Received W2 next year after leaving employer

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AJ1
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Received W2 next year after leaving employer

Post by AJ1 »

Hi,

I left my employer in 2019. But I still got W2 for 2020 (for taxes to be paid in 2021). I was not employee in 2020.
There are wages reported in W2 but no deductions. I called payroll service and they told me that its due to selling by stocks (RSU/ESPP).

Its not a huge amount (~2.5k), but the questions are:
1. Do I have to report this income on my taxes? I am reporting gains from selling the stocks however I usually adjust my cost basis to avoid double taxation.
2. The main issue is the address. The address reported (NY) is with different state I was not living in 2020. I left NY in 2019. The payroll services (ADP) told me that they cant change this address since this is the address they have on file.

What should I do in this case?

Thanks,
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Re: Received W2 next year after leaving employer

Post by Misenplace »

This topic is now in the Personal Finance (Not Investing) forum (taxes).

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neurosphere
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Re: Received W2 next year after leaving employer

Post by neurosphere »

-- Did you receive any stocks in 2020? Did you sell any stocks in 2020?
-- Yes you have to report the income unless you think the W2 is an error
-- If you received RSUs in 2020, those would be reported as wages and represent your cost basis of the shares, all else equal. Note, I've never dealt with RSUs so not an expert in this but that's my understanding.
-- What double taxation are you referring to? You pay taxes on the stock received (it's a form of compensation) and then you'll pay tax on the gains if any when you sell. Nothing is taxed twice.
-- Doesn't matter what they reported as your state. If there is no withholding and you otherwise did not live/work in NY and owe no tax you are not obligated to file in NY.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".
HIMcDunnough
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Re: Received W2 next year after leaving employer

Post by HIMcDunnough »

Unless you're still receiving shares after you left, it's most likely income from exercising non-qualified options. Even if a non-qualified option vested long ago, when you exercise it, the difference between strike price and exercise price is ordinary W-2 income. For example, if your option is at $10 and you exercised at $100, you're going to have $90 of W-2 income.
hachiko
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Re: Received W2 next year after leaving employer

Post by hachiko »

I don't know a whole lot about stock compensation. But a couple questions that may help others provide you with the answer.

Are you sure they're RSUs and not restricted stock?
If it's restricted stock (not RSUs) did you make an 83(b) election?
When was the vesting/stock delivered? I didn't know this could happen after you left employment, but maybe it can.

For the ESPP, did you purchase at a discount? And how long did you hold the stock after purchase?
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TomatoTomahto
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Re: Received W2 next year after leaving employer

Post by TomatoTomahto »

hachiko wrote: Fri May 07, 2021 3:26 pm I don't know a whole lot about stock compensation. But a couple questions that may help others provide you with the answer.

Are you sure they're RSUs and not restricted stock?
I think that RSU stands for Restricted Stock Units. Options are something different.

Have I been mistaken all these years?
I get the FI part but not the RE part of FIRE.
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neurosphere
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Re: Received W2 next year after leaving employer

Post by neurosphere »

TomatoTomahto wrote: Fri May 07, 2021 3:47 pm
hachiko wrote: Fri May 07, 2021 3:26 pm I don't know a whole lot about stock compensation. But a couple questions that may help others provide you with the answer.

Are you sure they're RSUs and not restricted stock?
I think that RSU stands for Restricted Stock Units. Options are something different.

Have I been mistaken all these years?
Restricted stock and restricted stock units are different.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".
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TomatoTomahto
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Re: Received W2 next year after leaving employer

Post by TomatoTomahto »

neurosphere wrote: Fri May 07, 2021 3:51 pm
TomatoTomahto wrote: Fri May 07, 2021 3:47 pm
hachiko wrote: Fri May 07, 2021 3:26 pm I don't know a whole lot about stock compensation. But a couple questions that may help others provide you with the answer.
Are you sure they're RSUs and not restricted stock?
I think that RSU stands for Restricted Stock Units. Options are something different.
Have I been mistaken all these years?
Restricted stock and restricted stock units are different.
Oh, okay. I’ve only ever gotten RSUs, so didn’t know. Thanks for clarifying.
I get the FI part but not the RE part of FIRE.
diy60
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Re: Received W2 next year after leaving employer

Post by diy60 »

AJ1 wrote: Fri May 07, 2021 12:02 pm Hi,

I left my employer in 2019. But I still got W2 for 2020 (for taxes to be paid in 2021). I was not employee in 2020.
There are wages reported in W2 but no deductions. I called payroll service and they told me that its due to selling by stocks (RSU/ESPP).
Selling RSUs does not generate a W2, but vesting of RSUs does.
AnEngineer
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Re: Received W2 next year after leaving employer

Post by AnEngineer »

More likely this is the ESPP discount, which is taxable wage income. If so, you'll adjust the cost basis to compensate. You'd have to do this your self even if they didn't send the W2.

If they say it's NY that's probably wrong and you probably need to get it corrected.
Jeev1
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Re: Received W2 next year after leaving employer

Post by Jeev1 »

diy60 wrote: Fri May 07, 2021 6:11 pm
AJ1 wrote: Fri May 07, 2021 12:02 pm Hi,

I left my employer in 2019. But I still got W2 for 2020 (for taxes to be paid in 2021). I was not employee in 2020.
There are wages reported in W2 but no deductions. I called payroll service and they told me that its due to selling by stocks (RSU/ESPP).
Selling RSUs does not generate a W2, but vesting of RSUs does.
+1

In case you got more vesting events coming I would get the address updated. Also no harm in requesting at least one time to change the address and get an amended w2 (I am not sure if address change qualifies as reason for amended w2).
Golfaddict
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Re: Received W2 next year after leaving employer

Post by Golfaddict »

Jeev1 wrote: Sat May 08, 2021 6:04 am
diy60 wrote: Fri May 07, 2021 6:11 pm
AJ1 wrote: Fri May 07, 2021 12:02 pm Hi,

I left my employer in 2019. But I still got W2 for 2020 (for taxes to be paid in 2021). I was not employee in 2020.
There are wages reported in W2 but no deductions. I called payroll service and they told me that its due to selling by stocks (RSU/ESPP).
Selling RSUs does not generate a W2, but vesting of RSUs does.
+1

In case you got more vesting events coming I would get the address updated. Also no harm in requesting at least one time to change the address and get an amended w2 (I am not sure if address change qualifies as reason for amended w2).
Probably a good idea to change the address now for future vesting. They likely aren’t able to retroactively change the state reported in box 15 of the W2 as all of their historical personnel information will show a NY address at the time of vesting. It’s now the recipients responsibility to prove to NY that they were not a resident in 2020.



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TomatoTomahto
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Re: Received W2 next year after leaving employer

Post by TomatoTomahto »

Golfaddict wrote: Sat May 08, 2021 6:28 am Probably a good idea to change the address now for future vesting. They likely aren’t able to retroactively change the state reported in box 15 of the W2 as all of their historical personnel information will show a NY address at the time of vesting. It’s now the recipients responsibility to prove to NY that they were not a resident in 2020.
Good luck. NY is likely to take the view that, regardless of vesting date, the RSUs were granted for work performed in NY.
I get the FI part but not the RE part of FIRE.
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neurosphere
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Re: Received W2 next year after leaving employer

Post by neurosphere »

TomatoTomahto wrote: Sat May 08, 2021 9:04 am
Golfaddict wrote: Sat May 08, 2021 6:28 am Probably a good idea to change the address now for future vesting. They likely aren’t able to retroactively change the state reported in box 15 of the W2 as all of their historical personnel information will show a NY address at the time of vesting. It’s now the recipients responsibility to prove to NY that they were not a resident in 2020.
Good luck. NY is likely to take the view that, regardless of vesting date, the RSUs were granted for work performed in NY.
Restricted units count as compensation when they vest, not when they are granted. There is no ownership until vesting, and vesting is subject to conditions such that one might never get the shares. I think it would be unlikely for any state to take the position that it's the grant date that determines whether a state may tax the income upon some future vesting date.

Can one have shares that vest AFTER leaving an employer? I would assume that's rare. I don't think we have all the necessary details yet to help the OP.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".
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neurosphere
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Re: Received W2 next year after leaving employer

Post by neurosphere »

neurosphere wrote: Sat May 08, 2021 9:12 am
TomatoTomahto wrote: Sat May 08, 2021 9:04 am
Golfaddict wrote: Sat May 08, 2021 6:28 am Probably a good idea to change the address now for future vesting. They likely aren’t able to retroactively change the state reported in box 15 of the W2 as all of their historical personnel information will show a NY address at the time of vesting. It’s now the recipients responsibility to prove to NY that they were not a resident in 2020.
Good luck. NY is likely to take the view that, regardless of vesting date, the RSUs were granted for work performed in NY.
Restricted units count as compensation when they vest, not when they are granted. There is no ownership until vesting, and vesting is subject to conditions such that one might never get the shares. I think it would be unlikely for any state to take the position that it's the grant date that determines whether a state may tax the income upon some future vesting date.

Can one have shares that vest AFTER leaving an employer? I would assume that's rare. I don't think we have all the necessary details yet to help the OP.
On the other hand, this document does mention that time spent working in NY during the "allocation period" (prior to vesting) might influence the taxation: https://www.tax.ny.gov/pdf/memos/income/m07_7i.pdf

So TomatoTomahto might be correct that federal taxation differs from state taxation. However, the specific portion of that document that relates to restricted stock was a little confusing to me, and I'm also not sure if in this case "restricted stock" refers to restricted stock units as in addition to other forms of restricted stock.

[Edit to add...I don't think that document applies actually, as the term "non-resident" in that case if being used with respect to one who WORKED in NY but was a non-resident of NY. Therefore, in the case of one who is a non-resident for the calendar year and did not work in NY for any part of the year, I still suspect that there is no state tax unless the shares vested during a period of state residency. I'm hoping someone who more knowledge than I will confirm!]
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".
diy60
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Re: Received W2 next year after leaving employer

Post by diy60 »

neurosphere wrote: Sat May 08, 2021 9:12 am Can one have shares that vest AFTER leaving an employer? I would assume that's rare. I don't think we have all the necessary details yet to help the OP.
I don't know if it is rare or not, but at the Megacorp I retired from vesting of RSUs continue for retirees, those laid off, and those that passed away while employed. Definition of retirement status was clearly defined in the plan.
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neurosphere
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Re: Received W2 next year after leaving employer

Post by neurosphere »

Found this: https://www.robertsandholland.com/siteF ... rticle.pdf
The ALJ, however, citing Michaelson v. New York State Tax Commission, 14 ruled that
when determining whether option income constitutes New York source income, the activities of
the taxpayer at the time the options are secured and earned (that is, date of grant)
are controlling,
rather than at the time when the benefit was actually received or realized (that is, date of
exercise).The ALJ found that the language of the plan under which the ISOs were granted
demonstrated that they were intended as compensation for services Mr. Stuckless rendered to
Microsoft while he was a resident of New York
.
It's just one case, details may not be relevant, and who know if this was the final word. But it's just a piece of evidence that yes, it seems there is precedent that in at least certain related situations, NY might tax stock grants/options/etc based on a date prior to a vesting or exercise date.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".
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Re: Received W2 next year after leaving employer

Post by teaman »

AnEngineer wrote: Fri May 07, 2021 6:17 pm More likely this is the ESPP discount, which is taxable wage income. If so, you'll adjust the cost basis to compensate. You'd have to do this your self even if they didn't send the W2.

If they say it's NY that's probably wrong and you probably need to get it corrected.
Correct. It’s very likely these are ESPP shares that fall under “Disqualified Disposition” category. The discount you get on these shares is considered ordinary income and is reported on your W2 in the year you sold them even if you don’t work for that employer in that year.
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Re: Received W2 next year after leaving employer

Post by neurosphere »

teaman wrote: Sat May 08, 2021 10:14 am
AnEngineer wrote: Fri May 07, 2021 6:17 pm More likely this is the ESPP discount, which is taxable wage income. If so, you'll adjust the cost basis to compensate. You'd have to do this your self even if they didn't send the W2.

If they say it's NY that's probably wrong and you probably need to get it corrected.
Correct. It’s very likely these are ESPP shares that fall under “Disqualified Disposition” category. The discount you get on these shares is considered ordinary income and is reported on your W2 in the year you sold them even if you don’t work for that employer in that year.
Wouldn't even qualified positions require a W2? The bargain element is wages and reported on a W2 in the year the shares are sold, whether qualified or not, right?
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".
AnEngineer
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Re: Received W2 next year after leaving employer

Post by AnEngineer »

neurosphere wrote: Sat May 08, 2021 10:20 am
teaman wrote: Sat May 08, 2021 10:14 am
AnEngineer wrote: Fri May 07, 2021 6:17 pm More likely this is the ESPP discount, which is taxable wage income. If so, you'll adjust the cost basis to compensate. You'd have to do this your self even if they didn't send the W2.

If they say it's NY that's probably wrong and you probably need to get it corrected.
Correct. It’s very likely these are ESPP shares that fall under “Disqualified Disposition” category. The discount you get on these shares is considered ordinary income and is reported on your W2 in the year you sold them even if you don’t work for that employer in that year.
Wouldn't even qualified positions require a W2? The bargain element is wages and reported on a W2 in the year the shares are sold, whether qualified or not, right?
Yes, though I'm surprised at the W2 for a former employee.
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neurosphere
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Re: Received W2 next year after leaving employer

Post by neurosphere »

AnEngineer wrote: Sat May 08, 2021 10:27 am
neurosphere wrote: Sat May 08, 2021 10:20 am
teaman wrote: Sat May 08, 2021 10:14 am
AnEngineer wrote: Fri May 07, 2021 6:17 pm More likely this is the ESPP discount, which is taxable wage income. If so, you'll adjust the cost basis to compensate. You'd have to do this your self even if they didn't send the W2.

If they say it's NY that's probably wrong and you probably need to get it corrected.
Correct. It’s very likely these are ESPP shares that fall under “Disqualified Disposition” category. The discount you get on these shares is considered ordinary income and is reported on your W2 in the year you sold them even if you don’t work for that employer in that year.
Wouldn't even qualified positions require a W2? The bargain element is wages and reported on a W2 in the year the shares are sold, whether qualified or not, right?
Yes, though I'm surprised at the W2 for a former employee.
One would get the W2 at any time after selling ESPP shares, and is unrelated to whether one is actually employed. Another example is withdrawal of tax-exempt 457b plan money. Whenever one withdraws from the 457b, it will generate a W2 and which can be decades after leaving that employer.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".
AnEngineer
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Re: Received W2 next year after leaving employer

Post by AnEngineer »

neurosphere wrote: Sat May 08, 2021 10:37 am
AnEngineer wrote: Sat May 08, 2021 10:27 am
neurosphere wrote: Sat May 08, 2021 10:20 am
teaman wrote: Sat May 08, 2021 10:14 am
AnEngineer wrote: Fri May 07, 2021 6:17 pm More likely this is the ESPP discount, which is taxable wage income. If so, you'll adjust the cost basis to compensate. You'd have to do this your self even if they didn't send the W2.

If they say it's NY that's probably wrong and you probably need to get it corrected.
Correct. It’s very likely these are ESPP shares that fall under “Disqualified Disposition” category. The discount you get on these shares is considered ordinary income and is reported on your W2 in the year you sold them even if you don’t work for that employer in that year.
Wouldn't even qualified positions require a W2? The bargain element is wages and reported on a W2 in the year the shares are sold, whether qualified or not, right?
Yes, though I'm surprised at the W2 for a former employee.
One would get the W2 at any time after selling ESPP shares, and is unrelated to whether one is actually employed. Another example is withdrawal of tax-exempt 457b plan money. Whenever one withdraws from the 457b, it will generate a W2 and which can be decades after leaving that employer.
Having sold ESPP without W2, I know this isn't true. In my case it was after moving the shares to a different brokerage.
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neurosphere
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Re: Received W2 next year after leaving employer

Post by neurosphere »

AnEngineer wrote: Sat May 08, 2021 10:41 am Having sold ESPP without W2, I know this isn't true. In my case it was after moving the shares to a different brokerage.
Thanks for that example. Curious how the bargain element (if there was one) was reported? I'm wondering if no bargain element and the shares are qualified there is no W2 required to be given?

This link contains the following:
You report as ordinary income (wages) on line 1 of Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors the lesser of (1) the amount by which the stock's FMV on the date of grant exceeds the option price or (2) the amount by which the stock's FMV on the date of sale or other disposition exceeds the purchase price. Your employer should report the ordinary income to you as wages in box 1 of Form W-2, Wage and Tax Statement. If your employer (or former employer) doesn't provide you with a Form W-2, or if the Form W-2 doesn't include the income in box 1, you must still report the income as wages on Form 1040 or Form 1040-SR for the year of sale or other disposition.
Maybe it's simply that in certain cases the actual W2 is not required (e.g. if shares are transferred as in your case), but the income is still reportable as wages.

So maybe I can amend what I wrote to "One CAN get a W2 at anytime..." even if no longer employed by that firm. :D
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes".
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Re: Received W2 next year after leaving employer

Post by anoop »

AnEngineer wrote: Sat May 08, 2021 10:41 am
neurosphere wrote: Sat May 08, 2021 10:37 am
AnEngineer wrote: Sat May 08, 2021 10:27 am
neurosphere wrote: Sat May 08, 2021 10:20 am
teaman wrote: Sat May 08, 2021 10:14 am

Correct. It’s very likely these are ESPP shares that fall under “Disqualified Disposition” category. The discount you get on these shares is considered ordinary income and is reported on your W2 in the year you sold them even if you don’t work for that employer in that year.
Wouldn't even qualified positions require a W2? The bargain element is wages and reported on a W2 in the year the shares are sold, whether qualified or not, right?
Yes, though I'm surprised at the W2 for a former employee.
One would get the W2 at any time after selling ESPP shares, and is unrelated to whether one is actually employed. Another example is withdrawal of tax-exempt 457b plan money. Whenever one withdraws from the 457b, it will generate a W2 and which can be decades after leaving that employer.
Having sold ESPP without W2, I know this isn't true. In my case it was after moving the shares to a different brokerage.
see the section under espp.
https://www.forbes.com/sites/brucebrumb ... 9d0b3f2ab3
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neurosphere
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Re: Received W2 next year after leaving employer

Post by neurosphere »

anoop wrote: Sat May 08, 2021 10:53 am
AnEngineer wrote: Sat May 08, 2021 10:41 am
neurosphere wrote: Sat May 08, 2021 10:37 am
AnEngineer wrote: Sat May 08, 2021 10:27 am
neurosphere wrote: Sat May 08, 2021 10:20 am

Wouldn't even qualified positions require a W2? The bargain element is wages and reported on a W2 in the year the shares are sold, whether qualified or not, right?
Yes, though I'm surprised at the W2 for a former employee.
One would get the W2 at any time after selling ESPP shares, and is unrelated to whether one is actually employed. Another example is withdrawal of tax-exempt 457b plan money. Whenever one withdraws from the 457b, it will generate a W2 and which can be decades after leaving that employer.
Having sold ESPP without W2, I know this isn't true. In my case it was after moving the shares to a different brokerage.
see the section under espp.
https://www.forbes.com/sites/brucebrumb ... 9d0b3f2ab3
Now we're getting far away from the OPs question, but until they come back I guess it's ok but...

I'll pose this in the form of statement. "If one has a bargain element on shares purchased in an ESPP and subsequently sold, that bargain element is reported as wages on the tax form, whether a W2 was issued or not, and whether the shares are qualified or not. In certain cases, an employer or former employer may issue a W2 to report this, but if not the taxpayer is required to keep track and report the compensation amount (i.e the bargain element of qualified shares) independently."

Do I have that right?

https://fairmark.com/compensation-stock ... reporting/
AnEngineer
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Re: Received W2 next year after leaving employer

Post by AnEngineer »

neurosphere wrote: Sat May 08, 2021 11:03 am
anoop wrote: Sat May 08, 2021 10:53 am
AnEngineer wrote: Sat May 08, 2021 10:41 am
neurosphere wrote: Sat May 08, 2021 10:37 am
AnEngineer wrote: Sat May 08, 2021 10:27 am

Yes, though I'm surprised at the W2 for a former employee.
One would get the W2 at any time after selling ESPP shares, and is unrelated to whether one is actually employed. Another example is withdrawal of tax-exempt 457b plan money. Whenever one withdraws from the 457b, it will generate a W2 and which can be decades after leaving that employer.
Having sold ESPP without W2, I know this isn't true. In my case it was after moving the shares to a different brokerage.
see the section under espp.
https://www.forbes.com/sites/brucebrumb ... 9d0b3f2ab3
Now we're getting far away from the OPs question, but until they come back I guess it's ok but...

I'll pose this in the form of statement. "If one has a bargain element on shares purchased in an ESPP and subsequently sold, that bargain element is reported as wages on the tax form, whether a W2 was issued or not, and whether the shares are qualified or not. In certain cases, an employer or former employer may issue a W2 to report this, but if not the taxpayer is required to keep track and report the compensation amount (i.e the bargain element of qualified shares) independently."

Do I have that right?

https://fairmark.com/compensation-stock ... reporting/
I believe so. Note that you need to understand how it works either way, as you'll need to adjust the cost basis as your 1099B will be wrong (as required by law). In the case where you don't get it included in a W2 you'll have to add it to wage income yourself.

I don't know what the point of the Forbes link was supposed to be.
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Re: Received W2 next year after leaving employer

Post by teaman »

Learned something new today. Thanks!
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Re: Received W2 next year after leaving employer

Post by hachiko »

neurosphere wrote: Sat May 08, 2021 10:05 am Found this: https://www.robertsandholland.com/siteF ... rticle.pdf
The ALJ, however, citing Michaelson v. New York State Tax Commission, 14 ruled that
when determining whether option income constitutes New York source income, the activities of
the taxpayer at the time the options are secured and earned (that is, date of grant)
are controlling,
rather than at the time when the benefit was actually received or realized (that is, date of
exercise).The ALJ found that the language of the plan under which the ISOs were granted
demonstrated that they were intended as compensation for services Mr. Stuckless rendered to
Microsoft while he was a resident of New York
.
It's just one case, details may not be relevant, and who know if this was the final word. But it's just a piece of evidence that yes, it seems there is precedent that in at least certain related situations, NY might tax stock grants/options/etc based on a date prior to a vesting or exercise date.
NY has an accrual rule for changes of residency. Very high level is that they treat the taxpayer as on an accrual basis for the period in which residency changes, and determine whether a taxpayer on accrual method would have to report that amount in income for federal tax purposes. NY specifically applies the "all events test" but that's basically all I know since at that point I send the documents over to a federal person and they just give me the answer.

Separate from that, NY considers the NY source income on stock options to be the NY workday percentage from grant to vest. Of course, if the taxpayer only worked in NY then the workday percentage would be 100% (though they at least should be able to find some days where they weren't working in NY to bring that percentage down a bit).
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AJ1
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Re: Received W2 next year after leaving employer

Post by AJ1 »

Thank you for all your replies. I verified my paystubs and its coming from qualified disposition of my ESPP stocks (no withholding). (FYI I dont have any vesting schedule after leaving the employer).

I can add this income to my Federal taxes and adjust my cost basis too.

However, the main issue is still NY. ADP declined to change the address and issue new W2... what are my options now? Pay tax in NY or mail them saying to waive the taxes since I was not resident of NY?
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AJ1
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Re: Received W2 next year after leaving employer

Post by AJ1 »

Also, my wife left her employer in 2014 and we have been selling her ESPP stocks over the years. We never received W2 from her employer (probably we moved couple of times over the years, and they dont use ADP to check online later like in my case)..
1. I have been adjusting the cost basis in taxes, but without including the W2 income, so does that mean I have under-reporting my income?
2. If we dont have W2 in such case, then we shouldnt adjust our cost basis?
AnEngineer
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Re: Received W2 next year after leaving employer

Post by AnEngineer »

AJ1 wrote: Mon May 10, 2021 12:08 pm Also, my wife left her employer in 2014 and we have been selling her ESPP stocks over the years. We never received W2 from her employer (probably we moved couple of times over the years, and they dont use ADP to check online later like in my case)..
1. I have been adjusting the cost basis in taxes, but without including the W2 income, so does that mean I have under-reporting my income?
Yes.
2. If we dont have W2 in such case, then we shouldnt adjust our cost basis?
No, because wage income and capital gains are taxed differently.
AnEngineer
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Re: Received W2 next year after leaving employer

Post by AnEngineer »

AJ1 wrote: Mon May 10, 2021 11:53 am Thank you for all your replies. I verified my paystubs and its coming from qualified disposition of my ESPP stocks (no withholding). (FYI I dont have any vesting schedule after leaving the employer).

I can add this income to my Federal taxes and adjust my cost basis too.

However, the main issue is still NY. ADP declined to change the address and issue new W2... what are my options now? Pay tax in NY or mail them saying to waive the taxes since I was not resident of NY?
Your problem is that your W2 is wrong. You should pursue it from that angle. I doubt NY is going to care that you're not a resident, because they see a W2 that says you have NY sourced income.
hachiko
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Re: Received W2 next year after leaving employer

Post by hachiko »

AJ1 wrote: Mon May 10, 2021 11:53 am Thank you for all your replies. I verified my paystubs and its coming from qualified disposition of my ESPP stocks (no withholding). (FYI I dont have any vesting schedule after leaving the employer).

I can add this income to my Federal taxes and adjust my cost basis too.

However, the main issue is still NY. ADP declined to change the address and issue new W2... what are my options now? Pay tax in NY or mail them saying to waive the taxes since I was not resident of NY?
Were NY taxes withheld?

If your income is properly not NY source (see my comment above on special accruals and nonresident sourcing), you have a couple options.

1) File a NY return and show $0 in NY source income, so your tax should be $0.
2) Wait for a non-filer notice, if any, and respond accordingly.

As far as I know there's no way to preemptively have a non-filer letter processed.

If NY taxes were withheld, the only way to guarantee a refund is to do (1). It's possible (though my guess is unlikely) that you won't receive a non-filer notice and you'll forfeit the withholding.
Topic Author
AJ1
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Re: Received W2 next year after leaving employer

Post by AJ1 »

hachiko wrote: Mon May 10, 2021 1:52 pm
Were NY taxes withheld?

If your income is properly not NY source (see my comment above on special accruals and nonresident sourcing), you have a couple options.

1) File a NY return and show $0 in NY source income, so your tax should be $0.
2) Wait for a non-filer notice, if any, and respond accordingly.

As far as I know there's no way to preemptively have a non-filer letter processed.

If NY taxes were withheld, the only way to guarantee a refund is to do (1). It's possible (though my guess is unlikely) that you won't receive a non-filer notice and you'll forfeit the withholding.
No NY taxes were withheld, but income was reported to NY state. Can I still file a return and show $0 in NY source income?
Last edited by AJ1 on Mon May 10, 2021 2:36 pm, edited 1 time in total.
Topic Author
AJ1
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Re: Received W2 next year after leaving employer

Post by AJ1 »

AnEngineer wrote: Mon May 10, 2021 12:20 pm Your problem is that your W2 is wrong. You should pursue it from that angle. I doubt NY is going to care that you're not a resident, because they see a W2 that says you have NY sourced income.
Thanks, I already tried correcting my W2, but ADP said that they cant modify the address- they can update only the numbers if they are wrong.
Topic Author
AJ1
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Re: Received W2 next year after leaving employer

Post by AJ1 »

AnEngineer wrote: Mon May 10, 2021 12:19 pm
AJ1 wrote: Mon May 10, 2021 12:08 pm
2. If we dont have W2 in such case, then we shouldnt adjust our cost basis?
No, because wage income and capital gains are taxed differently.
How do you calculate W2 wage income based on ESPP sales for qualified disposition.. I have been trying calculate how they got this W2 number but cant figure out..
AnEngineer
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Re: Received W2 next year after leaving employer

Post by AnEngineer »

AJ1 wrote: Mon May 10, 2021 2:33 pm
hachiko wrote: Mon May 10, 2021 1:52 pm
Were NY taxes withheld?

If your income is properly not NY source (see my comment above on special accruals and nonresident sourcing), you have a couple options.

1) File a NY return and show $0 in NY source income, so your tax should be $0.
2) Wait for a non-filer notice, if any, and respond accordingly.

As far as I know there's no way to preemptively have a non-filer letter processed.

If NY taxes were withheld, the only way to guarantee a refund is to do (1). It's possible (though my guess is unlikely) that you won't receive a non-filer notice and you'll forfeit the withholding.
No NY taxes were withheld, but income was reported to NY state. Can I still file a return and show $0 in NY source income?
In that case, maybe just investigate if you need to file a return under your circumstances. With small NY income, you may not have to.
AnEngineer
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Re: Received W2 next year after leaving employer

Post by AnEngineer »

AJ1 wrote: Mon May 10, 2021 2:37 pm
AnEngineer wrote: Mon May 10, 2021 12:19 pm
AJ1 wrote: Mon May 10, 2021 12:08 pm
2. If we dont have W2 in such case, then we shouldnt adjust our cost basis?
No, because wage income and capital gains are taxed differently.
How do you calculate W2 wage income based on ESPP sales for qualified disposition.. I have been trying calculate how they got this W2 number but cant figure out..
For a qualifying disposition it's the discount you got from the lookback price.

(For a disqualifying disposition, it's the total discount you got.)
MarkNYC
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Re: Received W2 next year after leaving employer

Post by MarkNYC »

AJ1 wrote: Mon May 10, 2021 2:33 pm
hachiko wrote: Mon May 10, 2021 1:52 pm
Were NY taxes withheld?

If your income is properly not NY source (see my comment above on special accruals and nonresident sourcing), you have a couple options.

1) File a NY return and show $0 in NY source income, so your tax should be $0.
2) Wait for a non-filer notice, if any, and respond accordingly.

As far as I know there's no way to preemptively have a non-filer letter processed.

If NY taxes were withheld, the only way to guarantee a refund is to do (1). It's possible (though my guess is unlikely) that you won't receive a non-filer notice and you'll forfeit the withholding.
No NY taxes were withheld, but income was reported to NY state. Can I still file a return and show $0 in NY source income?
If you received a W-2 for 2020 showing $2.5K NY source income, then you will be required to file a 2020 NY nonresident tax return. NY will not accept a tax return showing $0 as NY source income if the W-2 shows $2.5K. If you try to explain that the W-2 is wrong, NY will essentially respond with ... "please obtain a corrected W-2 otherwise we don't believe you."

Based on the information provided, it seems likely that all or some of the $2.5k income on the sale of ESPP shares is properly NY source income. The NY tax might be around $150 depending on your total income. If you moved from NY to a state with income tax I think it would make sense to file the NY nonresident return consistent with the W-2, and claim a credit on your resident state tax return for tax paid to NY, and be done with it.

If you moved to a state with no income tax, then you would need to decide how much time and effort you're willing to spend to potentially eliminate some or all of the $150 NY tax, with no guarantee of success.
hachiko
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Re: Received W2 next year after leaving employer

Post by hachiko »

AJ1 wrote: Mon May 10, 2021 2:33 pm
hachiko wrote: Mon May 10, 2021 1:52 pm
Were NY taxes withheld?

If your income is properly not NY source (see my comment above on special accruals and nonresident sourcing), you have a couple options.

1) File a NY return and show $0 in NY source income, so your tax should be $0.
2) Wait for a non-filer notice, if any, and respond accordingly.

As far as I know there's no way to preemptively have a non-filer letter processed.

If NY taxes were withheld, the only way to guarantee a refund is to do (1). It's possible (though my guess is unlikely) that you won't receive a non-filer notice and you'll forfeit the withholding.
No NY taxes were withheld, but income was reported to NY state. Can I still file a return and show $0 in NY source income?
Yes you can. Be prepared for the notice and be prepared to explain why it is not NY source income, assuming it is not in fact NY source income. If it constitutes wages for services performed in NY, I'm not sure how good of an argument you have.
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