ESPP sales after leaving a company, will I receive W2 from the previous company?

The good news is that you won't receive a W-2 from your former employer for selling ESPP shares after leaving the company. When you sell ESPP shares, you'll receive a Form 1099-B from the brokerage where you held the shares, not a W-2 from your former employer. Here's how to understand the tax breakdown: When you originally purchased the ESPP shares, any discount you received was already reported as ordinary income on your W-2 for that year (when you were still employed). That discount amount gets added to what you paid for the shares to establish your "cost basis." When you sell the shares, you'll have a capital gain or loss based on the difference between your selling price and your cost basis. If you held the shares for more than a year after purchase, it's a long-term capital gain; if less than a year, it's short-term capital gain (taxed at your ordinary income rate).

After dealing with a similar ESPP situation last year, I found https://taxr.ai incredibly helpful. I was confused about figuring out which portion of my stock sales were ordinary income vs. capital gains, especially since I had multiple purchase periods with different discount rates. I uploaded my old ESPP statements and previous W-2s to taxr.ai, and the service analyzed everything and broke down exactly what portions were already taxed as ordinary income and what would be capital gains. It also explained the qualifying vs. non-qualifying disposition rules that applied to my specific situation. Saved me from making a costly mistake on my taxes!

Just wanted to follow up and say I tried taxr.ai after seeing it mentioned here. Total game changer for my ESPP nightmare! I had shares from two companies with different purchase dates and discount percentages, and the service sorted it all out perfectly. It showed me that my brokerage had been reporting an incorrect cost basis all along, which would have resulted in me overpaying taxes by nearly $1,300. The system explained everything in plain English - which sales were qualifying vs non-qualifying dispositions and exactly what to report where on my tax forms. It even created a document I can keep with my tax records explaining all the calculations in case of an audit. Super glad I found this before filing next year!

If you're trying to get clarification directly from your former employer or the IRS about your ESPP tax situation, good luck getting through to anyone! I spent weeks trying to reach someone at my old company's stock admin department and then the IRS for guidance on my ESPP sales. After wasting hours on hold, I tried https://claimyr.com and was shocked at how well it worked. They got me connected to an actual IRS agent in about 15 minutes when I had been trying for days on my own. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed exactly how to handle reporting my ESPP sales and explained the documentation I needed to keep to support my cost basis calculations. Much better than the generic answers I was finding online.

Coming back to admit I was totally wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway since I was desperate for answers about my ESPP tax situation. I couldn't believe it when they called me back in about 20 minutes with an actual IRS agent on the line. The agent walked me through exactly how to handle my complicated ESPP sales - including shares I sold after leaving my company and others I'm still holding. She confirmed that my brokerage was reporting an incorrect cost basis (as many do with ESPP shares) and explained exactly how to correct it on my tax return. This saved me hours of frustration and potentially a lot of money. If you're trying to get specialized tax help from the IRS, especially for something complicated like ESPP sales, this service is absolutely worth it.

Here's something nobody mentioned yet - check if your company provided Form 3922 when you originally purchased the ESPP shares. This form shows the FMV on grant date, purchase date, and the actual purchase price, which helps calculate your correct cost basis. Your former employer should have provided this, and you can request it if you don't have it. Also, your brokerage might have a special ESPP section in your online account that shows the breakdown of ordinary income vs. capital gains for each lot of shares. Mine does this and it's super helpful - check your broker's tax reporting section!

Has anyone used TurboTax for handling ESPP sales? I've got a similar situation and wondering if the software can handle the complexities or if I should just hire a tax professional this year?

One more thing to consider - if you sold your ESPP shares within 2 years of the offering date (the start of the offering period), you might need to report additional ordinary income on your tax return that won't be on any W-2 or 1099. This trips up a lot of people. Keep good records of your ESPP purchase prices, FMVs on purchase dates, and offering dates to make sure you're calculating everything correctly!

Don't feel overwhelmed - you're not alone in finding ESPP taxes confusing! The key is to tackle it systematically. First, gather all your documents: Form 3922s from each purchase period, your purchase confirmations, and any 1099-B forms from sales. For each sale, you'll need to determine: 1) Was it a qualifying or non-qualifying disposition based on the holding period rules? 2) What's your correct cost basis (purchase price + any discount already taxed)? 3) What additional ordinary income needs to be reported for non-qualifying dispositions? I'd recommend creating a simple spreadsheet listing each sale with purchase date, offering date, sale date, purchase price, FMV at purchase, and sale price. This will help you see which sales are qualifying vs non-qualifying and calculate the tax treatment for each. If you're still feeling lost after organizing everything, consider consulting a tax professional who has experience with employee stock plans. The peace of mind is often worth the cost, especially when dealing with multiple years of ESPP participation.

I went through a very similar situation last year when I left my company and had ESPP shares to deal with. Here's what I learned that might help you: First, you're right that you won't get a W-2 from your former employer for the stock sales - that discount was already reported when you made the purchases while employed. You'll get a 1099-B from your brokerage instead. The tricky part is that many brokerages don't report the correct cost basis for ESPP shares on the 1099-B. They often miss the discount amount that was already taxed as ordinary income, which means you could end up paying taxes twice on that portion if you're not careful. Here's what saved me: I dug up all my old ESPP statements and Form 3922s (if your company issued them) to reconstruct the correct cost basis for each lot of shares. Your cost basis should be: what you actually paid + the discount that was reported as income on your W-2. For the sale timing, if you held the shares more than 1 year from purchase AND more than 2 years from the offering date, it's a qualifying disposition (better tax treatment). If not, you'll have additional ordinary income to report. I'd strongly recommend keeping detailed records and consider getting help from a tax professional if you have multiple purchase periods - it can get complex quickly, but it's definitely manageable with the right approach!