Exercise of nonstatutory stock options reported on form w-2
From the team at myStockOptions. We do our best to keep the writing lively. Form W-2 is in the air—or rather, hopefully in the safety of your mailbox or reported by now. If you had income from stock compensation or an employee stock purchase plan inyou need to understand where that income is reported on the W-2 so that you can complete your tax return properly. In the award-winning Tax Center at myStockOptions. Each one includes an annotated diagram of Form W-2 that clearly interprets this sometimes cryptic document. If you exercised nonqualified stock options last year, the income you recognized at exercise will be reported on your W The income from a exercise stock option NQSO exercise appears on the W-2 with other income in:. That last item, Code V in Box 12, identifies the NQSO income included in Boxes 1, 3, and 5. For the places where the tax-withholding amount appears, see our FAQ on W-2 reporting for NQSOs. The W-2 reporting is, by the way, identical for stock appreciation rightswith the exception that Code V is not used. With incentive stock optionsthe spread value appears on the W-2 only when you make what is technically called a disqualifying dispositioni. In that case the income appears on the W-2 as compensation income. Unlike with NQSOs, your company does not withhold federal taxes on ISO exercises and no money is owed for Social Security and Medicare, even with a same-day sale or any later disqualifying dispositions. For the details of W-2 reporting for ISOs in this situation, see our FAQ on this topic in the Tax Center. The vesting exercise restricted stock, the share delivery from restricted stock units RSUsand the vesting of performance shares all prompt W-2 reporting of the income received. The treatment on the W-2 is essentially the same for all three grant types. Income appear in the following places:. To learn which boxes show the taxes withheld, and other reported details for all three grant types, see the related FAQsincluding annotated diagrams, in the Tax Center. The W-2 reporting for ESPP income depends on whether your company's ESPP is tax-qualified or not and, if it is tax-qualified, how long you hold the shares. For a nonqualified ESPP, there is withholding on the income you recognize at purchase, and the income and withholding are reported on your W-2 in a way resembling that for nonqualified stock options. With a tax-qualified ESPP, nothing appears on your W-2 until you sell the shares. The details of all three situations are clearly presented, with annotated diagrams, in the section on ESPP W-2s in the Tax Form at myStockOptions. If you sold shares from stock compensation or an ESPP last year, you'll need more guidance to report the sale proceeds on your tax return. Fortunately, the Tax Center at myStockOptions. Each FAQ in the section includes annotated diagrams of Form and Schedule D, the two crucial forms for stock-sale reporting. All of our tax-season content, including our popular annotated tax forms, is available for corporate licensing. Help your participants make the most of their stock compensation by giving them resources for avoiding expensive mistakes on tax returns. The excellence of our resources is attested by the many testimonials we have received, so don't just take our word for it. As one of our licensees puts it, nonstatutory "find the tax information and annotated tax forms extremely helpful. Digg This Save to del. You can follow this conversation by subscribing to the comment feed for this post. The letters and numbers you entered did not match the image. As a final step before posting your comment, enter the letters and numbers you stock in the image below. This prevents automated programs from posting comments. Having trouble reading this image? Comments w-2 moderated, and will not appear until the author has approved them. Name and email address are required. Email address will not be displayed with the comment. Name is required to post a stock. Please enter a valid email address. Get RSS updatesor enter your email address below to receive our blog commentaries in your inbox. Enter your email address. Tweets by the myStockOptions. OUR BLOG From the team at myStockOptions. Time For Our FAQs And Diagrams Form W-2 is in the air—or rather, hopefully in the safety of your mailbox or desk by now. Stock Options If you exercised nonqualified stock options last year, the income you recognized at exercise will be reported on your W The stock from a nonqualified stock option NQSO exercise appears on the W-2 with other income in: Wages, tips, and other compensation W-2 3: Social Security wages form to the income ceiling Box 5: Medicare wages and tips Box State wages, tips, etc. Local wages, tips, etc. Restricted Stock, RSUs, Performance Shares The vesting of restricted stock, the share delivery from restricted stock units RSUsand the vesting of performance shares all prompt W-2 reporting of the income received. Income appear in the following places: Form Security wages to income ceiling Box 5: If you made a Section 83 b election to be taxed on the value of restricted stock at grant, your Exercise for the year of grant, not vesting, will show the income and withholding. Employee Stock Purchase Plans ESPPs The W-2 reporting for ESPP income depends on whether your company's ESPP is tax-qualified or not and, if it is tax-qualified, how long you hold the shares. Sell Shares In ? The Fun Ain't Over Yet If you sold shares from stock compensation or an ESPP last year, you'll need more guidance to report the reported proceeds on your tax return. Resources For Stock Plan Professionals All options our tax-season options, including our popular annotated tax nonstatutory, is available for corporate licensing. Comments You can follow this conversation by subscribing to the comment feed for this post. Verify your Comment Previewing your Comment. This is only a preview. Your comment has not yet been posted. Your comment could not be posted. Your comment has been saved. Comments are moderated and will not appear until approved by the author. Your Information Name and email address are required. Name is required to post a comment Please enter a valid email address W-2 URL. Download our free stock comp glossary app! SUBSCRIBE Get RSS updatesor enter your email address below to receive our blog commentaries in your inbox. Enter nonstatutory email address Tweets by the myStockOptions. Try the new myStockOptions.
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