Author Topic: ESPP sale not reported by my employer  (Read 5230 times)

nawhite

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ESPP sale not reported by my employer
« on: February 09, 2015, 09:26:52 PM »
I paid about $10k for shares worth $12k through my employer's Employee Stock Purchase Plan in June. There was no minimum holding period so I sold the shares the first chance I had two days later I then left that company 2 weeks later. My understanding is that my employer should have recorded that extra $2k as income on my W-2 on line #12 but they didn't for some reason.

So, how do I file my taxes now? Do I just call it a capital gain? Do I write it up as an additional source of income? Do I need to call my old employer's HR department and get them to reissue a W-2? Anybody else had to deal with ESPP taxes this year?

MDM

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Re: ESPP sale not reported by my employer
« Reply #1 on: February 09, 2015, 09:37:07 PM »
Did you get a 1099-B for the sale?  What did it show for the cost basis?  If $10K, just process the 1099-B into your return and you are all set.

A bigger, although manageable, problem starts this (2014 tax) year when the 1099-B shows (following your example) $10K as the cost basis so a $2K gain, but the W-2 also shows $2K income due to the ESPP.  Then you have to explain why the 1099-B basis is incorrect.

See http://forum.mrmoneymustache.com/investor-alley/your-2014-1099-b-form-for-an-espp-sale-will-probably-be-wrong/.


ncornilsen

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Re: ESPP sale not reported by my employer
« Reply #2 on: February 10, 2015, 08:13:25 AM »
Be careful here.  I did my 2013 taxes wrong and will be ammending because I didn't do it right... and seeming employer's aren't doing it right at this point. my w2 had the right info, but did a bad job explaining it. My 1099B was flat wrong.

You need to make sure the W2 reflects the value of the discount you got. Mine included it in the gross pay, but had a section that subtracted that amount out for reporting my social security wages. Since the discount amount is included on the w2, your cost basis is increased to the market price when you acquired the shares. (NOTE - I technically "acquire" my shares on dec 31st of a year, but dont actually get to do anything with them for 2 weeks due to processing and such. In my example, you would use the market price on dec 31st to figure the discount amount, and to determine your actual cost basis.)

So, here's what you do:
-Determine the stock price that you purchased the shares for. This is "A."
-Determine the price of the stock on the day you "acquired" the shares. "B".
-Calculate B-A. This will probably show up on your W2 under the earnings summary, where they calculate your social security wages, as "Misc non-taxable Comp."

Your cost basis is now B. On form 8949, checking box A, put the information provided on your 1099B, but also do adjustments in column G to bring the cost basis up to the correct amounts.  Put those calculated amounts on your scedhule D short term gains, and continue as needed.

nawhite

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Re: ESPP sale not reported by my employer
« Reply #3 on: February 10, 2015, 09:15:00 AM »
I was a little off on the numbers above but here is more info. My employer sent me a document explaining the purchase of the shares.

Price I purchased shares for: $26.90
Price of shares on exercise date: $36.20
Number of shares transferred: 320.611
Income that should be reported on my W-2: ~$2980

I don't see any "earnings summary" on my W-2 but my "Social Security Wages" are greater than my "Wages, tips, other compensation" buy about $2980 + my HSA contribution. Is that how it would be reported or should there be a line 12 entry on the W-2 for that $2980?

lurker

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Re: ESPP sale not reported by my employer
« Reply #4 on: February 10, 2015, 10:11:08 AM »
There's no line 12 code for your ordinary income from disqualifying dispositions.  From your description, it sounds like the amount is in box 1, but not box 3 (or 5), which would be the appropriate presentation.

nawhite

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Re: ESPP sale not reported by my employer
« Reply #5 on: February 10, 2015, 10:24:50 AM »
There's no line 12 code for your ordinary income from disqualifying dispositions.  From your description, it sounds like the amount is in box 1, but not box 3 (or 5), which would be the appropriate presentation.

Actually Boxes 3 and 5 are the same and are higher than Box 1. Is that what you meant?

MDM

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Re: ESPP sale not reported by my employer
« Reply #6 on: February 10, 2015, 10:31:36 AM »
I don't see any "earnings summary" on my W-2...
Yes, you won't find a breakdown on the W-2.  But do you get a "pay stub" from your employer each time you receive pay?  That is typically where you find the details behind the totals.

ncornilsen

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Re: ESPP sale not reported by my employer
« Reply #7 on: February 10, 2015, 07:04:32 PM »
Box 1, at least on my W2, is Gross pay minus 401K. (401K contrib was box 12, code D)
Bo3 was my gross pay minus the value of my ESPP discount. (2980 in your case.)
Box 5 was the same as box 3 for me.


nawhite

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Re: ESPP sale not reported by my employer
« Reply #8 on: February 10, 2015, 09:10:55 PM »
Box 1, at least on my W2, is Gross pay minus 401K. (401K contrib was box 12, code D)
Bo3 was my gross pay minus the value of my ESPP discount. (2980 in your case.)
Box 5 was the same as box 3 for me.

So how do you know the value of your ESPP discount? Is it listed somewhere else on your W-2 or do you calculate it yourself from another form?

ncornilsen

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Re: ESPP sale not reported by my employer
« Reply #9 on: February 11, 2015, 08:12:01 AM »
I calculated it using the data given to me by our HR department that listed the "official" exercise price and market price on the date of exercise.

You could also add your 401K contrib, and HSA contrib(if your HSA contribs were done by way of a pay stub deduction) to box 1, , then subtract box 3 from that amount. I did this as a sanity check and it came out to the same number.