TurboTax is double counting income from the sale of stock options, which was already included in my W2.

Forum|Forum|6 years ago
June 1, 2019
2 replies
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How do I avoid double counting the income from the exercise of my stock options?

TurboTax Premier Online

Best answer by DavidD66

When you enter your 1099-B information for your stock option transaction, do not select the Import option. Instead, select "I'll type it in myself". Click on Continue. On the next screen, select your broker and click on Continue. Next select the categories of trades reported on your 1099-B and click Continue. Enter the information reported for your sale just as it is on the 1099-B and then check the box below the transaction that says "This sale involves an employee stock plan (including ESPP) or an uncommon situation" then click on Start now. Continue through the interview to enter the information for stock options. You should have received a statement from your employer or the broker that manages your company's plan. You will need that information. If your options were Incentive Stock Options (ISOs) then that would be Form 3921.

After entering the transaction, the cost basis for your stock should be adjusted to reflect the amount that was reported on your W-2 as income. This will result in your option transaction being properly reported and the income will not be doubled.

D

DavidD66Answer

When you enter your 1099-B information for your stock option transaction, do not select the Import option. Instead, select "I'll type it in myself". Click on Continue. On the next screen, select your broker and click on Continue. Next select the categories of trades reported on your 1099-B and click Continue. Enter the information reported for your sale just as it is on the 1099-B and then check the box below the transaction that says "This sale involves an employee stock plan (including ESPP) or an uncommon situation" then click on Start now. Continue through the interview to enter the information for stock options. You should have received a statement from your employer or the broker that manages your company's plan. You will need that information. If your options were Incentive Stock Options (ISOs) then that would be Form 3921.

After entering the transaction, the cost basis for your stock should be adjusted to reflect the amount that was reported on your W-2 as income. This will result in your option transaction being properly reported and the income will not be doubled.

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B

Bee712

@DavidD66 What code should you use for the cost basis adjustment when adjusting due to income already reported on your W-2. Is it Code B?

A

AbrahamT

If the cost basis is coming off the supplemental schedule you received, then this is the way to do it.

When entering the sales information in this screen, you will check off that the cost basis is incorrect or missing on my 1099B

On the next screen, you will indicate the adjusted cost basis

And will flow seamlessly onto Form 8949 in this fashion

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SteamTrain

Employee

You update the cost of the stock on your 1099-B/8949 entry to be the market price of the stock at the time of the exercise.......this usually results in a small loss on the exercise due to broker fees. And when you enter the stock exercise, you do not indicate that tax withholding was done with that exercise....that withholding is already shown separately on your W-2 form.

Assuming this was an exercise and immediate sale...Read situation #2 at:

https://turbotax.intuit.com/tax-tips/investments-and-taxes/non-qualified-stock-options/L8zsxRi7B

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*