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Where to enter ESPP ordinary income for a qualifying disposition?

I have a qualifying disposition ESPP sale. I am able to import the 1099-B form reporting the sale and adjust the cost base. According to https://turbotax.intuit.com/tax-tips/investments-and-taxes/employee-stock-purchase-plans/L8NgMFpFX, I "will still need to report some ordinary income on your 2023 Form 1040, as "compensation."" How should I enter it in turbo tax 2023? None of the categories under "personal income" that seems fit for "compensation" or "ESPP ordinary income"
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ThomasM125
Expert Alumni

Where to enter ESPP ordinary income for a qualifying disposition?

Normally, the ordinary income portion of the employee stock sale is reported on your W-2 form in box 1. It may or may not have a reference to it in box 14. It is not subject to social security tax, so you won't see it in box 3. If so, you just need to enter your W-2 form to report the ordinary income. If not, you can enter it as Other Income in the Less Common Income section of TurboTax,  which is in the Wages and Income section. Look for Miscellaneous Income at the bottom of the list, and on the next screen choose Other Reportable Income

 

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4 Replies
ThomasM125
Expert Alumni

Where to enter ESPP ordinary income for a qualifying disposition?

Normally, the ordinary income portion of the employee stock sale is reported on your W-2 form in box 1. It may or may not have a reference to it in box 14. It is not subject to social security tax, so you won't see it in box 3. If so, you just need to enter your W-2 form to report the ordinary income. If not, you can enter it as Other Income in the Less Common Income section of TurboTax,  which is in the Wages and Income section. Look for Miscellaneous Income at the bottom of the list, and on the next screen choose Other Reportable Income

 

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Where to enter ESPP ordinary income for a qualifying disposition?

That is very helpful. Thank you!

Where to enter ESPP ordinary income for a qualifying disposition?

According to the IRS: "If your employer (or former employer) doesn't provide you with a Form W-2, or if the Form W-2 doesn't include the income in box 1, report the income on line 8k of Schedule 1 (Form 1040)".

Will reporting this as "Other Reportable Income" result into line 8k being populated in the IRS form? 

Where to enter ESPP ordinary income for a qualifying disposition?

I tested this and the answer seem to be "no"--this results in the the income being reported on line 8z of Schedule 1 instead of 8k.

 

For what it's worth, even if you jump through the hoops to get the "native" TurboTax handling of ordinary income from ESPP dispositions, it still doesn't report it in the right place--I haven't figured out a way to get it to show up in 8k where it's supposed to.

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