W-2 from previous employer for ESPP Sale

[mydailyjunk]

I sold ESPP with qualified disposition, these ESPP were issued from my previous employer.

I have recieved a W-2 from my previous employer along with broker 1099-B.

Should I enter in turbotax the second W-2 from previous employer? It has only Box-1 with amount equal to 15% discount and Box-14 with same amount as Box-1 with ESPPQD description.

Thanks in advance.

[ReneeM7122]

It depends.  You should enter the second W-2 from the previous employer, but you need to check and make sure it does not change your income.  Keep in mind, you only need to report the sale if you sold stock that was purchased through an ESPP (Employee Stock Purchase Plan). In that case, the sale will be reported on Form 1099-B, which you should receive from your brokerage around tax time (early February is typical). Simply enter your 1099-B to report the sale on your tax return.

If you merely purchased (but didn't sell) ESPP shares, there's nothing to report.

@mydailyjunk

[mydailyjunk]

@ReneeM7122 

Thanks for your reply. I am still confused if I should add the second W-2 or not?

Because adding the second W-2 add to my income and eventually increase my my tax liability?

On your suggested note, how can I check and make sure it does not change your income in turbotax?

P.S. I have sold the ESPP after holding for more than 8 years and I am entering it as a capital gain as1099-B.

[DianeW777]

Yes, you must enter the W-2 received in 2020 from your previous employer. It sounds like, based on your comments, that what is being reported is required for the difference in the option price and the fair market value (FMV) on the date of exercise.  This is normal practice for employee stock purchase plans (ESPP)

This amount should also be added to the cost basis of these same shares when they are sold.  If the sale of your ESPP shares was these same shares then by adding this additional W-2 income with the reduced amount you purchased the stock for this would create no increase to your income overall.  The cost basis increase is allowed because it is money you are taxed on.

Your broker statement does not usually include the taxable wage portion to your cost basis which is why you must add this to your cost when you enter the sale of the ESPP shares. Based on the holding period you would use long term and receive capital gain tax treatment.

[meixiaoxiao]

I have some ESPP from my previous company in CA. If I sell this ESPP stock, I would receive a W2 from my previous CA company.  But since now I live in Florida, do I have to report tax for California for that ESPP portion of gain?

How about the RSU, I have a few RSU shares from the previous company in California as well.

Thanks,

Cindy

[DaveF1006]

Yes, California will tax your ordinary gain from ESPP or RSU stock sales. According to this Turbo Tax source written by BSTV, California will tax the ordinary gain from income from ESPP, RSU, or any stock in a qualifying or disqualifying disposition while a nonresident, but will not tax capital gain. You will need to file as a California non-resident to report your ordinary gain.