This thread has been incredibly helpful! I'm dealing with the exact same issue - multiple CSP transactions that resulted in negative proceeds on my 1099-B, and FreeTaxUSA just won't accept the negative amounts. Based on all the advice here, it sounds like the consensus is to use the workaround of entering $0 for proceeds and putting the absolute value in the cost basis field instead. I'm going to try this approach for my ~30 options transactions. Quick question though - when I check the box on Form 8949 indicating the basis is incorrect, should I attach a separate statement or is there a specific field in FreeTaxUSA where I can add the explanation about the software limitation? Want to make sure I document this properly for the IRS. Thanks everyone for sharing your experiences - this saved me from potentially switching tax software at the last minute!

I ran into this exact same issue last year with my options trading! The negative proceeds problem with FreeTaxUSA is so frustrating, especially when you're dealing with multiple CSP transactions. What worked for me was the workaround others have mentioned - entering $0 for proceeds and putting the loss amount in the cost basis field. But here's an additional tip that saved me time: if you have a lot of transactions like I did (around 40), you can actually bulk edit them in FreeTaxUSA's spreadsheet view instead of going through each one individually. Go to the Investment Income section, find where it shows your imported 1099-B data, and look for the "Edit in Spreadsheet" option. You can then quickly adjust all the negative proceeds entries at once by copying the absolute values to the cost basis column and zeroing out the proceeds column. Much faster than doing it transaction by transaction. Just make sure to add that explanation note about software limitations when you get to Form 8949. I used something simple like "Negative proceeds adjusted to cost basis due to software input limitations - net loss amount unchanged from 1099-B reporting." The IRS has never questioned it, and it saved me from having to pay for more expensive software or start over completely.

I'm really sorry you're going through this - what an absolute nightmare to deal with! Having been through a similar payroll mess myself, I can definitely relate to the frustration of suddenly owing thousands because someone else couldn't do their job correctly. From my experience, you actually have more leverage than you might think. While legally the tax liability is yours, most employers will work with you when their error creates genuine financial hardship. The key is approaching this strategically rather than just venting (totally understandable as that frustration is though). Here's what worked for me: First, calculate the total financial impact - not just the $3,800 you owe, but any penalties, interest, or even the opportunity cost of having that money tied up. Then draft a professional letter to HR outlining the situation and proposing specific solutions: they could cover it as a corrective payment, provide an interest-free advance through payroll deductions, or at minimum cover penalties/interest. Also definitely check your employee handbook for language about correcting administrative errors - many companies have policies about "making employees whole" for their mistakes. And contact your state tax authority to see if they offer penalty relief or payment plans for situations caused by employer errors. The fact that you're already planning to speak with a tax attorney shows you're taking this seriously, which is smart. Just make sure to document everything in writing from here on out. Most reasonable employers will want to avoid the bad publicity and potential legal issues that come from leaving employees financially devastated by company mistakes. Don't give up - you shouldn't have to empty your savings because of their incompetence!

I'm really sorry you're dealing with this situation - it's incredibly frustrating when an employer's mistake creates such a significant financial burden for you. Based on what you've described, you definitely have options beyond just accepting this as "your problem." While the tax liability itself legally belongs to you, your employer's error in coding the wrong state creates a strong case for them to help resolve the financial hardship they caused. I'd recommend approaching this systematically: First, document everything - when you provided your correct state information, all conversations about this issue, and the full financial impact (including any penalties or interest, not just the base $3,800). Second, check your employee handbook for policies about administrative errors or "making employees whole" for company mistakes. Many employers have language that could apply to your situation. Third, contact your state tax authority to ask about penalty relief for situations caused by employer errors, and inquire about payment plan options to avoid the lump sum burden. Finally, when you approach HR, present this as a business problem needing a solution rather than just a complaint. Offer multiple options: they could cover the amount as a corrective payment, provide an interest-free advance through payroll deductions, or at minimum cover any penalties and interest their error caused. Most reasonable employers will work with you on this to avoid the bad publicity and potential legal issues that come from leaving employees financially devastated by company mistakes. Stay persistent but professional - you shouldn't have to drain your savings because of their incompetence.

One thing nobody mentioned yet - make sure you're keeping DETAILED records of: - Offering date - Purchase date - Fair market value on both dates - Actual purchase price - Number of shares - Which specific shares you sell when you eventually sell I learned this the hard way when I sold some ESPP shares last year and couldn't prove it was a qualifying disposition because I was missing some of this documentation. My company's stock administrator wasn't helpful at all in providing historical records.

Something else to consider - if your ESPP offers the "lookback provision" where they use the lower of the beginning or ending price of the offering period, the tax calculation gets even more complex. The additional discount from the lookback gets treated as ordinary income even in a qualifying disposition. Ex: If stock was $100 at offering date, drops to $80 at purchase date, and you get 15% off the LOWER price ($80 * 0.85 = $68), the $12 discount (15% of $80) is one part of ordinary income, but the extra $20 discount from the lookback feature is ALSO ordinary income. Found this out the hard way last year!

This is exactly what I needed to hear! I've been on the fence about switching from TurboTax for the past two years because their prices keep going up, but I was worried about losing all my previous data. Knowing that FreeTaxUSA can import from TurboTax is huge - that was honestly my biggest concern about switching. I have a pretty straightforward tax situation (W-2, some investment income, mortgage interest) so it sounds like FreeTaxUSA would handle everything I need without the premium pricing. The fact that you saved $65 and got the same quality return really seals the deal for me. Thanks for sharing your experience! Definitely going to make the switch for next year's filing season.

I switched from TurboTax to FreeTaxUSA two years ago and couldn't agree more! The import feature was a game-changer - I was amazed at how smoothly it transferred everything from my previous TurboTax files. What really impressed me was how FreeTaxUSA handles complex situations without charging extra fees. I have rental income, some freelance work, and multiple investment accounts, and TurboTax was charging me over $120 just for those "premium" features. FreeTaxUSA handled everything for a fraction of the cost. The customer support is solid too - I had a question about depreciation on my rental property and got helpful answers through their chat feature within minutes. The interface might not be as flashy as TurboTax, but it's actually more straightforward once you get used to it. Plus, their tax library and help articles are really comprehensive if you want to understand the reasoning behind certain deductions. Saved me about $80 last year and got the same accurate results. Never looking back!

I think everyone's overlooking the most important factor - how badly do you need your refund? If you're counting on that money soon for bills or something important, it might be worth filing now and dealing with a possible amendment later. Just know that amendments can take 16+ weeks to process according to the IRS website. So if your correction results in a larger refund, you'll be waiting a long time for that additional money.

Here's a practical middle ground approach I've used successfully: Check if your brokers have published their correction schedule dates. Most major brokers like Fidelity, Vanguard, and Schwab publish target dates for when they expect to issue final corrected forms (usually mid to late March). If your brokers haven't published specific dates or if you're getting close to the tax deadline, you can file with what you have. Just keep detailed records of your original forms so you can easily compare if corrections arrive later. One tip that's saved me headaches: if you do get a correction and it's unclear whether you need to amend, many tax software programs can help you determine the impact. TurboTax, FreeTaxUSA, and others have amendment features that will calculate whether the changes are significant enough to warrant filing Form 1040-X. The threshold isn't officially published, but generally if the correction changes your tax owed or refund by less than $1, most preparers would say an amendment isn't necessary. Anything more than that, especially if it changes which tax brackets you fall into, should probably be amended.