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Level 2
April 11, 2023
Question

How do I enter a 1099-B for an EOP / Equity Ownership Plan when the taxpayer's income taxes were collected by the employer on the vesting date?

  • April 11, 2023
  • 2 replies
  • 11 views
The award was reflected as ordinary income, and the related taxes withheld were in the taxpayer's W-2.  
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2 replies

qbteachmt
Level 15
April 11, 2023

"and the related taxes withheld were in the taxpayer's W-2."

This never happens. Employers are not income tax authorities.

Your taxpayer, as with all employees, provides a W-4 to the employer, so that the employer can use the payroll tax tables to provide an estimated amount to take from the employee pay, as a prepayment to the Fed (and perhaps, the State) against your taxpayer's likely taxes owed when you prepare that taxpayer's tax filing.

It's never Tax. It's called Withholding. It's a Prepayment against taxes.

Any award of significant value is taxable. There are withholding requirements, such as flat rates on bonuses, amounts held out of RMD, etc. None of these are Tax. They are the same as an estimated payment the taxpayer can and would make on their own, if they opt out of all withholding.

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qbteachmt
Level 15
April 11, 2023

Oh: Vesting date is the Basis date and value. 1099-B means something was sold. The sales sometimes are of holdings that vested across many years. That's why you need the W2 from those years. And sometimes an employer will sell (or have a broker sell) some vested shares to cover withholding, when the value of this bonus exceeds the ability to withhold from the regular paycheck amount.

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Level 2
April 11, 2023

Yes, thank you, exactly as described in the EOP doscuments.

So I checked the box in ProConnect for "Not Taxable".

Warm regards

 

qbteachmt
Level 15
April 11, 2023

"So I checked the box in ProConnect for "Not Taxable"."

Which part isn't taxable? If you have a sale that is at basis, there is no gain. That isn't the same as not taxable.

Here is the ProConnect article for 1099-B:

https://proconnect.intuit.com/support/en-us/help-article/income-taxes/entering-form-1099-b-proconnect/L60ZLNnYK_US_en_US?uid=lgclwf4i

 

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