Options Trading Tutorial - If we exercised some stock options and tax was with held do we claim as income and pay again as income?

If we exercised some stock options and tax was with held do we claim as income and pay again as income?

An HR Block rep is saying yes, Merrill Lynch is saying no. I have an appointment with a CPA but I am looking for input. thanks!!

You misunderstood Merrill Lynch. You only pay the income tax once, but you need to properly report it on your tax return to avoid nastygrams in the future. Your W-2 has the money, right? You did a same day sale, right? Did the broker charge anything to handle the sale? (Also called cashless exercise). If you know or believe there is a 1099-B floating around showing proceeds of $10,000, then you do a schedule D with line 1 showing proceeds of $10K, cost of $10K and gain =0. If there was a fee to process, add the fee to the cost. if you didn't do a same day sale, then the cost basis is the FMV on the day you exercised the stock. You only owe additional income on the gain/loss since then. The original spread (the option value) was part of your W-2.
Yes, you have to report it on your 1040 but it will not probably cause a tax increase. Most stock option sales are reported as $0.00 gain/loss or a small loss on the 1040.