that is already included in my W2. So the result is that I owe the tax (again). Wondering how to resolve this...

[robtm]

It's very unusual for stock transactions to be shown on W-2. W-2 are for wages (your job) and not investments. Investments are shown on 1099-B and Taxes, SS, etc. are not withheld from investments.

[tjellis]

sorry - I left off an important thing - these are NQ Staock options from my employer. So that is why the income and taxes show up on my W2. I think my original tax filing info is correct - but when I go back and amend my return - adding the 1099-B, it says I have that income again and that I owe the tax - the tax that is already in my W2. So the result is I am accounting for the income from the stock sell twice - but the tax that I paid only once. The income from the stock sell should not appear twice (once in my W2 and again in the 1099-B.

[Mike9241]

what happened is that you exercised the options. income was realized and added to your W-2. thus some of the stock was sold to cover the taxes. generally, if sold the same day as the exercise your sales price and tax basis should be equal or almost equal so there is little or no gain or loss. so I'm thinking g that the 1099-B is not reflecting your proper tax basis. I would think your basis in the stock sold would be the income added to your w-2 divided by the number of shares received times the number of shares sold. 

[tjellis]

For these stock options, I had a strike price that was significantly lower than the exercise price when I sold. I will use some round numbers to give an example of my situation. The 1099-B indicates that my gross proceeds were about $47K. Since my strike price was lower than the selling price, I made a nice profit. The basis shows what I had to pay (sell some shares to buy all the shares). The basis was around $22K. So I had an income/profit of about $25K. My W2 shows this $25K profit as income, along with $5K Federal Income Tax ($2K SS Tax, $500 Medicare, $1.5K State Tax) So total deductions of about $8k were made from my profit of $25K - leaving me with a check from the broker of about $17K. If I leave things here, they seem right - I got credit for the income and all the taxes paid (Fed and State) in my W2 numbers.  Here's the problem - now when I go back and enter the 1099-B for this transaction (amending my return), It says I owe an additional $5k in Federal taxes and $1.5K in state taxes. My income is now $25K higher (this is not accurate) than when just using my W2 info - and no additional taxes were listed (my 1099-B shows $0 taxes paid). It seems that entering the 1099-B  accounts for the income from the sale twice.

[robtm · Accepted solution]

On the Investment Income screen, under 1099-B, click on Get More Help. On that screen click on How do    I fix the basis for NQSO sale that was also reported on my W-2? Hope this helps.

[tjellis]

This got me where I needed to be - after taking this path, the result was that I got back a few dollars - thanks!