Entering SSPP purchase discount income in Turbo Tax

[mckmike62]

I understand the requirements for reporting the SSPP purchase discount as income but how do I get the income to the 1040 form?  The amount is listed on my W2 line 14 but no code was provided that line up with the options in Turbo Tax.  I entered it as miscellaneous.  The amount on line 14 of the W2 does not show up on Schedule 1 (additional income and adjustments to income) nor does is add to the wages show on the 1040. 

Any assistance would be appreciated.

[mckmike62]

Not sure if the is the correct approach but I manually opened schedule 1 and enter the amount as other income in item Z.  This has passed to the 1040 as other income from schedule 1.  If there is a more correct way I am interested hear knowing.

[KrisD15]

THERE IS A MORE CORRECT WAY.

Did you sell the stock or only purchase?

The discount on the purchase of the stock is not reported as income when you exercise the right to purchase. 

Income is only recognized when the stock is sold. 

HERE is a link that explains more in detail. 

If you did sell the stock, please continue the question. 

The amount of the discount in Box 14 is only used when the stock is sold and how it's reported depends on how long you held the stock before you sold it.  

[mckmike62]

I had reviewed the post you shared prior to my initial post and it is very informative.  However, while it explains the tax treatment, it does not explain how to enter the transaction in Turbo Tax.

I did sell the stock and have held it for over three years.  I entered the capital gain from the information in the 1099-B and my employer reported the purchase discount on my W2 box 14.  I entered the amount from box 14 when I entered my W2 information.  There was no obvious code to report the SSPP discount so I selected miscellaneous.  This amount did not flow though to schedule 1 or the 1040.  Hence my question on the correct way to enter the information in Turbo Tax.  Short of manually entering it on schedule 1 is there a recommended way to enter this transaction?

[MarilynG1]

Take the amount in Box 14 and divide by the number of shares vested.  Add that amount to the Exercise Price per share, to arrive at your correct Cost Basis per share for reporting the sale from your 1099-B. 

Now that you know your Cost Basis per share, enter your 1099-B as a regular stock sale in the Investments section (don't indicate employee stock).  Enter the Cost Basis as shown on your 1099-B, then check the box that says 'my cost basis is missing or incorrect'.  On the next screen enter the correct Cost Basis that you calculated earlier.

You don't need to report any other income.  The Box 14 amount was included in your Box 1 Wages, so is being taxed as ordinary income. 

Here's more info on Employee Stock Purchase Plans.

@mckmike62