With employee stock options there are two taxable transactions. First, when the shares vest--that's ordinary income reported on your W-2. Second, when you sell the shares, which often occurs on the same day. The sale is reported on Form 1099-B. The key to avoiding double taxation is to add the ordinary income shown on your W-2 for the shares vesting to your basis for the subsequent sale. In most cases this results in little or no gain or even a small loss due to sales commission.
Please follow this link for more information. https://turbotax.intuit.com/tax-tools/tax-tips/Investments-and-Taxes/Incentive-Stock-Options/INF1204...
With employee stock options there are two taxable transactions. First, when the shares vest--that's ordinary income reported on your W-2. Second, when you sell the shares, which often occurs on the same day. The sale is reported on Form 1099-B. The key to avoiding double taxation is to add the ordinary income shown on your W-2 for the shares vesting to your basis for the subsequent sale. In most cases this results in little or no gain or even a small loss due to sales commission.
Please follow this link for more information. https://turbotax.intuit.com/tax-tools/tax-tips/Investments-and-Taxes/Incentive-Stock-Options/INF1204...
YOu only enter income once, and that's it. Par chance, on the W-2 is it reported in box 12 with code "V"? If not, then how is it reported on the W-2?
I have the same question. Yes, on the W2 the amount is reported in box 12 with "V". on the 1099-B, it has a bigger amount that includes both ESPP shares and Stock Options shares. The amount on W2 appears to only reflect the Stock Options and not the ESPP shares exercised.
How should I input the accurate info into TurboTax? When I tried to import it, it just loaded in everything and causing double counting.
Thanks!
I'm wondering whether you saw line 5 This sale involves an employee stock plan as you entered the 1099-B information?
See this Best answer.
What I did: import 1099 B from my broker, edit, follow the questions to the point it asks do you have a 3921? Answer yes, then reenter the data you saw/entered in the 1099B with those in 3921, and I end up with a gain of zero '0'
Normally, you would have a $0 gain from the entry of your form 1099-B when you sell employee stock as soon as your acquired it, since the compensation portion of the gain is on your W-2 form, and you don't have any appreciation in the stock since you sold is as soon as you acquired it. So, it looks like your entries were done properly.
I exercised and sold employee stock options. The net proceeds show as V on my W2 and the taxes were paid by the company on the W2. How do I enter this? Do I also enter as investment income? When I do, the proceeds are counted twice. Please help. thanks
It depends. Were these Incentive Stock options, EESP, or RSU? These are all handled a little differently.
Yes. You probably need to adjust the cost basis of the 1099-B stock sale with the amount included in your w2 box 1.
What appears on your W-2 is not proceeds from the stock sale; it's the difference between what you paid for the stock (as an employee) and the FMV of the stock when it vested (your discount). There may be a notation of this amount on your W-2.
Just enter your W-2 as shown; there is no other place to report this.
The 1099-B reports the proceeds from the actual stock sale. However, since the broker doesn't know what you actually paid for the stock (as an employee) it usually shows a Cost Basis of $0.
You need to change the Cost Basis on your 1099-B entry to the FMV amount, so you don't overpay gains/loss on the stock sale.
Depending on which TurboTax you have, when you are entering your 1099-B there's a place to indicate that 'I need to adjust cost basis' or 'the cost basis is incorrect' so that you can then enter the correct Cost Basis.
You should have info from your employer in some form that tells you what the FMV of the stock was when it was vested.
Hope this helps!
Click this link for more info on How to Enter 1099-B.
I wave similar question hope someone can help:
'22 sold company stock option at gain lets say 10K, employer reported them on W2
'22 sold various stock on market at loss, lets say -10K. reported on 1099
Turbotax does not combine these and wants me to deduct max 3k from my taxable income and carry over 7K for next year loss
Should stock option sale gain wash out loss from other stock sale ???
It all depends.
Whatever income is picked up on your W2 would be the "bargain element." This typically represents the difference iv value between the market price and the exercise at the time the stocks are sold. It is part of your ordinary income and gets taxed at ordinary income rate.
Attached to whatever shows up on your 1099B will be a supplemental schedule which will adjust the cost basis upward to the fmv of the stocks so that you don't end up paying tax a second time. Whatever figure shows up as a sales price for those stocks will appear on that 1099B and be reported accordingly. As such, stock option stock gain does not wash out loss from this other sale
For more details on stock options and their sales implications, see HERE
" The key to avoiding double taxation is to add the ordinary income shown on your W-2 for the shares vesting to your basis for the subsequent sale. "
Add where? As soon as I entered by 1099-B, the double taxation showed up. I tried to use the "I need to adjust my total cost basis", but then it wanted an adjustment code. None of those seemed to indicate "already reported on W-2". The referenced ISO page talked about Schedule D. Great. That makes sense, but my TurboTax didn't prepare a schedule D for me.
form 8949 instructions
• If this transaction is reported on a Part I (of form 1099-B) with box B checked at the top or if this transaction is reported on a Part II (of form 1099-B) with box E checked at the top, enter the correct basis in column (e), and enter -0- in column (g) and enter code B
• If this transaction is reported on a Part I (of form 1099-B) with box A checked at the top or if this transaction is reported on a Part II (of form 1099-B) with box D checked at the top, enter the basis shown on Form 1099-B in column (e), even though that basis is incorrect. Correct the error by entering an adjustment in column (g). and enter code B
code B covers all situations where the cost basis reported is incorrect. there is no code for "already reported on w-2".
the numbers from form 8949 will flow to schedule D, either the short term or long-term section, and that form will be included in your return. it's required in this situation.
Thank you very much @Mike9241 for the prompt answer. That exactly answers my question (and I am sure will do the same for many others).
This was a same-day sale of ISO.
My 1099-B does have a value for "Cost or other basis". In my opinion the cost basis is exactly right since that was the cost basis. It feels as if I am twiddling the numbers to make everything come out correctly. Maybe this is just a case of the forms not catching up to requirements for reporting such income on W-2.
I also wish the TurboTax UI would label their input fields with the IRS form line/column/box numbers (where there is a correspondence). That way when people give answers in terms of line/column/box, I can know where to put the numbers on the UI. In this case the box was labeled "Total adjustments to gain (or loss)" on the UI, so it was obvious. Once I complete everything on the UI, I will go back and look at all the forms/schedules to see if it looks right.