Just what you wanted to start your new year: two new tax forms! Companies offering employee stock purchase plans or incentive stock options must now file two new information returns with the IRS: Form 3922 for ESPPs and Form 3921 for ISOs. By the end of January, the company must also provide each participant with either the relevant form or similar information in a substitute form.
These forms have both good and bad potential: bad, to create confusion; good, to help employees gather information for tax returns after they have sold ESPP or ISO shares. The forms also ensure that the IRS will know information about participants' ESPP and ISO stock that it did not have before. This makes accurate and timely tax return reporting more important than ever.
To help companies and participants understand these forms and the related tax rules, myStockOptions.com has an article and FAQ just on Form 3922 for ESPPs and an article and FAQ just on Form 3921 for ISOs. These include annotated examples of the forms that "translate" IRS jargon into understandable language. This content is available in the ESPP and ISO tax sections of both myStockOptions.com and the Knowledge Centers that we license to companies and stock plan service providers. They are also available for individual licensing (for details, please contact firstname.lastname@example.org).