How do I report the compensation income from an ISO sale that is not included on my W-2?

Forum|Forum|4 years ago
March 12, 2022
1 reply
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It is a disqualifying disposition and I have left the employer long ago so I don't get a W2 from the employer. For some reason, Turbotax online is not adding compensation income to the tax calculation.
In online turbotax edition, I add "An employer without a W-2 on this return" in ISO option interview but still, I see no change in tax. I don't see any page where online edition is asking me whether the amount reported on you W-2.

TurboTax Premier Online

ThomasM125

You normally have a problem with the income not showing in wages if you didn't enter the proper dates for the acquisition and sale of the stock.

The stock must have been held at least one year and a day after your acquired it and at least two years after the original grant date for the gain on sale to be treated as capital gain income and for no ordinary income to be recognized. So, you need to make sure the dates you entered did not fall into that range for some of the income to be reported as wage income.

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anilkAuthor

As part of the ISO interview, I entered 3921, which has accurate grant and exercise dates. The issue is that I have left the employer and Turbotax is assuming the income will be part of the W2. Is there a way to specify if the compensation part is not part of W2. Please note that it's a disqualifying disposition where I have to report short term gain.

Thanks

RaifH

Since you did not receive a W-2 for the bargain element of the ISO, you will need to report this as regular income. To do this in TurboTax:

With your return open, go to Federal > Wages & Income
Open the Less Common Income section and start or revisit the last entry, Miscellaneous Income, 1099-A, 1099-C.
Select Other income not already reported on a Form W-2 or Form 1099
Select Yes to Did you receive any other wages?
Leave household employee income and sick pay blank
Select Yes to Did you earn any other wages?
Select Other to Enter source of other earned income
Enter ISO Ordinary Income and for the amount, enter only the bargain element.

This will appear on Line 1 along with your other wages. To preview your tax return:

Open or continue your return.
Select Tax Tools in the left menu (if you don't see this, select the menu icon in the upper-left corner).
With the Tax Tools menu open, you can then view your 1040 form: Select Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu
Scroll down until you see Form 1040 Line 1 Wages salaries tips etc. The bargain element should be included along with your other wages on this line.