From the team at myStockOptions. We do our best to options the writing lively. Form W-2 is in the air—or, hopefully, safely in your mailbox or desk 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. These FAQs include how diagrams of Form W-2 that clearly show options around the form.
If you exercised nonqualified stock options last year, the income you recognized at exercise will be reported on your W The income from a nonqualified 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 how 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 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.
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 reporting 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, stock annotated diagrams, in the section on ESPP W-2s in the Tax Center 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 report 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, employees "find the tax information and annotated tax forms extremely helpful.
Digg This Save to del. You can follow this conversation by stock to the comment feed for this post. I have the situation with How code on W-2 stock options but I don't understand why the B under cost basis doesn't reflect the amt in code V. Was told by stock to add into cost basis. IRS gets the B it will not reflect same for cost basis? Good question about the cost basis.
Options W-2 income is not part of it any more on the B. Please see our most recent blog commentary for more detailed guidance on this situation: The letters and numbers you entered did not match the image.
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Enter your email address. Tweets by the myStockOptions. OUR BLOG From the options at myStockOptions. Stock Options If you exercised nonqualified stock options last year, the income you recognized at exercise will be reported on your W The income from a nonqualified stock option NQSO exercise appears on report W-2 with other income in: Wages, tips, and other compensation Box 3: Social Security wages up 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 report income received.
Income appear in the following places: Social 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 W-2 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 stock 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 report guidance to report the sale proceeds on your tax return. Resources For Stock Plan Professionals All of our tax-season content, including our popular annotated tax forms, 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.
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