, Answering FAQ'sTurboTax Employee
If you participate in your employer's Employee Stock Purchase Plan (ESPP), you can enter your stock sales in TurboTax.
Did you buy stocks through your ESPP but didn't sell any during the tax year? Then don't worry about it. Taxation only kicks in when you sell the stock.
ESPP stock sales are entered like any other stock sales.
- Select the Federal Taxes tab (the Personal tab in the Home & Business edition).
- Select the Wages & Income subtab, click on I'll choose what I work on.
- Scroll down to Stocks, Mutual Funds, Bonds, Other and click the Start/Update button on the right.
- Follow the on screen prompts.
How to enter an employer stock sale as ordinary income
Typically, when you sell shares of employer stock, you're taxed at the generally lower capital gains rate instead of the often higher ordinary income rate. However, you need to be aware of the possibility that the gain or loss on the sale of your employer shares could be treated as ordinary income if:
- You bought the stock shares at a discount from the market price, or
- You owned the stock for one year or less, or
- You began buying the stock less than two years before you said you sold it.
If your shares are treated as ordinary income, look on your Form W-2. It should list an amount titled "ESPP Disqualifying Disposition" or "ESPP Qualifying Disposition" or something similar.
Add this amount on your Form W-2 to the cost of the shares to figure the total cost basis to enter for this sale.
If you don't see an ESPP-related entry on your Form W-2, contact your ESPP administrator, who will give you the information you need.