Tax Report

RSU Tax report

Here are a few facts: (see https://www.benefitaccess.com/forms/rsstock/form65532.pdf)

Restricted Stock Units (RSU) and TurboTax: Net Issuance

http://thefinancebuff.com/restricted-stock-units-rsu-and-turbotax-net-issuance.html

• In form w2, the RSU amount is the total amount before shares sold for taxes.
• In form w2, the federal tax withholdings includes shares sold for tax when vesting RSU

If you did not sell RSU

The info w2 form is enough for tax reporting.

If you sold RSU

see http://people.opposingviews.com/report-restricted-stock-units-taxes-8228.html

ESPP Tax Report

Facts: You may see there is an amount of ESPP gain included in W2. This gain is calculated on the time of share acquisition。 You will receive 1099-B if you sold your ESPP

If you did not sell your espp share

It will not appear on W2, and you do not report this.

If you sold part or all of espp

You need to report an adjustment on form 8949
see http://www.sfgate.com/business/networth/article/How-to-avoid-paying-double-tax-on-employee-stock-6021347.php

See also http://www.sfchronicle.com/business/networth/article/How-to-avoid-getting-double-taxed-on-employee-6080453.php

If you cannot access that page, here is some sample senarios

Scenario 1

Last year, the price was $10 on Jan. 1 and $15 on June 30. Assume you bought one share on June 30 at $8.50 (15 percent less than $10), giving you a paper profit of $6.50 on the purchase date. You sold in September for $18, so it was a disqualifying disposition.

In a disqualifying disposition, the compensation component is always the paper profit on the purchase date, or in this case $6.50. Your employer will include $6.50 in wages on your W-2.

Your adjusted basis is $15 ($8.50 purchase price plus $6.50 ordinary income). You also have a $3 capital gain ($18 sale price less $15 adjusted basis). It’s a short-term capital gain because you held the stock less than one year.

However, on Form 1099-B, your broker will report an unadjusted basis of $8.50 (just the purchase price). If you fail to make an adjustment on Form 8949, you would mistakenly report a capital gain of $9.50, which includes the $6.50 included in ordinary income. The $6.50 would be taxed twice.

Here’s how to avoid that: On Form 8949, enter proceeds of $18 in column (d) and $8.50 in cost basis in column (e). In column (f), use code B, which means the basis is incorrect. In column (g) for adjustments, subtract $6.50. This will result in the correct capital gain of $3, which you transfer to Schedule D.

Scenario 2

Same as above, but you hold the stock long enough to get a qualifying disposition.

In a qualifying disposition, your compensation element is the “discount as of the enrollment date or the actual gain on the sale, if it is lower,” says Barbara Baksa, executive director of the National Association of Stock Plan Professionals.

In this case, the enrollment-date discount is $1.50 (15 percent off $10) and your actual gain is $9.50 ($18 minus $8.50).

Since $1.50 is lower, that’s how much compensation your employer will include on your W-2 in the year you sell. But your 1099-B for that year will still show $8.50 in cost basis.

On Form 8949, report $18 in column (d), $8.50 in cost basis in column (e), code B in column (f) and in column (g), subtract $1.50. This will result in the correct capital gain of $8. In this case, it’s a long-term capital gain because you held the stock for at least one year from the purchase date.

Scenario 3

Now suppose you held the stock long enough to get a qualifying disposition, but instead of selling at $18, you sold at $8, which is 50 cents less than the purchase price.

“In this case, the employee won’t recognize any ordinary income on the sale, because the tax code includes a special rule (that applies to qualifying dispositions only) that limits the employee’s ordinary income to the actual gain on the sale. And, in this case, there is no gain, hence, no ordinary income,” Baksa says.

The company won’t report any stock compensation on Form W-2. The broker will report $8.50 as cost basis on Form 1099-B, and it will be correct. No adjustment is necessary on Form 8949. The employee’s capital loss is 50 cents ($8 in sales proceeds minus $8.50 in basis), Baksa says.