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How to enter taxes withheld from exercising employee stock options

Uding Quicken 2011. 
    The general answer to entering taxes withheld from pretty much anything - including pension payments or stock sales - is the same.

    Enter the transaction in the generating account - in this case the sale of the employee stock options - as a transfer to the account where you are receiving the funds, like your checking account.

    In the receiving account, edit the transaction and add split lines for the gross amount and the withheld amounts. The total of the deposit in our receiving account should be the net amount of the transaction (gross amount minus withholdings).

    • But the net transfer is the gross proceeds minus tax wiitholdings minus commission & fees . If you don't subtract the tax witholdings from the generating account, then you end up with an incorrect cash balance. Does it work to enter the tax witholdings as individual "Miscellaneous Expense" or "Cash Withdraw" entries in the generating account?
    • If you go back and carefully read mshiggins' response you will see that it produces the correct results. The transaction in the destination account is the gross minus withholding, fees, etc; it is the net deposit.

      As a general comment the technique of entering the withholdings, fees, etc in the destination account is applicable when recording distributions from a tax-deferred account [IRA, 401k, other]. The gross distribution is taxable. Further, the tax related withholdings must be entered in a taxable account if the user wants Quickens tax reporting and planning features to recognize them. Quicken does not pick up tax related info if it is entered behind the 'tax-deferred shield'.

      If one is moving funds from one taxable account to another taxable account, then it should make no difference where the deductions are recorded - the originating account or the destination account.
    • I don't see an option to split lines in the receiving account. How do I do this? Can you please explain? I had to enter another transaction as a withdrawal.
    • Similar issue as prior poster. I maintain a cash balance in the brokerage account itself. The same day sale transaction resulted in the gross proceeds posted as cash balance with no way to split it to account for the tax withholding. Is that a dead end?
      As an experiment, I created a linked checking account and had the gross proceeds posted there but I am not sure how to record a split adjustment to account for taxes and recreate the net amount that is reflective of what I actually received. An example would really help.
    • I think you both need to carefully re-read mshiggins post from 3 months ago.
    • Sorry for being dense. I understand the concept of splitting the transaction in the receiving account but I was pointing out that, in my case, the generating and receiving accounts are the same, i.e., the brokerage account, which won't  allow splits  in the stock sale transaction. mshiggins' post refers to a scenario where the receiving account is distinct from the generating account, and allows split transactions. I guess I really needed a visual to understand how to enter the adjusting tax withholding splits which he just posted.
    • Either start the transaction IN the checking account or put the full amount in the checking and then go to checking account and edit the transaction to add the splits.
    Perhaps a picture will explain it better. Here is the transaction in the checking account receiving the investment proceeds. You split the transaction here in the checking account and add the tax withholding as negative amounts. Then adjust the amount of the split to equal the net deposit.
    q2013_proceedswithhold.jpg
    • Thank you! The picture was exactly what I needed. Indeed worth a thousand words. :-)
    • :-)
    • Love a happy customer

    This question comes up often enough to have a FAQ topic here and often enough that I created a suggestion over on Quicken GetSatisfaction to create a IRA/401(k)/Investment distribution transfer wizard.

     

    Here is the link to the FAQ topic:

     

    https://qlc.intuit.com/questions/68752-best-way-to-handle-distributions-from-ira

     


    Here is the link to the GetSat suggestion:

     

    https://getsatisfaction.com/quicken/topics/ira_distribution_wizard

     


    If you think this wizard would be a good addition to Quicken, please vote up the suggestion by clicking the +1 button in the topmost post in the thread.

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