What should I do with Form 3922 for my ESPP stock purchase?

Thanks for explaining! So if I haven't sold any shares yet, I don't need to do anything with the form this year? And if I did sell some shares, would Credit Karma have a way to enter this or would I need to use a different tax service?

If you haven't sold any shares yet, you don't need to do anything with Form 3922 for this year's taxes except keep it in a safe place for future reference. The form is basically documenting your cost basis for when you do eventually sell. If you did sell shares during the tax year, Credit Karma and most other tax services have sections for reporting capital gains where you can enter the information manually. Look for a section about stock sales or Schedule D/Form 8949 in the software. You'll need to enter the dates acquired (from Form 3922), date sold, proceeds from sale, and your cost basis (calculated using info from Form 3922).

How does this work with complicated situations? I have ESPP from multiple years and some qualifying and non-qualifying dispositions mixed together. Would this still work for me?

Is it secure? I'm always worried about uploading my tax documents to random websites. Does it store your tax forms or personal information after analysis?

It handles complicated situations really well. I had purchases from three different years with some qualifying and non-qualifying dispositions, and it sorted everything correctly. It even explains the difference between them and how each should be treated for tax purposes. Regarding security, they use bank-level encryption for all uploads and don't permanently store your documents. There's a privacy policy on their site that explains how everything is handled - basically the documents are analyzed and then deleted after processing. I was hesitant at first too but felt comfortable after reading through their security measures.

Wait, does this actually work? I thought it was impossible to get someone at the IRS on the phone. How long did you have to wait even with this service?

This seems sketchy. Why would I pay a third party service when I can just keep calling the IRS myself? Sounds like they're just making money off a broken system.

It absolutely works! Instead of me having to repeatedly call and navigate the phone tree only to get disconnected, they handled all that part. I got a text when an agent was about to be connected. Total wait time was about 45 minutes, but I didn't have to actively wait on the phone - I just went about my day until I got the text. Regarding why you would use this instead of calling yourself - it's all about the value of your time. I spent nearly 3 hours across multiple days trying to get through myself with no success. If you have unlimited time and patience to keep redialing, sure, do it yourself. For me, it was worth it to not deal with the frustration of getting disconnected over and over.

Thanks for pointing this out! So does that mean I should be checking my W-2 to see if some of this is already accounted for? My company gives us a 15% discount on the stock price, so I'm guessing that part might be on my W-2 already?

Yes, definitely check your W-2! Look at Box 1 which shows your total taxable wages - this typically includes the ESPP discount. Many companies report the 15% discount as ordinary income on your W-2 already. The Form 3922 becomes especially important when you sell the shares because you'll need to calculate your cost basis correctly. Your cost basis isn't just what you paid, but also includes any amount that was already reported as income on your W-2. If you don't account for this properly, you could end up paying tax twice on the same income.

I agree! I tried three different services last year and FreeTaxUSA was the only one that let me correctly enter all my stock information without getting confused.

Thanks for the tip! I might look into switching if Credit Karma can't handle this properly. I have a few other investments too, so maybe I need something more robust.

This is exactly what I needed to hear! I was getting so stressed thinking I was missing something important on my tax return. So just to confirm - I can file my taxes normally through Credit Karma this year without worrying about the Form 3922, and then when I eventually sell shares (probably not for a while), that's when I'll need to dig into all the cost basis calculations? Thanks for reassuring me that the confusion is normal - I felt like I was the only one who didn't understand this stuff!

Exactly right! You can file your taxes normally through Credit Karma this year without doing anything special with Form 3922. Just keep it with your tax records for when you do sell shares in the future. The timing of when you sell will determine whether it's a qualifying or non-qualifying disposition, which affects how much tax you'll owe. But for now, you're good to go with your regular tax filing. The ESPP discount portion should already be included in your W-2 wages if your company handles it the typical way.

This is incredibly helpful advice! I never thought about creating a spreadsheet to track everything, but that makes so much sense. The part about the 2-year/1-year rule for disqualifying dispositions is especially good to know - I definitely would have missed that detail. Quick question - when you track brokerage fees in your spreadsheet, do those get factored into the cost basis when calculating capital gains? I assume they do since they're part of the actual cost of the transaction, but I want to make sure I understand this correctly before I start my own tracking system. Thanks for sharing your experience - it's really reassuring to hear from someone who's been through this process multiple times!

Yes, absolutely! Brokerage fees definitely get factored into your cost basis calculations. When you sell shares, you can add the brokerage fees to your cost basis, which effectively reduces your taxable capital gains. So if you bought shares for $1000 and paid a $10 fee, then later sold them for $1200 with another $10 fee, your actual gain would be $1200 - ($1000 + $10) - $10 = $180, not $200. I track both purchase and sale fees in separate columns in my spreadsheet because some brokers charge different amounts for different types of transactions. It's one of those small details that can add up over time, especially if you're making multiple ESPP transactions throughout the year. The spreadsheet approach has saved me so much headache - I just update it whenever I make a transaction and then everything is ready to go at tax time instead of scrambling to reconstruct everything from old statements!