How to enter 1099-B sale that was "sell to cover" as someone working abroad

Forum|Forum|3 years ago
March 1, 2023
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I work in the UK for a US-based company that went IPO. I exercised my non-qualified options, and used "sell to cover". About 600 stock was sold, leaving me with about 400 which I've not sold.

The sale was reported on a 1099-B from Charles Schwab, but it just looks like a normal sale.

As I'm working abroad, I do not get a W-2 which I assume would show that tax was withheld and would explain the sale.

But since I don't have that, how do I enter this in TurboTax? Do I enter the unsold stock as foreign income, but then somehow specify that taxes were already withheld? That money already went to the UK government, and I believe they have the "first" taxing rights on the income... hopefully I'm not going to be double taxed on it?

TurboTax Home & Biz Windows

Best answer by DaveF1006

Assuming the 1099B was issued for the 600 shares of stock that was sold, you will not report the remaining 400 shares. You can file a form 1116 to receive a credit for the tax paid to the UK government.

To report the sale of your 600 shares, go to;

Go to federal>wages and income>investment income>stocks, bonds, other
Now you will answer some preliminary questions. Say no if you did not receive a 1099B.
Next screen is critical because it asks you for the sale price, description, what you originally paid for it, date sold, date acquired etc.
Now you will be asked a question if this was a sale of employee stock, here you will say yes.
The next screen will ask what type of employee stock is it. Without knowing the specific details of this award, if you are uncertain, just check none of these.
if you know the type of employee stock it is, you may wish to choose the other options because you may receive more favorable tax treatment.
Navigate through the remainder of the section as it will address option prices, exercise prices, and other information that is crucial to the reporting on the exercise of your options.

To claim a foreign tax credit for the taxes you paid to the UK;

Go to federal>deductions and credits>estimate and other taxes paid
Foreign taxes >start
Start answering questions. Make sure you answer the question correctly about if this is the first year you are making the simplified election
Answer the questions in the next screens until you reach a screen that talks about income type. This will be a passive category of income.
Next screen is where you add the country your foreign income was earned in.
Next screen will ask you what your source income earned in that country. Here you will allocate income earned while you were in that country.
You will continue answering questions until you get to a screen that says foreign taxes paid to XXXX. Be sure not to list a date at the bottom beyond 12/31/2020 or you won't get the foreign tax credit and will show up as an error in your return

DaveF1006Answer

To report the sale of your 600 shares, go to;

Go to federal>wages and income>investment income>stocks, bonds, other
Now you will answer some preliminary questions. Say no if you did not receive a 1099B.
Next screen is critical because it asks you for the sale price, description, what you originally paid for it, date sold, date acquired etc.
Now you will be asked a question if this was a sale of employee stock, here you will say yes.
The next screen will ask what type of employee stock is it. Without knowing the specific details of this award, if you are uncertain, just check none of these.
if you know the type of employee stock it is, you may wish to choose the other options because you may receive more favorable tax treatment.
Navigate through the remainder of the section as it will address option prices, exercise prices, and other information that is crucial to the reporting on the exercise of your options.

To claim a foreign tax credit for the taxes you paid to the UK;

Go to federal>deductions and credits>estimate and other taxes paid
Foreign taxes >start
Start answering questions. Make sure you answer the question correctly about if this is the first year you are making the simplified election
Answer the questions in the next screens until you reach a screen that talks about income type. This will be a passive category of income.
Next screen is where you add the country your foreign income was earned in.
Next screen will ask you what your source income earned in that country. Here you will allocate income earned while you were in that country.
You will continue answering questions until you get to a screen that says foreign taxes paid to XXXX. Be sure not to list a date at the bottom beyond 12/31/2020 or you won't get the foreign tax credit and will show up as an error in your return