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What might the ESPP DD amount on my W-2 be different than the W-2 disposition amount calculated by Turbo Tax? The difference is a couple thousand dollars.

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February 23, 2025
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Best answer by DavidD66

By ESPP DD amount I am assuming you mean the Bargain Element that was included in your W-2 box 1 compensation after selling your ESPP stock in a Disqualifying Disposition. Not to point out the obvious, but the on reason would be you input amounts into TurboTax that are different than what your employer used to calcuate the amount of the Bargain Element. The bargain element is calculated this way:

Subtract the actual price paid from the market price at the exercise date
Multiply the result by the number of shares

If the amount TurboTax calculated is significantly different than what was added to your W-2, it could be that you had more than one ESPP grant that was sold and you are only entering the information for one. You should have a separate Form 3922 for each ESPP grant. Without knowing the amounts involved in the transaction, it's impossible to say whether a "couple thousand dollars" is significant.

Since your employer added the bargain element to your W-2, I suggest you report your sale of ESPP stock without indicating that it is Company Stock from an ESPP. All you need to do is report what is on your Form 1099-B, and then adjust the cost basis on your 1099-B so that it includes the bargain element added to your W-2.

For more information see the following TurboTax Help Article: Employee Stock Purchase Plans

S

shannon_reillyAuthor

I cannot figure out how to edit my question, but it should read:

What might cause the ESPP DD amount on my W-2 to be different than the W-2 disposition amount calculated by Turbo Tax? The difference is a couple thousand dollars.

D

DavidD66Answer

By ESPP DD amount I am assuming you mean the Bargain Element that was included in your W-2 box 1 compensation after selling your ESPP stock in a Disqualifying Disposition. Not to point out the obvious, but the on reason would be you input amounts into TurboTax that are different than what your employer used to calcuate the amount of the Bargain Element. The bargain element is calculated this way:

Subtract the actual price paid from the market price at the exercise date
Multiply the result by the number of shares

If the amount TurboTax calculated is significantly different than what was added to your W-2, it could be that you had more than one ESPP grant that was sold and you are only entering the information for one. You should have a separate Form 3922 for each ESPP grant. Without knowing the amounts involved in the transaction, it's impossible to say whether a "couple thousand dollars" is significant.

Since your employer added the bargain element to your W-2, I suggest you report your sale of ESPP stock without indicating that it is Company Stock from an ESPP. All you need to do is report what is on your Form 1099-B, and then adjust the cost basis on your 1099-B so that it includes the bargain element added to your W-2.

For more information see the following TurboTax Help Article: Employee Stock Purchase Plans

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