How should I report free stock from my employer on my income taxes? 1099-B confusion

Thanks for explaining! I checked my pay stubs from when I got the stock (April last year) and you're right - there was an extra $450 listed as "stock compensation" that had taxes taken out already. So does that mean my cost basis should be $450 instead of $0? And I'd only pay tax on the difference ($150) as capital gains?

Yes, exactly! Your cost basis is $450 since you already paid income tax on that amount when you received the stock. You'll only need to pay capital gains tax on the $150 difference between your proceeds ($600) and your cost basis ($450). When you enter this in your tax software, make sure you adjust the cost basis from $0 to $450 so you don't end up paying tax twice on the same money. The 1099-B might show $0 because the brokerage doesn't know what you already reported as income - that's why it's important to make this adjustment yourself.

Does it work with RSUs too? My company gives us restricted stock units that vest over time and I'm never sure if I'm reporting them correctly. The tax forms always seem to have different numbers than what I expect.

I'm always skeptical of these tax tools. How does it handle the wash sale rule? I had some company stock that I sold at a loss and then rebought similar shares through my ESPP within 30 days and got totally confused on how to report it.

Yes, it absolutely works with RSUs! It identifies when RSUs have vested and makes sure you're not double-taxed when you eventually sell them. It keeps track of all your vesting schedules and correctly calculates the right cost basis for each sale. As for wash sales, it actually has a specific feature that identifies potential wash sale scenarios. It analyzes your transaction history across all your accounts to flag when you've bought similar securities within the 30-day window before or after selling at a loss. It then calculates the proper adjusted basis so you don't accidentally claim losses you're not entitled to under IRS rules.

Wait, how does this actually work? Does the IRS know about this service? Seems weird they'd let someone jump the queue when I've been trying to get through for weeks.

This sounds like a complete scam. There's no way to "skip" IRS hold times - everyone has to wait. I bet they just keep you on hold themselves and then transfer you whenever the IRS finally answers. Probably charging a fortune for something you could do yourself for free.

The IRS definitely knows about the service - it's just using their existing callback system but with technology to monitor hold times. It doesn't actually let you "skip" ahead of others; it just holds your place in line so you don't have to do it yourself. The way it works is pretty simple - they call the IRS and wait on hold for you, then when an agent is about to pick up, they connect you to the call. It's basically like having someone else wait on hold for you while you go about your day. It doesn't affect anyone else's wait time at all.

What about if the stock value dropped between when I received it and when I sold it? Can I claim a loss in that case? My employer gave us stock at $75/share but by the time I sold it had dropped to $58.

Yes, if the stock value dropped between when you received it and when you sold it, you can absolutely claim a capital loss. In your example, if your stock was valued at $75 per share when granted (and that amount was included in your W-2 income), but you sold at $58 per share, you would have a capital loss of $17 per share. This loss can be used to offset capital gains from other investments, and if your total capital losses exceed your gains, you can deduct up to $3,000 of the excess loss against your ordinary income. Any remaining loss can be carried forward to future tax years.

In TurboTax, when you enter your 1099-B information, there should be a screen that says something like "Review your 1099-B entries" after you input the initial information. On that screen, you can select the specific stock transaction and click "Edit" or "Update." There should be a field labeled "Cost basis" where you can manually enter the correct amount instead of using what's on the form.