Normally, the ordinary income is included in the employee’s W-2. If there are any capital gains to report or if you received a Form 1099-B, you would need to complete Federal Form 1099-B in the program to report the information on Schedule D on your return.

If this is the case, the information would be entered in the Investment Income section of TaxACT.

1. From within your TaxACT return (Online or Desktop), click on the Federal Q&A tab
2. Click Investment Income to expand the section, then click Gain or Loss on Sale of Investments
3. Click Capital Gain or Loss Form 1099-B
4. The program will proceed with the interview questions for you to enter or review the appropriate information

If the income was included in the W-2 and you also received a 1099-B that should not be taxable, you would still want to enter it in your return as the IRS will try and match the sales proceeds amount to their copy of the form. Enter the amount of the Sales Proceeds and then enter the same amount as the Purchase Price (basis). This reports the 1099-B but creates no gain or loss on the return.

You may need to contact your employer or plan administrator to determine if any amount was included in your W-2. You should have also received literature from them on the tax treatment of the plan you are under and how it is reported.

TaxACT now allows you to add the ordinary income from an ESPP sale to your wages on Form 1040, Line 7, if this amount has NOT been included in your wages by your employer. You would enter this compensation (wage) income on the screen titled Investment Sales – Employee stock purchase plan (ESPP) amount not on W-2 if you need to report this income as wages.

Related Links:

• IRS Publication 525 – Taxable and Nontaxable Income