I sold stock options in 2017 that I received when I joined the company in 2015. It appears in my W2 in boxes 1 (incorporated with my salary), 5, 12 (V), and 14 (STOCK). It also states it in a table that our payroll provider places in their W2 showing this and other things that effects box 1 (eg, 401k). All taxes were paid for at the time of the sale and are incorporated as part of box 2. I did however receive a 1099B and if I enter that information as well I am now getting double taxed.
What is the best way to work around this? Step by step (click here, select this, etc.) would be great.
Thank you for your help.
The reason that you are getting double taxed when you enter the sale of the stock is that the broker is reporting the wrong basis. When brokers report the sale of stock acquired via an employee stock incentive program they are only required to report your out of pocket cost of the stock, not the correct cost which includes the compensation income reported on the W-2. Accordingly, if you simply enter the W-2 as it reads and don't correct the basis you do end up reporting the income twice: once as compensation and then again as an overstatement of capital gain.
The correct per share basis to use when reporting the sale is the sum of what you paid for the stock - which might be $0 - plus the compensation per share. The compensation per share is the "spread" between what you paid for the stock and the per share "fair market value" of the stock when it was received. In other words the correct per share basis is the same as the per share "fair market value" used by the employer to calculate the compensation.
Using the "Stocks, Mutual Funds, Bonds, Other" interview enter the 1099-B as it reads on the TurboTax default 1099-B entry form but then click on the "I'll enter additional info on my own " blue button. On the next page enter the correct basis in the "Corrected cost basis" box. The correct basis is (number of shares sold) x (per share FMV used by employer to calculate the compensation).
TurboTax will report the sale on Form 8949 "as reported by the broker" but will put an adjustment figure into column (g) of the Form, a code "B" into column (f) of the Form, and the correct amount of gain or loss which includes the adjustment.
NOTE: TURBOTAX CHANGES THE SECURITY SALES INTERVIEW JUST ABOUT EVERY SINGLE YEAR. THE INSTRUCTIONS ON "HOW TO FIX" THE BASIS REFLECT THE STATE OF THE INTERVIEW FOR TAX YEARS 2016 AND 2017