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Category: Tax
Satisfied Customers: 9679
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am doing my taxes in Turbo Tax. I am having trouble inputting

Customer Question

I am doing my taxes in Turbo Tax. I am having trouble inputting ISO bought/sold same day where it is on the W-2. Turbo Tax 2015 Premier does not seem to have the right places to input the information. Also, my husband performed work for his previous employer and 1099 was received. Turbo Tax reflects errors saying we must fill out information on our business. We do not have a business - he just did some work a couple of months after he left the position. I need help talking me through these sections of Turbo Tax. I have everything else completed but this.
Submitted: 6 months ago.
Category: Tax
Expert:  Lane replied 6 months ago.
Hi, first the easy part... Anytime that someone receives a 1099 (rather than an a W-2 - which is for employees) they DO have a business (by default, if you will)....For the time that your husband worked after no longer BEING an employee he was technically a sole proprietor (the business that anyone receiving a 1099-MISC is deemed to be, unless they've done something more formal like set up an LLC or a corporation)....By answering those questions, not only will the required Schedule C be generated with the return, you can deduct certain expenses on that schedule C to lower the "profit" from his "business," hence, lowing the taxable income from that "business."...Now part II, bear with me for a moment...
Expert:  Lane replied 6 months ago.
When you exercise an incentive stock option (ISO), there are generally no tax consequences, BUT when you automatically sell the stock that you bought and sold SIMULTANEOUS WITH exercising that ISO , that's when you're taxed (both on the profit made form buying the stock at a discount (that's what an option is, an option to buy a stock at a price that's usually lower than the actual market price) and on the option itself....Bear with me ... not quite done
Expert:  Lane replied 6 months ago.
If you exercise a non-statutory option for IBM at $150/share and the current market value is $160/share, you'll pay tax on the $10/share difference ($160 - $150 = $10). For example:...100 shares x $150 (award price)/share = $15,000100 shares x $160 (current market value)/share = $16,000$16,000 - $15,000 = $1,000 taxable income...Since you'll have to exercise your option through your employer, your employer will report the amount of your income on line 1 of your Form W-2. You should include this in your ordinary wage or salary income when you file your tax return....Then, when you sell stock you've acquired via the exercise of any type of option, you might face additional taxes. Just as if you bought a stock in the open market, if you acquire a stock by exercising an option and then sell it at a higher price, you have a taxable gain....So here, you rally have two pieces of income; the ordinary income that was already included in the W-2 when the option was exercised, AND the capital gain on the sale of that resulting stock
Expert:  Lane replied 6 months ago.
TurboTax Premier includes a step-by-step guide through entry of your stock option transactions, including reporting of purchases and sales of incentive stock options (ISOs). Or, select Wages & Income, Investment Income, Stocks Mutual Funds, Bonds, Other. You have to use the "Add Another Investment Sale" button, and then pick the EasyGuide.
Expert:  Lane replied 6 months ago.
I hope this has helped....Please let me know if you have any questions at all....If this HAS helped, and you DON’T have other questions … I'd really appreciate a positive rating (using the , faces, or stars on your screen, and then clicking “submit”)...That’s the only way JustAnswer will credit us for the work here....Thank you!Lane……I hold a JD (Juris Doctorate, the law degree), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security & Medicare, estate, corporate & tax advice since 1986.

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