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Subject:   double reported income
Date:   28 Mar 2008
From:   Larry

Hello Mike,

I just realized that my employer has been reporting my ordinary income from disqualifying sales of ISO shares on my W-2 for past years. Not realizing this, I also reported the sales from Form 1099B into Turbo Tax. The software didn’t ask whether the proceeds were included in W-2 wages. As a result, I have double reported the income.

I know other people who have made the same error.

What should we do?

Answer

Date:   10 Apr 2008

Hello Larry,

You should file amended income tax returns to recover the overpaid tax.

The federal form is Form 1040X.

Assuming you filed by April 15, 2005, your deadline for an amended 2004 income tax return is April 15, 2008.

We do this all the time. It’s a common error.

Good luck!

Mike Gray

For more information about incentive stock options, request our free report, Incentive Stock Options - Executive Tax and Financial Planning Strategies.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.