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wydtrak
New Member

I spent 2 hrs on the phone w/ someone and I am exactly where I started. There is a disconnect in Turbo Tax where it is not filling out and recognizing form 8949.

Stocks sold are being shown as income on the W-2 and subsequent 1099-B because Turbo Tax doesn't do the form 8949.  So, I'm getting double taxed!
1 Best answer

Accepted Solutions
TomYoung
Level 13

I spent 2 hrs on the phone w/ someone and I am exactly where I started. There is a disconnect in Turbo Tax where it is not filling out and recognizing form 8949.

No, TurboTax most certainly does prepare a Form 8949.  It's done "behind the scenes" so to speak, taking information that you input using the "Stocks, Mutual Funds, Bonds, Other" interview and placing this information on Form 8949.  Summary numbers off your Form(s) 8949 then flow up to Schedule D and summary numbers off Schedule D then flow up to line 13 of your Form 1040.

You problem is that you are using the WRONG basis to report the sale.  Use the CORRECT basis and your "double taxation" issue goes away.

Starting in 2014 brokers were only required to report on Form 1099-B your "out of pocket" cost for receiving the stock, (which might be $0 for an RSU plan), so if you simply enter the Form 1099-B exactly as it reads you would be double taxed: you'd report the compensation on your W-2 and then also overstate your gain on Form 8949.

After entering the 1099-B exactly as it reads click the "I'll enter additional info on my own" and put the correct amount of basis in the "Corrected cost basis" box.

Tom Young

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7 Replies
TomYoung
Level 13

I spent 2 hrs on the phone w/ someone and I am exactly where I started. There is a disconnect in Turbo Tax where it is not filling out and recognizing form 8949.

No, TurboTax most certainly does prepare a Form 8949.  It's done "behind the scenes" so to speak, taking information that you input using the "Stocks, Mutual Funds, Bonds, Other" interview and placing this information on Form 8949.  Summary numbers off your Form(s) 8949 then flow up to Schedule D and summary numbers off Schedule D then flow up to line 13 of your Form 1040.

You problem is that you are using the WRONG basis to report the sale.  Use the CORRECT basis and your "double taxation" issue goes away.

Starting in 2014 brokers were only required to report on Form 1099-B your "out of pocket" cost for receiving the stock, (which might be $0 for an RSU plan), so if you simply enter the Form 1099-B exactly as it reads you would be double taxed: you'd report the compensation on your W-2 and then also overstate your gain on Form 8949.

After entering the 1099-B exactly as it reads click the "I'll enter additional info on my own" and put the correct amount of basis in the "Corrected cost basis" box.

Tom Young

fleurypj
Returning Member

I spent 2 hrs on the phone w/ someone and I am exactly where I started. There is a disconnect in Turbo Tax where it is not filling out and recognizing form 8949.

So - "After entering the 1099-B exactly as it reads click the "I'll enter additional info on my own" and put the correct amount of basis in the "Corrected cost basis" box."

 

What is the "correct amount of basis"? This means nothing to me and I have this same problem. 

KathrynG3
Expert Alumni

I spent 2 hrs on the phone w/ someone and I am exactly where I started. There is a disconnect in Turbo Tax where it is not filling out and recognizing form 8949.

Correct amount of basis means adjusting the wrong cost reported on your broker statement to the amount you paid for this investment. In the case of Restricted Stock Units that were reported in Form W-2, the stock amount included in Box 1 has been taxed. That amount should be entered as your basis.

 

For example,

  • Included in Box 1 of Form W-2 was 8,000 for the Restricted Stock Units when they vested, and were therefore taxed. 
  • These stocks were then sold.
  • The broker reported a stock sale with proceeds of $10,000 and cost basis of $0.
  • When filing the tax return and reporting the stock sale, the cost should be adjusted to $8,000. 
    • If the stocks were sold on the same day they vest, there is usually a small capital loss due to the sales fee.

@fleurypj

fleurypj
Returning Member

I spent 2 hrs on the phone w/ someone and I am exactly where I started. There is a disconnect in Turbo Tax where it is not filling out and recognizing form 8949.

Thank you, but this still seems rather vague.

 

In the step by step, Turbo Tax asks me to enter total proceeds and total cost basis from the 1099-B summary that references Form 8949. Let's say that's 280,000 and 230,000. These were fully vested restricted stock units for which I paid $0. This 50K for the sale of those restricted stock units is included in block 1 of my W2. This is supported by W2 block 12C Code V showing 50.2K - which is different than the 8949 total by a little.

 

How do I know what exact amount to enter in  Turbo Tax under gains/losses adjustment, and what adjustment codes apply, if any? Further, what documentation do I have to prove the adjustment is accurate/valid? 

 

Thanks again.

AmyC
Expert Alumni

I spent 2 hrs on the phone w/ someone and I am exactly where I started. There is a disconnect in Turbo Tax where it is not filling out and recognizing form 8949.

W2 box 12 wins for the amount that was added to your income and taxed. That plus any sales expenses equals your adjusted basis in the stocks. 

 

You have your brokerage statement and w2 as proof of your basis. The brokerage did not know the amount your employer added to your w2. What the broker knows plus what you know equals your true basis.

 

I want to urge you to create a financial notebook that is kept separate from your tax return. Keep it safe and each year, add your year-end statements from all your financial accounts plus a copy of your W2’s, your  carryover information, and proof of your basis in your various investments. You must keep tax records  from the time you purchase until sold/ loss used plus 3 years. It is very easy to lose track of disallowed losses / carryforwards/basis.

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_dk
Returning Member

I spent 2 hrs on the phone w/ someone and I am exactly where I started. There is a disconnect in Turbo Tax where it is not filling out and recognizing form 8949.

Hi, I used the off-line H&B version and imported my data from the vendors.  All 1099s and 8949's were filled out and processed correctly.  I don't have the data on the on-line version but check that it covers all investments.  Seems to me I had a problem with Premier and K-1's a couple of years ago.

best, _dk

KathrynG3
Expert Alumni

I spent 2 hrs on the phone w/ someone and I am exactly where I started. There is a disconnect in Turbo Tax where it is not filling out and recognizing form 8949.

Yes, TurboTax handles investment sales and prepares all necessary forms. In the event of employee stock options or other transactions requiring adjustment to cost basis, the program allows you to make those adjustments.

 

For more information, see: 

Where do I enter investment sales?

What is a wash sale?

Where do I enter a K-1 that I received?

 

@_dk

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