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How do I add ESPP ordinary income that was not included in my W-2?

Forum|Forum|6 years ago
March 18, 2020
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The 2020 version of Turbotax online does not ask me if the ordinary income I earned as part of an ESPP stock sale was included in my W-2. I went through the step-by-step enter it yourself. I even worked with a Turbotax support person on the phone, and they could not get the question to come up. I then used the suggestions from 2019 questions that said to use the "Miscellaneous Income, 1099-A, 11099-C" option and then the "Other income not already reported on a Form W-2 or Form 1099" option but I am not able to put in a description of "ESPP ordinary income" and none of the pre-set choices for description are applicable. How do I handle this?

TurboTax Premier Online

Best answer by lazyh32

I finally figured it out. For 2020, in order to get the program to ask you if your ordinary income was included in your W-2, you must do the following.
1) You must select "I need help figuring out my cost basis"
2) You must select "I'll enter this on my own" when asked about the sales info
3) Specify "It's for an employer that has an existing W-2 on this return" (if appropriate, either way works)
4) You must enter the amount of compensation income on the "Let's enter your ESPP sale details" page
5) Then after completing it, it will summarize your sales on the "Here are all your investment sales" screen
6) When you click on continue, it will bring up the "Let's review your employee stock plan results" screen and ask you about your W-2's

Without going though the "I need help figuring out my cost basis" section, it never asks about your W-2, nor gives you the option to specify your ordinary income.

DawnC

Employee

After you go through the step by step and click through the summary screens, you should come to a screen that says Let's review your employee stock plan results. There will be a checkmark in the box that says 'Reported on W-2'. Uncheck that box and TurboTax will add the amount to your Wages reported on Line 1 of your Form 1040.

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L

lazyh32AuthorAnswer

I finally figured it out. For 2020, in order to get the program to ask you if your ordinary income was included in your W-2, you must do the following.
1) You must select "I need help figuring out my cost basis"
2) You must select "I'll enter this on my own" when asked about the sales info
3) Specify "It's for an employer that has an existing W-2 on this return" (if appropriate, either way works)
4) You must enter the amount of compensation income on the "Let's enter your ESPP sale details" page
5) Then after completing it, it will summarize your sales on the "Here are all your investment sales" screen
6) When you click on continue, it will bring up the "Let's review your employee stock plan results" screen and ask you about your W-2's

Without going though the "I need help figuring out my cost basis" section, it never asks about your W-2, nor gives you the option to specify your ordinary income.

M

maja_MN

Thank you for asking this question! I'm hoping the answer from lazyh32 will work for me. I tried adding an extra 1099 or adding an extra line to my W-2 that isn't really on the actual W-2. fingers crossed.

C

czhang4

sorry to ask a dumb question: isn't still ok to do the ""Other income not already reported on a Form W-2 or Form 1099" option" trick? I know there is no way to enter "espp ordinary income" there. But isn't TurboTax simply added that ordinary income to the wage in 1040 line 1? I don't see any other form being attached in the final reporting forms.

The net result of the final forms looks no different from just add the amount to section "Other income not already reported on a Form W-2 or Form 1099".

M

mglauner

@czhang4 You are correct, the income still gets taxed the same way adding it through 'Income not reported on W-2..'.

Another option is to choose 'Other Reportable Income', where you will be able to enter a description on the next screen (screenshots).

C

czhang4

Thank you MarilynG1!

The only concern that I have is, will IRS understand that this is the "compensation income" part of the ESPP sale if I report them as'Income not reported on W-2..'.?

My point is the final form does not look contains any explanation or whatsoever about this adjustment even if I go through the ESPP questionnaire to adjust the cost basis.