This is a qualified disposition. I sold ESPP in 2024 (acquired from 2018-2020). Turbo Tax is asking me to confirm if the disposition amounts were included in the W2. Which W2 should I check? I have already left the employer and they have not issued a W2 for 2024.
W2's related to the purchase. You should have form 3922 from when the stock was acquired. Your basis in the stock is the amount you paid plus the discount you received from your employer.
Example: you bought stock for $85 that should have cost $100. You hold it and sell as a capital gain later for $200. Gain is $100.
Thank you. But am I supposed to pay Ordinary Income Tax on the discount that I received, i.e. $15 in the example? I have already left the employer when I made the ESPP sale and am not expecting a W2 from them. Do I need to self report this amount as ordinary income in the year I sell the ESPP?
You already paid regular income tax on them. Your employer included that discount ($15 in @AmyC's example) on your W2 when you received it. So you paid regular income tax on it then. Now you're paying capital gains on the sale.
Hi,
I checked my prior W2 forms from this employer (in the year in which the ESPP was purchased). I do not see this bargain element included anywhere in there (not even in line 12). Line 12 does include RSU and NSQO values but nothing for ESPP.
Are you sure this is always included in there by the employer?
Thanks!
It should not be included on your W2 as a separate line item. The amount should be included as part of the compensation that you received in box 1 if your W2.
So your salary for the year may have been 50K and the discount may have been worth 10K then your W2 for the year in question would show 60K.
It is treated just like you received extra paychecks and you must pay social security and medicare tax on it as well.
Thank you. I have already double checked the breakdown of Box 1 and it (the ESPP discount) is not included in that sum.