Non Qualified Stock Option Question

[lauren170]

This is so confusing and I realize we'll need to probably need professional help this year. Anyway we exercised non qualified in Feb 2020. We sold to cover, and E-trade shows $35k was send back to my husband's company for taxes. Yet, his total taxes withheld on his W-2 are less than this amount. Shouldn't this $$ be showing on his W-2 as taxes paid?

When you sell to cover - how does that get paid to the gov't and should it show up on the W-2?

[numbers]

This was a long time ago, so details are fuzzy, but we did something similar years ago and I'm pretty sure everything was captured on a separate tax document, not a W2.

[awkwardpenguin]

It’s confusing, for sure.

The taxable amount for the options should be included on your W-2 with the wage income in box 1 and also reported in boxes 12 and 14. And the amount your employer withheld should be in your total withholding on your W-2.

You should also get a 1099-B for the sale, which you use to calculate a loss or gain for the sale. Make sure the cost basis is reported correctly for the sale, which is the market price on the date of exercise.

It’s quite possible they didn’t correctly report the sell to cover withholding. I’d contact his employer.