(2023) Adding ESPP ordinary income not included in my W-2

[shariharan912]

In the 2023 online version of TurboTax, how do we get to the screen where it asks if our ESPP ordinary income was included in the W-2 or not ?

I tried following steps from here: https://ttlc.intuit.com/community/taxes/discussion/how-do-i-add-espp-ordinary-income-that-was-not-in..., but still couldn't get to that screen. Can someone please share updated steps for 2023 or confirm if the old steps (from the link above) still works for them ? THanks.

[ThomasM125]

I noticed that I see that option in the desktop Home and Business version of TurboTax but not in the Premier version of the program. So it may not be available in the version you are using.

I found the option you are referring to when I entered an investment sale.  I came to a screen that said What type of employee stock is this and I chose the answer Employee stock purchase plan (ESPP). Then I chose the job the stock came from. Eventually I came to a screen that said Here's all the investment accounts we have so far, on which is listed the investment sale I entered. On the next screen entitled Your Employee Stock Plan Results was listed the ordinary income component of the sale and I was asked Is this income included in wages? Here are some screen shots:

If the ordinary income component your ESPP sale is listed on your W-2 form, as it should be, then you just need to be sure that it is factored into your basis as reported on your Form 1099-B, as an increase in the cost basis. If not, you can adjust the cost basis after your enter the Form 1099-B, there is an option for that in the program. You don't need to indicate in TurboTax that it is included on your W-2, as the default assumption is that it is.

If the ordinary income component of the ESPP sale is not listed on your W-2 form, you can enter it as Other Income as follows:

1. Choose the Federal option on your left menu bar
2. Choose Wages & Income
3. Find Less Common Income
4. Choose Miscellaneous Income, 1099-A, 1099-C
5. Choose Other reportable income
6. Answer Yes to the question Any Other Taxable Income?
7. Enter a description and amount of the income

You can view your form 1040 and schedules 1 to 3 while working in the online version of TurboTax by following these steps:

1. Click on Tax Tools in the left menu bar
2. Click on Tools
3. Look under Other Helpful links….
4. Choose View Tax Summary
5. Look in the left menu bar and choose Preview my 1040
6. Scroll down the page to see form 1040 and schedules 1 to 3

[shariharan912]

Thanks for the response. In my case, I do have a few ESPP dispositions that do not have the ordinary income included in the W-2 provided by my employer.

Thanks for illustatring the "miscellaneous income" approach to include the ordinary income. I will be sure to try this. But, will this show up on Line 8k (stock options) of Schedule 1 or Line z (Other income) ? Reading at the documentation for Schedule 1, it seems like the correct line is Line 8k of schdule 1.

Also, when I try to click on "View Tax Summary", I am unable to preview the 1040 and the schedules. This is probably because I have some things still to be reviewed and probably why it isn't able to generate a preivew just yet. Thanks for this suggestion too. I will fix the issues and see if I can get it to generate the preview.

[ThomasM125]

Yes, it should show in box line 8, row K, but by entening it as other income in TurboTax, it won't show there. If you use the Home and Business version of TurboTax you can get it to show in the correct box by answering the questions in the program. If you report it as other income your tax will be correct but the schedule 1 detail will not be totally correct. 

[Franklin2023]

For TurboTax for Tax year 2022 (filed in 2023), ESPP Ordinary Income can be entered on line 5 of the Wages, etc. Wks form.  This line 5 mentions it’s for “Ordinary income from employer stock transactions not reported on Form W-2”.  This value ends up in line 1h (Other Earned Income) of the 1040 form.

You can get to this worksheet by doing the following:

1) Choose View->Forms

2) Open the 1040 Form

3) Double-click into box for line 1h (Other Earned Income).  A 1040 Wks form opens up.

4) In 1040 Wks, double-click into box for line 1h (Other Earned Income).  The Wages, etc. Wks form opens up

5) In the Wages, etc. Wks form, right click in box on line 5 to bring up a pop up menu and choose Override (It wouldn’t let me type directly in until I override).  Now, you can enter the totals for your ESPP Ordinary Income not reported on W-2.

Remember to adjust your gain or loss on form 8949 for your ESPP transactions.

[shariharan912]

Thanks. Is this for TurboTax Desktop or TurboxTax online ?

[Franklin2023]

This is for the Desktop Deluxe version of TurboTax.

It would not let me e-file with line 5 of the Wages Wks form overridden, and I can’t type into the entry box.

I suspect it wants me to use the Premier version ($35 more), and go thru the Steps method.

So, I can enter the value in line 7 (Other Earned Income) of Wages Wks with a description of ESPP Ordinary Income not on W-2.  This has the same effect as line 5 because the value goes into line 1h of the 1040 form. Then, I was able to e-file.