Can't get past W-2 Validation for ESPP Sales

[snoocher]

Hi - I sold a lot of ESPP shares in 2025 (multiple purchases through the years) and I was still with that employer for part of 2025.

My W-2 has Qualified and Non-Qualified numbers in Box 14.

When I go through each of the lots to recalculate the cost basis, I select that I have a W-2 from the employer in 2025/on this tax return.

I have validated all of the numbers but the 1099-B still lists it as needing review. I cannot get past the Federal Review to file my taxes.

Also my W-2 SQD and SDD numbers in Box 14 do not match what TurboTax calculated. But I don't think there is any comparison behind the scenes by Turbo Tax.

How do I get past this roadblock?

[KrisD15]

Box 14 on a W-2 can be used for anything the payroll department wants to use it for. 

Some codes are picked up by tax software but most are not relevant, not recognized, and not used. Your Box 14 may be reporting to you what your employer added to your wages in Box 1. 

For the NON-QUALIFYING SALES:

SQD is usually used in Box 14 on a W-2 for Non-Qualifying sales. 

If you were still employed when the ESPP was sold, the "Bargain Element" (Discount) for the Non-Qualifying sales should have been included in your wages in Box 1 on your W-2.  That income will not be claimed by you a second time. That number may also have been reported in Box 14 code SQD on your W-2 as an FYI to you.

For the QUALIFYING SALES:

SDD usually stands for State Disability Insurance, but it could have something to do with your stock sales. Make sure you know which it is. TurboTax cannot tell you.

If the price on the shares that you purchased (and held to be considered "Qualifying Sales")  increased between the Offering date and the Exercise Date, the discount (or the profit on the sale whichever is less) is reported as income. 

This only for Qualifying Stock that increased between Option and Excersise.

The Capital Gain is what is reported on your 1099-B. The capital gain (or loss) is not reported on your W-2. 

Be sure to complete the interview after entering your 1099-B. 

Here is a TurboTax link with more information 

[snoocher]

Appreciate the response, but it doesn't help my specific situation. I have now triple checked all of my entries and they are correct for each lot. I have all of the 3922 forms and have entered the info correctly to correct what is on my 1099-B.

I cannot clear this item to review so I cannot file my taxes.

[DaveF1006 · Accepted solution]

The best way to handle this is to delete your Box 14 entries in your W2 entry. Box 14 is mostly informational. As long as the income is already included in Box 1 (Wages), deleting the informational labels in Box 14 will not change your tax liability, but it will stop the software from trying to cross-reference them with your stock sales.

[mowzy]

Removing box 14 of the W2 did not help. Its still stuck in Needs Review.

[MarilynG1]

If you know what your Cost Basis is for your shares (Exercise Price + Discount), delete your 1099-B (especially if imported), and re-enter it as a regular stock sale.  Check the box to 'adjust cost basis' and enter the correct basis amount.

@mowzy 

[mowzy]

Its not a regular stock. Its ESPP and I've entered my form 3922 like I've done in previous years to adjust my cost basis correctly. There should be nothing left to do. TurboTax is fixated on this for no good reason.

This has worked in previous year. What has changed recently?

[mowzy]

Ok. Here's what worked for me. I edited one of my ESPP cost basis to zero clicked done and then changed it back to what's on the 1099 and that made the "Needs Review" flag go away.