The tax reporting for income received in 2024 via equity comp or stock sales can be complex, given the year's uneven stock markets and economic uncertainty. Moreover, changes at the IRS under the second White House administration of President Donald Trump could impact the IRS in unpredictable ways.
Mistakes can lead to overpaid tax, underreported income, IRS penalties, or even an IRS audit. The last thing you want is to pay too much tax or incur penalties that take yet more money out of your pocket.
As in every tax season over the past 20+ years, the fully updated myStockOptions Tax Center is here to help. Our resources provide expert yet easily understandable guidance on tax returns that involve stock options, restricted stock, restricted stock units, performance shares, stock appreciation rights, employee stock purchase plans, and sales of company stock. In addition to updates for 2025, the website's content includes new videos and infographics.
Tax Center Resources
Core articles and FAQs spell out the core rules and most common mistakes people make with stock grants on their tax returns. Taxpayers, financial advisors, CPAs, and Enrolled Agents can quickly run through these to be sure they submit error-free returns.
The reporting of stock sales is made clear by special FAQs with annotated how-to diagrams of IRS Form 8949 and Schedule D.
Diagrams of Form W-2, Form 3922 (for employee stock purchase plans), and Form 3921 (for incentive stock options) illustrate how companies report equity compensation income to employees.
Infographics illustrate the process of tax reporting on key IRS forms.
A fun interactive quiz on tax-return topics lets you test your reporting knowledge in a painless way, before you file your return, and links to related content from the answer key.
Brief videos include a guide to avoiding costly tax-return mistakes that can lead to the overpayment of taxes. A new video at the myStockOptions YouTube Channel, embedded into Tax Center content, goes over the top 5 things to know before you report stock sales on your tax return.
Stephanie Bucko, CPA, CFA®, Mana Financial Life Design
Dan Hodgin, CPA, Silicon Valley Tax Group
Daniel Zajac, CFP®, EA, Zajac Group
moderator: Bruce Brumberg, JD, editor-in-chief of myStockOptions
The panelists provide practical insights on mistakes to avoid that can lead to major tax overpayments or IRS trouble. They also discuss their takes on the future of the IRS under President Trump. In addition, they present real-world case studies, including one showing how to use information in tax returns to create better financial plans.
The on-demand webinar offers 2.0 CE credits for CFP, CPWA/CIMA, and CEP/ECA (the live event also provided CE for CPAs and Enrolled Agents). A detailed agenda is available at the webinar registration page.
Tax Season 2024 is upon us. The tax reporting for stock comp income can be complex amid the current uneven stock markets, ongoing economic uncertainty, and increase in IRS resources for audits. Taxpayer mistakes can lead to overpaid tax, underreported income, or IRS penalties.
myStockOptions is here to help with its fully updated Tax Center. Our goal is to help you realize the full potential of stock options, restricted stock, RSUs, and ESPPs by educating you and your advisors about tax rules and helping to prevent errors. The last thing you want is to pay too much tax or incur penalties from the IRS or your state that take yet more money out of your pocket. Especially with the increase in IRS firepower and its targeting of wealthier taxpayers to boost Treasury revenue, that is a pressing concern.
myStockOptions Tax Center Provides Valuable Tax-Return Resources
An article and FAQ summarize changes in forms and reporting that taxpayers with stock compensation must know:
You, your financial advisor, and your CPA or EA can quickly run through these to be sure you submit error-free returns.
More in-depth resources of the Tax Center include the following:
special FAQs with annotated how-to diagrams of IRS Form 8949 and Schedule D
diagrams of Form W-2, Form 3922 (for employee stock purchase plans), and Form 3921 (for incentive stock options)
a fun interactive quiz on tax-return topics that lets you test your reporting knowledge in a painless way, before you file your return, and links to related content from the answer key
an animated video guide to avoiding costly mistakes that can lead to the overpayment of taxes on stock sales.
myStockOptions On-Demand Webinar Provides Expert Insights And Case Studies
On February 14, we held our popular annual webinar on tax returns involving equity comp and stock sales, featuring a panel of tax experts. The webinar is now available on demand for immediate access. Get valuable insights and actionable takeaways from tax experts to sharpen your knowledge and help you avoid errors that can lead to overpayments or unwanted IRS attention. Case studies include ways to use the information on tax returns to create better financial plans. The webinar recording offers 2 CE credits for CFP, CPWA/CIMA, and CEP/ECA.
Panelists:
Stephanie Bucko, CPA, CFA®, Mana Financial Life Design
Dan Hodgin, CPA, Silicon Valley Tax Group
Daniel Zajac, CFP®, EA, Zajac Group
moderator: Bruce Brumberg, JD, editor-in-chief of myStockOptions
When you receive stock options, restricted stock units, or other types of equity compensation from your company, you are plunged into a new world of technical terms and jargon. To make the most of your equity comp and avoid costly mistakes, you need to understand the terminology in your stock plan, grant agreements, company communications, and other documents relating to your awards. It's a matter of "financial literacy" in its most literal form!
Ever since myStockOptions.com went live in 2000, the goal of our website has been to provide education on equity comp for employees, their advisors, and stock plan professionals seeking to further their knowledge. With clear explanations and independent, unbiased expertise, we seek to make you smarter about the basics, financial planning, taxation, and legal issues.
Now the practical expertise of our website has a handy extension in the form of our free app for Apple and Android smartphones: Stock Compensation Glossary. Available from the App Store (for Apple devices) and from Google Play (for Android devices), it's the first and only smartphone app devoted to the often confusing terminology of equity comp and executive comp.
Based on the popular glossary at myStockOptions.com, this searchable reference guide defines almost 1,000 words, phrases, and abbreviations in the areas of equity compensation and executive compensation, along with the related taxation, financial planning, corporate accounting, and securities law.
Clearly written in plain English with a navigation that's easy to use, the app covers terms relating to all types of equity awards, including stock options, restricted stock, RSUs, and ESPPs. In addition:
The "Term Of The Day" helps users improve their technical vocabulary.
Recent searches can be quickly recalled.
Users can test their knowledge with a quiz game right in the app.
Our app is just one of the many innovative multimedia ways in which myStockOptions.com delivers stock plan education for employees who want more than traditional written content:
Our videos serve as helpful gateways into the website’s detailed educational materials on equity compensation.
Engaging podcasts cover many topics in equity compensation.
18 fun, interactive quizzes let users test their knowledge about all aspects of equity compensation, including restricted stock and restricted stock units, employee stock purchase plans, the rules against insider trading, financial planning, and the impacts of job and life events on equity awards.
Modeling tools, calculators, and a stock compensation portfolio tracker help stock plan participants and/or their advisors manage equity comp financial planning.
All of the content on myStockOptions.com is ideally suited for licensing by companies and stock plan providers for their stock plan participants.
ICYMI: Test Your Knowledge Of Stock Comp Abbreviations
As if texting shorthand wasn’t confusing enough (IKR?), equity comp comes with an alphabet soup of initialisms and acronyms that can make you go WTF. Do you know NQSOs from ISOs? Your AMT from your FICA and your NIIT? What’s the FMV at option exercise? What’s the deal with RSUs, PSUs, ESPPs, and SARs?
Now you can test your knowledge with our fun interactive quiz on stock comp abbreviations. With a little practice it’s easy to become proficient in them—and BTW, given how long and cumbersome some of the underlying terms are, you’ll soon learn to appreciate them. Moreover, learning these abbreviations is a good way to become familiar some of the key facts and concepts of stock compensation.
WEBINAR: Restricted Stock & RSU Financial Planning: Insights From Leading Advisors (May 18)
In 100 minutes, the webinar will feature insights from a panel of three leading financial advisors, including real-world case studies, to provide practical info, guidance, and expertise for restricted stock/RSUs in both public and private companies. They will delve into financial and tax planning to effectively build wealth and prevent expensive mistakes. Volatile stock markets and widespread layoffs in the tech industry make the need for effective guidance even more important, as this webinar will cover.
The webinar offers 2.0 CE credits for CFP, CPWA/CIMA, CEP, CPE (live webinar only), and EA (live webinar only).
After the live webinar, the webinar recording will be available in on-demand format both to registered webinar attendees and to those who later purchase streaming access.
Below is a quick take on things you need to be aware of in 2023 when your tax return involves nonqualified deferred compensation (NQDC) distributed to you in 2022. It's extracted from the comprehensive resources on nonqualified deferred comp at our sibling website myNQDC.com.
Did you also have income in 2022 from equity compensation or sell shares acquired from equity comp? See the Tax Center at myStockOptions for resources and guidance on tax returns involving equity comp and sales of company shares.
Changes In Reporting On IRS Form 1040
The IRS Form 1040 tax return has been revised for the 2023 tax season (reporting income received in 2022). Distributions from NQDC plans, as well as salary income, are now reported as part of income on Line 1a of Form 1040. (See also the article on tax-return changes at myStockOptions for more details on changes in Form 1040 reporting.)
W-2 Reporting Still Potentially Unclear
The IRS has still not finalized the Section 409A rules on W-2 reporting. Therefore, your company does not need to indicate deferred income from an NQDC plan on your Form W-2, though it may do so voluntarily in Box 14. (Once the IRS has finalized the 409A rules on W-2 reporting, income deferred during the year will have to be indicated with Code Y in Box 12.) Distributions from plans usually appear in the W-2 boxes used for wages and other compensation, along with Box 11 for nonqualified plans (see an FAQ on this topic at myNQDC).
What To Do If Your Company’s NQDC Plan Violates Section 409A
If your plan violates Section 409A and you need to pay a penalty and interest, you report that on Schedule 2 of your IRS Form 1040 tax return: Line 17h, “Income you received from a nonqualified deferred compensation plan that fails to meet the requirements of section 409A.”
The total on Schedule 2 is then entered on Line 23 (“Other taxes”) of Form 1040.
Consider the alternative minimum tax (AMT) income exemption amounts, the point where the AMT exemption phaseout starts, and the threshold for the higher AMT rate. Nonqualified deferred compensation itself is not an AMT preference item. However, income deferrals or distributions can serve to prevent you from triggering the AMT in a tax year or can cause to you trigger it, depending on your other income. While the 2018 tax changes reduced the likelihood of triggering the AMT by raising the exemption amounts and phaseout thresholds, you still need to calculate it (see an FAQ on this topic myStockOptions).
Need An Extension?
If you need to file an extension of your tax-return deadline because of nonqualified deferred compensation, see the FAQ at myNQDC on mistakes to avoid with extensions. Note that the IRS routinely postpones the filing due date for taxpayers in areas affected by natural disasters. You can find out whether you qualify for a postponement in the IRS website section Tax Relief In Disaster Situations. For most taxpayers in California, the due date for 2022 tax returns (April 18, 2023) has been extended to October 16.
Like what you see at myNQDC? Full access to myNQDC is available through individual subscriptions to premium membership or through corporate licensing. Premium access includes the Learning Center, which offers up to 6 continuing education credits for CFPs, 6 PACE credit hours for CLU® and ChFC® professionals, and 12 CPE hours for ASPPA members.
To learn about our corporate services, see the About Us and Licensing sections of myNQDC. Please contact us (617-734-1979, [email protected]) to obtain more information about licensing content for your website, print materials, and/or newsletters, and for premium memberships at special bulk rates for your staff.
The popular myStockOptions tax-season webinar is available on demand: Preventing Tax-Return Mistakes With Stock Comp & Stock Sales. It features a panel of tax experts discussing how to prevent errors in tax returns that involve equity comp and company shares. Their presentations include real-world case studies showing how to use information in tax returns to create better financial plans.
Stephanie Bucko, CPA, CFA®, Mana Financial Life Design
Dan Hodgin, CPA, Silicon Valley Tax Group
Daniel Zajac, CFP®, EA, Zajac Group
moderator: Bruce Brumberg, JD, editor-in-chief of myStockOptions
The webinar recording offers 2.0 CE credits for CFP, CPWA/CIMA, and CEP/ECA. A detailed agenda is available at the webinar registration page.
Need CE credits? Wish you had a single easy place to get them?
Wish granted!
myStockOptions.com has expanded the valuable offerings in its Learning Center, a convenient resource that offers required continuing education (CE) credits for Certified Financial Planners (CFPs), Certified Equity Professionals (CEPs), Certified Private Wealth Advisors (CPWAs), and Certified Investment Management Analysts (CIMAs).
Our eagerly awaited new course on equity compensation at private and pre-IPO companies builds on the previously established programs about financial planning, taxation, stock options, restricted stock and restricted stock units, employee stock purchase plans, and SEC law.
New Course: Private & Pre-IPO Company Stock Compensation
The new course, Private & Pre-IPO Company Stock Compensation, is a timely addition in an age of huge demand for knowledge and resources in the complex realm of startup and private company equity compensation. Private companies have been growing fast over the past few years while granting increasing amounts of equity to their employees, whether via stock options or restricted stock units. Furthermore, the record number of initial public offerings (IPOs) and M&A deals in 2021 put a spotlight on the complex financial planning for equity comp and company shares that employees and their advisors need to know when a private company goes public or gets acquired.
myStockOptions Learning Center For Continuing Professional Education
The Learning Center at myStockOptions is a crucial resource for financial advisors and stock plan professionals who need to keep up their required continuing education on equity comp and earn the CE credits required to maintain their certifications. The eight courses in the myStockOptions Learning Center, each with a 30-question exam, now offer:
40 CE credits for CEP (over 100% of the total requirement)
26 CE credits for CFP (87% of the total requirement)
26 CE credits for CPWA/CIMA (65% of the total requirement)
Our CE courses not only demonstrate the practical expertise and excellence of our resources on equity comp. They add significant value to memberships at our websites, which have a big following among financial advisors, stock comp professionals, and stock plan participants. These are engaging online self-study programs that busy professionals can take at their convenience to obtain necessary CE credits.
Each course features articles, FAQs, podcasts, and videos from myStockOptions.com. They are woven into a dynamic, interactive learning tool that teaches the topics in a memorable way. The answer key for each 30-question exam also links to relevant content on the site for further reading and learning.
The value of our CE courses as efficient educational tools has also led some major financial institutions to use our Learning Center for internal training and their in-house certification programs.
Along with the Learning Center, the myStockOptions Webinar Channel also offers continuing education for the CFP, CEP, CPWA/CIMA, and EA certifications in its array of live and on-demand webinars.
Once again, the IRS has assigned us all homework due by mid-April. For tax returns involving equity comp and stock sales, the reporting has changed yet again for the 2022 tax-return season (income received in 2021). The changes, including where to put income left off Form W-2, expand what you must understand before you prepare your tax return.
With these and the many other tax changes of recent years, the 2022 tax-filing season presents more risk than ever for expensive errors on tax returns. Taxpayer mistakes can lead to overpaid tax, underreported income, IRS penalties, or even an IRS audit.
The fully updated myStockOptions Tax Center provides expert yet easily readable guidance on the filing and reporting of tax returns that involve stock options, restricted stock, restricted stock units (RSUs), performance shares, stock appreciation rights, and employee stock purchase plans (ESPPs).
An article and FAQ summarize changes in forms and reporting that taxpayers with stock compensation must know:
You, your financial advisor, and your CPA can quickly run through these to be sure you submit error-free returns.
To get even more in-depth help with tax returns:
The reporting of stock sales is made clear by special FAQs with annotated how-to diagrams of IRS Form 8949 and Schedule D.
Diagrams of Form W-2, Form 3922 (for employee stock purchase plans), and Form 3921 (for incentive stock options) show how companies report equity compensation income to employees.
An animated video explains how to avoid costly mistakes that can lead to the overpayment of taxes.
A fun interactive quiz on tax-return topics lets users test their reporting knowledge in a painless way, before they file their returns, and links to related content from the answer key.
On-Demand Webinar About Preventing Tax-Return Mistakes
Held live on March 3 and now available on demand, the myStockOptions webinar Preventing Tax-Return Errors With Stock Comp And Stock Sales features insights from a panel of tax experts on how to avoid errors with tax returns involving equity comp and sales of company shares. It also offers special insights from panelist case studies on how to use information in tax returns to create better financial plans. The webinar recording offers 2.0 CE credits for the CFP, CEP, and CPWA/CIMA designations.
Panelists:
Stephanie Bucko, CPA, CFA®, Mana Financial Life Design
Dan Hodgin, CPA, Silicon Valley Tax Group
Daniel Zajac, CFP®, EA, Zajac Group
moderator: Bruce Brumberg, JD, editor-in-chief of myStockOptions
Remember that accountants and tax advisors sometimes make mistakes, so even if your return is being handled by a preparer, it's good to know the reporting. The last thing you want for your tax return is to pay too much tax, incur IRS penalties, or draw unwanted IRS attention leading to an audit.
Tax season is a busy time at myStockOptions. It's also a busy time at our sibling website myNQDC, all about nonqualified deferred compensation (NQDC) plans. These plans let you defer more income in addition to what you can defer via qualified retirement plans, such as a 401(k).
Based on the tax resources at myNQDC, below is a quick take on things to be aware of when your tax return involves nonqualified deferred comp. (These items are separate from the 2018 tax changes, which still affect rates and brackets that apply for your tax return.)
Changes In Reporting On IRS Form 1040
The IRS Form 1040 tax return has been revised again for the 2021 tax season. Distributions from NQDC plans, as well as salary income, are now reported as part of income on Line 1 of Form 1040.
See also the related FAQ at myStockOptions for details on changes in Form 1040 reporting (estimated taxes, capital gains, alternative minimum tax) and on the new Form 1099-NEC for reporting nonemployee compensation.
W-2 Reporting Still Potentially Unclear
The IRS has still not finalized the Section 409A rules on W-2 reporting. Therefore, your company does not need to indicate deferred income on your Form W-2, though it may do so voluntarily in Box 14. (Once the IRS has finalized the 409A rules on W-2 reporting, income deferred during the year will have to be indicated with Code Y in Box 12.) Distributions from plans usually appear in the W-2 boxes used for wages and other compensation, along with Box 11 for nonqualified plans (see an FAQ at myNQDC).
What To Do If Your Company’s NQDC Plan Violates Section 409A
Consider the alternative minimum tax (AMT) income exemption amounts, the point where the AMT exemption phaseout starts, and the threshold for the higher AMT rate. Nonqualified deferred compensation itself is not an AMT preference item. However, deferrals of income can serve to prevent you from triggering the AMT in a tax year; conversely, income you receive in a distribution can trigger the AMT. While the 2018 tax changes reduced the likelihood of triggering the AMT by raising the exemption amounts and phaseout thresholds, you still need to calculate it (see a related FAQ at myStockOptions).
Need An Extension?
For 2020 tax returns, the usual April 15 filing deadline has been postponed to May 17, 2021. If you still need to file an extension of your tax-return deadline because of nonqualified deferred compensation, see the myNQDC FAQ on mistakes to avoid with extensions. Also, even with the delayed filing deadline, your first-quarter 2021 estimated taxes remain due by April 15.
Did you also have income from equity compensation or sell shares acquired from equity compensation? See the popular resources in the Tax Center at our sibling website myStockOptions.
More Tax Resources At myNQDC
The tax section of myNQDC has a full range of resources on tax returns that involve NQDC. For new Premium Memberships and renewals, please contact us (617-734-1979, [email protected]). We can process your membership directly by phone or email you an invoice.
Want to license readable, high-quality educational content on NQDC plans for participants, clients, or prospects? Find out about our corporate services in the About Us and Licensing sections of myNQDC. Please contact us (617-734-1979, [email protected]) to obtain more information about licensing content for your website, print materials, and/or newsletters, and for premium memberships at special bulk rates for your staff.
Tax Season 2021 presents more risk than ever for confusion and costly errors with tax returns involving stock comp. Join us for a lively educational webinar on reporting rules for stock options, restricted stock/RSUs, ESPPs, and sales of company shares.
Learn how to avoid common mistakes that can lead to overpaying taxes or unwanted IRS attention.
All the essentials of tax returns for equity comp are presented in just 75 fast-paced minutes. Register to stream the recording.
What do you call a bootcamp about stock compensation? A "Bootcomp"? Maybe. Whatever the case, myStockOptions is holding a bootcamp on stock comp in a special webinar on October 21, presented by myStockOptions editor-in-chief Bruce Brumberg, Esq.
While nobody will actually have to drop and give us twenty pushups (though they are welcome to do so if they want), our bootcamp is a great opportunity for financial advisors, lawyers, CFAs, and tax professionals to learn all they need to know about stock comp or sharpen their existing knowledge in just 100 lively minutes. This webinar is yet another educational offering from myStockOptions in addition to the self-study courses and exams in the website's Learning Center, which offers a multitude of continuing education credits for CFP, CEP, CPWA, and CIMA professionals.
For financial advisors in particular, stock compensation is a complex planning niche they must understand when their clients have grants of stock options, restricted stock, restricted stock units, or employee stock purchase plans. Command of the core topics is required to better serve clients, build wealth, and prevent costly mistakes.
"You will understand the fundamentals of stock comp with our bootcamp webinar," guarantees Bruce, a respected expert on equity comp with over 20 years of experience in stock comp education, communications, and training. "We are very confident in the power of this educational event. If you don't feel you're in top stock comp shape after our webinar, as part of our bootcamp guarantee I will provide you with a private tutoring session myself."
All the essential topics below will be presented in just 100 minutes by Bruce Brumberg, the editor-in-chief and co-founder of myStockOptions.
Stock options: 8 core features
Exercise methods
4 key features of nonqualified stock options (NQSOs)
Like all storms, both literal and figurative, the pandemic of 2020 will pass, but at the moment it's a wild ride. Like everything else, company approaches to equity compensation and the financial-planning strategies advisors must consider for clients are being heavily impacted by Covid-19 and its ripple effects.
After wild waves in the stock markets, financial planning for stock compensation continues to be tested by volatility, economic uncertainty, corporate layoffs, and indefinite employment furloughs. It is more important than ever for financial advisors to re-evaluate approaches in this planning niche. Client strategies that may have been ideal for the economic boom years may need adjustment or revision in the unprecedented circumstances of the novel coronavirus.
Webinar: Financial Planning For Stock Compensation During The Pandemic
This is the subject of a special one-hour webinar from myStockOptions on July 22. Bruce Brumberg, the editor-in-chief of myStockOptions, will moderate a panel discussion among three leading financial advisors and a top compensation consultant:
In this online event, leading financial advisors and equity comp experts will discuss how to reconsider planning for stock compensation and company shares amid Covid-19 and its fallout. Registration is open at the webinar homepage.
The webinar discussion panelists are:
Meg Bartelt, CFP® (Flow Financial Planning)
Tim Kochis, CFP® (Kochis Global, former CEO and Chairman of Aspiriant)
C.J. Van Ostenbridge, CEP (Infinite Equity)
Jane Yoo, CFP® (Jane Financial)
Bruce Brumberg, discussion moderator (myStockOptions)
After explaining how companies are changing their stock grants, including trends in approaches to underwater stock options, the discussion will turn to what the pandemic and its impacts mean for financial planning. Key topics:
what to do with vested stock options
strategies for nonqualified stock options and incentive stock options
whether to immediately sell restricted stock or restricted stock units when the grant vests
whether to participate in an employee stock purchase plan, and ESPP benefits even in down markets
special strategies for grants in private companies
helping stock comp clients through layoffs, furloughs, and new job opportunities
The webinar offers 1.0 CE credit hour for:
Certified Financial Planners (CFPs)
Certified Equity Professionals (CEPs)
CIMA and CPWA
Webinar Joins Related New Financial-Planning Articles
Many employees with stock compensation are facing tough choices with their equity grants and holdings of company shares.
You may need to sell company stock for cash to meet living expenses.
Your company's stock price has probably steeply declined and rebounded, going through volatility that makes you wonder about your equity comp and financial planning.
You may have lost your job or been furloughed, or you may have changed jobs.
New articles at myStockOptions address these and other timely topics:
7 Things To Know When You Sell Company Stock To Raise Cash For reasons beyond your control, you may find yourself in a position where you suddenly need to sell stock for cash to meet urgent living expenses. When selling stock you must always proceed with caution. Review this checklist of topics to understand on tax, company, brokerage firm, and SEC rules.
ESPPs Offer Special Benefits In Down And Volatile Markets ESPPs cannot be "underwater" like stock options, but a declining stock price can have an impact on your plan participation and the tax consequences. This article explains what you need to know for participating in your company's ESPP with a falling or volatile stock price.
What To Do With Your Just-Vested Shares After Your Company's Stock Price Drops Market volatility can rattle anyone's financial plan for stock compensation and company shares. What should you do with shares acquired from equity awards now? Sell them immediately? Hold them in the hope that the stock price will recover? Should you change the strategy you've been following? This article provides a financial planner's insights on how to consider these questions.
These articles join our longstanding expertise on equity comp and company stock during down markets in our sections on volatility and job loss.
While states are finally starting to reopen after the pandemic shutdowns, the return of traditional conferences, seminars, and chapter meetings for equity comp pros and financial advisors are still a long way off. If you need continuing education (CE) credits for your professional certifications, online courses and events are the way to go for the foreseeable future.
myStockOptions.com is there for you. We have expanded the valuable offerings in our Learning Center, which offers CE credits for:
Certified Equity Professionals (CEPs)
Certified Financial Planners (CFPs)
Certified Private Wealth Advisors (CPWAs)
Certified Investment Management Analysts (CIMAs)
A new course and exam on taxation and tax reporting for equity compensation builds on the previously established programs about financial planning, stock options, restricted stock/RSUs, employee stock purchase plans, and SEC law.
CEPs Can Get All Of Their CE Credits, CFPs Most Of Them
The programs in the myStockOptions Learning Center now offer:
35 continuing education credits for CEPs (over 100% of the total requirement)
18 continuing education credits for CFPs (60% of the total requirement)
18 continuing education credits for CPWAs and CIMAs (45% of the total requirement)
The Learning Center offers engaging online self-study programs that busy professionals can take at their convenience to obtain necessary CE credits. Each course features podcasts, articles, FAQs, and videos from myStockOptions.com. They are woven into a dynamic, interactive learning tool that teaches the topics in a memorable way. The answer key for each exam also links to relevant content on the site for further reading and learning.
The Learning Center now has seven separate online self-study courses and exams:
Our CE courses add a lot of value to the content at myStockOptions.com, which has a big following among financial advisors, stock comp professionals, and stock plan participants. The value of our CE courses as efficient educational tools has also led some major financial institutions to use our Learning Center for internal training and their in-house certification programs.
CPE For Certified Public Accountants (CPAs)
Many states have a process for CPAs to self-determine whether a program qualifies as acceptable continuing education. For example, Massachusetts, which does not have a registration requirement for CPE programs, allows CPAs to self-determine and self-report their continuing education activities. CPAs are encouraged to take our courses and exams and determine whether they comply with their states' rules for CPE credits. (myStockOptions.com is not registered with NASBA or any state boards of accountancy.)
CE For CFA Charterholders
Chartered Financial Analysts (CFAs) are encouraged to take our courses and exams and include them when they self-document their continuing professional development in the online CE tracker on the CFA Institute website.
More CE At myNQDC.com
A sibling website of myStockOptions.com, myNQDC.com is the leading online resource of educational content on nonqualified deferred compensation (NQDC) for both NQDC professionals and NQDC plan participants. The continuing education programs in the website's Learning Center focus on two areas of nonqualified deferred compensation: Basics & Taxes and Enrollment & Distribution. Each program offers a comprehensive course of educational content and a rigorous 30-question exam. To take the exam, professionals must certify that they have read the content. They can earn credits only by achieving a passing score in the exam.
The courses and exams at myNQDC.com offer:
6 Professional Achievement in Continuing Education (PACE) credit hours for Chartered Life Underwriters and for Chartered Financial Consultants
12 Continuing Professional Education (CPE) hours for credentialed members of The American Society of Pension Professionals & Actuaries
6 CE credits for CFPs
Alert: If you haven't yet seen the popular Forbes blog of our editor-in-chief Bruce Brumberg, you can catch up at the link and see what we've been up to during the pandemic vacation.
The COVID-19 pandemic has affected everyone, including employees with equity compensation.
You may need to sell company stock for cash to meet living expenses.
Your company's stock price has probably declined, leaving you wondering about your equity comp and financial planning.
You may be considering the best use of your stimulus payment from the IRS.
If you work for a small business that's seeking a forgivable loan from the Paycheck Protection Program, you need to understand the legal risks in the application and the use of the funds.
Here we present recent articles from the myStockOptions editorial team on these and other timely topics.
See also a full list of new and recently updated content at myStockOptions. Because Tax Season 2020 has been extended to July 15, it includes the fully updated tax-return content in our Tax Center.
7 Things To Know When You Sell Company Stock To Raise Cash
You may find yourself in a position where you suddenly need to come up with cash to meet living expenses or other urgent financial demands. One source of these funds can be proceeds from selling shares of your company's stock, whether acquired via the open market or equity compensation (e.g. stock options, RSUs, ESPPs). Before you sell your company shares, review this article's checklist of topics to understand on tax, company, brokerage firm, and SEC rules: 7 Things To Know When You Sell Company Stock To Raise Cash.
Insider Trading: How To Stay Out Of Trouble
If you do sell company stock quickly to raise cash, be careful. Depending on your access to confidential company information, trading company stock can actually get you into serious legal trouble, including criminal liability for insider trading. A new article at myStockOptions explains what you need to know: Insider Trading: How To Stay Out Of Trouble.
Market Volatility: A Survival Guide For Equity Comp
When stock markets become a rollercoaster and the economy is in a downturn, you need to hang in there and remember equity comp and company shares are best viewed as a long-term deal. Several articles at myStockOptions provide useful advice on coping with stock-price volatility, down markets, and job termination (whether layoffs or other types). These include:
Donating Your Stimulus Check: 4 Key Tax Rules To Know
If you don't need the extra cash, one possible use of your stimulus payment from the IRS is to donate the money to a worthy cause. For this beneficence, you may get a tax deduction. Before you seek the deduction, learn the IRS rules that apply in an article at the Forbes.com blog of our editor-in-chief Bruce Brumberg.
For guidance on the tax deduction for donations of stock instead of cash, see the related FAQ at myStockOptions.
How To Avoid Legal Problems With Your Paycheck Protection Program Loan
Potentially forgivable loans to small businesses are available via the Paycheck Protection Program (PPP).
In an article at Forbes.com, we present advice from former federal prosecutors on avoiding legal problems with PPP loans.
In a separate Forbes.com article, we share insights from small-business attorneys about how to meet the conditions that make the loan forgivable, and how to use PPP loan funds in a way that avoids abusing the loan program.
Learning Center Offers CE Credits
Keep up your continuing professional education! In our Learning Center, myStockOptions has six courses and exams offering CE credits for several professional designations:
30 continuing-education credits for Certified Equity Professionals (CEPs): 100% of the total requirement
15 continuing-education credits for Certified Financial Planners (CFPs): 50% of the total requirement
15 continuing-education credits for Certified Private Wealth Advisors (CPWAs) and Certified Investment Management Analysts (CIMAs): 37.5% of the total requirement
Chartered Financial Analysts (CFAs) and Certified Public Accountants (CPAs) are encouraged to take our courses and exams and include them, if possible, when they self-document their continuing professional education
Each course of study features podcasts, articles, and FAQs from myStockOptions. They are woven into a dynamic, interactive learning tool that teaches the topics in a memorable way. The answer key for each exam also links to relevant content on the site for further reading and learning.
There's a lot going on right now. The last thing you want is headaches with your IRS tax return. Tax returns involving stock compensation are complicated, whether the income is from stock options, restricted stock units, an employee stock purchase plan, or sales of company shares acquired from equity comp. The special reporting issues can flummox even experienced accountants and financial advisors. Meanwhile, mistakes can lead to overpayment of taxes or (perhaps even worse) unwanted attention from IRS auditors.
myStockOptions is here to help. Below are five big reporting mistakes to avoid when you have compensation income from employee stock options or sell shares acquired from these grants. For more guidance on tax returns that involve stock compensation, whether stock options, restricted stock units, employee stock purchase plans, or performance shares, see the articles, FAQs, and annotated diagrams of IRS forms in the Tax Center at myStockOptions.com. Just for fun, try the tax-return quiz to test your knowledge.
Alert: The COVID-19 pandemic of 2020 has prompted the postponement of the April 15 tax-return deadline to July 15, both for filing and for the payment of any tax owed with your return. In other words, Tax Day 2020 is July 15. States that have income taxes are expected to make similar provisions for their state tax returns. Be sure to check with your state's tax agency/revenue department.
1. Nonqualified Stock Options: Double-Reporting Compensation Income
If you exercised nonqualified stock options (NQSOs) last year, you may mistakenly double-report income on your tax return if you do not realize that the income in Box 1 of your Form W-2 already includes the option exercise income. Your company reports this income separately in Box 12 of Form W-2, but it’s still part of the income in Box 1.
Wrongly thinking the income was left out of Box 1 may prompt you to erroneously report it as “Other income” on Schedule 1 of your tax return. Doing that would cause the income to be taxed twice as ordinary income, as the income is already included in the W-2 income that you report on Line 1 of Form 1040:
2. Failure To Report The Sale In A Cashless Exercise/Same-Day Sale
With a cashless exercise/same-day sale, the full exercise spread income is reported on Form W-2, and you report it on your tax return as ordinary income. Even though you never owned all the stock after exercise, you also need to report this transaction on Form 8949 and Schedule D. Those forms are used to report capital gains and losses on all stock sales with your Form 1040 tax return. You may even have some small gains or losses, depending on how your company calculates the spread at exercise and on any commissions and fees for the stock sale. For an annotated example of how to report the cashless exercise on Form 8949 and Schedule D of Form 1040, see an FAQ at myStockOptions.com.
Alert: If the IRS were to receive a report of your gross sale proceeds from your broker (on Form 1099-B) but without a corresponding report of the sale on your Form 8949 and Schedule D, it would think you had failed to report the gain on the sale. Assuming a tax basis of $0, the IRS computers would then automatically send you a CP2000 notice for the taxes due.
3. Cost-Basis Confusion
With nonqualified stock options, for employees the spread at exercise is reported to the IRS on Form W-2 For nonemployees, it is reported on Form 1099-MISC (starting with the 2020 tax year, it will be reported on Form 1099-NEC ). It is included in your income for the year of exercise. Income from an incentive stock option (ISO) disqualifying disposition, such as an early sale, will also appear.
The cost-basis part (Box 1e) of Form 1099-B from your broker will probably report only the exercise price as the cost basis. When you report the sale on Form 8949, do not list the exercise price as your cost basis without also making an adjustment in column (g) of Form 8949. Only for ISO stock sold in a qualifying disposition will the tax basis equal the exercise price.
Alert: If the cost basis is not reported on Form 1099-B, avoid double taxation by listing the market price on the date of exercise as your cost basis in the stock. The basis should be the exercise price plus the amount of ordinary income you already paid taxes on.
Each type of exercise method can create its own confusion with the reporting of shares sold either at exercise or later. For example, if you sold only some of the shares in a sell-to-cover exercise, you don't want to report on your Form 8949 the cost basis for all the shares exercised. This would result in a much larger tax basis and a capital loss for these shares sold.
4. Incentive Stock Options: Alternative Minimum Tax (AMT) Calculation
With incentive stock options (ISOs), when you exercise and hold through the calendar year of exercise, remember that you need to complete an AMT return (Form 6251) to see whether you owe AMT. If the tax amount is higher than the ordinary income tax, you need to pay AMT. Your company does not send you a W-2 for this spread amount when you hold the ISO stock, so remember to do this.
Alert: ISO exercises in a given tax year are reported on IRS Form 3921 early in the following year. The form helps you collect information for reporting sales of ISO shares on your tax return. It also helps in the AMT calculation at exercise. The IRS receives a copy of the form, ensuring that it knows about your ISO exercise and therefore any AMT triggered by the exercise income.
5. Failure To Use AMT Credits
When you have paid AMT because of your ISO exercise and hold, you get a tax credit. You do not need to sell the stock to start using the AMT credit. In addition, every year until the credit is used up, you do need to complete IRS Form 8801 to calculate it. Once you have sold the stock, avoid paying or calculating more AMT than is required for your ISO stock sale by reporting (as a negative amount) your "adjusted gain or loss" on Part I of IRS Form 6251.
myStockOptions 2020 Conference
Registration is now open for the 2020 myStockOptions conference: Financial Planning For Public Company Executives & Key Employees, scheduled to take place on June 15 and 16 at the Hilton San Francisco Airport Bayfront. While postponement of this conference is likely because of COVID-19 response measures, no decision has yet been made about postponement dates or details.
The conference is for financial advisors working with executives, directors, and highly compensated employees at public and private companies, as well as others interested in those topics. The event will start on the afternoon of June 15 with our Stock Compensation Bootcamp For Financial Advisors. A full day of conference sessions with expert speakers will follow on June 16. The agenda, speakers, and other details are available at the conference website.
The high tax-return season is upon us, and this one is a doozy. Tax reporting for stock compensation is complex to begin with. On top of that, IRS tax forms and reporting have changed yet again for the 2020 tax season (for 2019 tax returns), adding yet more confusion to an already complicated process.
As we all know, tax mistakes can be very painful. With these and the multitude of other tax changes in recent years, the 2020 tax season presents more potential than ever for confusion and expensive mistakes in IRS filings for the millions of people in the United States who received income in 2019 from employee stock compensation and sales of company shares.
myStockOptions.com explains the tax-return forms and reporting you need to know in its fully updated Tax Center. This clear and reliable information includes easy-to-understand guidance and annotated tax forms. The website's goal is to help you and your financial or tax advisors realize the full potential of equity compensation. The last thing you want is to pay too much tax or incur IRS penalties that take yet more money out of your pocket.
This blog commentary gives a helpful overview of the tax-return content on myStockOptions.com to help you during tax season 2020.
What Taxpayers Need To Know About The Changes In Tax Forms And Reporting
The IRS Form 1040 tax return, condensed in 2018, has been revised again for the 2019 tax year. The numbered schedules (supplementary forms) of Form 1040 have been reduced to three (Schedules 1, 2, 3). On the IRS Form 1040, total capital gain or loss on Schedule D is once again entered directly on IRS Form 1040, not on Schedule 1 as it was last year. The AMT calculation total on Form 6251 is entered on a different line of Schedule 2.
An article and an FAQ at myStockOptions.com explain everything that taxpayers with stock comp must know about the changes in tax forms and reporting:
the myStockOptions Tax Center has all the answers on the filing and reporting of tax returns that involve stock options, restricted stock, restricted stock units, performance shares, stock appreciation rights, and employee stock purchase plans.
Core articles and FAQs spell out the most common mistakes people make with stock grants on their tax returns. Taxpayers, their financial advisors, and their accountants can quickly run through these to be sure they submit error-free returns.
The reporting of stock sales is made clear by special FAQs with annotated how-to diagrams of IRS tax-return forms.
Diagrams of Form W-2, Form 3922 (for employee stock purchase plans), and Form 3921 (for incentive stock options) show how companies report equity compensation income to employees.
Animated videos include a succinct tutorial on key IRS tax forms related to stock-sale reporting and a video guide to avoiding costly mistakes that can lead to the overpayment of taxes.
A fun interactive quiz on tax-return topics lets users test their reporting knowledge in a painless way, before they file their returns, and links to related content from the answer key.
A separate website on nonqualified deferred compensation at taxes: myNQDC.com
Confusing Rules For Reporting Stock Sales
By mid-February, each brokerage firm sends IRS Form 1099-B, or the firm's equivalent substitute statement, to clients who sold shares during the tax year. The information on Form 1099-B is also reported to the IRS. A diverse set of content at myStockOptions.com relates the background issues, explains how to understand Form 1099-B after selling shares from stock compensation or an ESPP, and shows how to avoid mistakes with the cost basis that can lead to the overpayment of taxes:
Form 1099-B is essential for completing IRS Form 8949 and Schedule D. Taxpayers who sold shares during the tax year must submit those forms with their IRS Form 1040 tax returns. Form 8949 is where taxpayers list the details of each stock sale, using the information on Form 1099-B. Schedule D aggregates the column totals from Form 8949 to report total long-term and short-term capital gains and losses. The total from Schedule D is entered on the Form 1040 return.
However, the cost-basis information in Box 1e of Form 1099-B may be too low, or the box may be blank. This is because the rules for cost-basis reporting are somewhat counterintuitive. Also, no basis is reported for restricted stock or restricted stock units.
Sound confusing? It is.
In the myStockOptions Tax Center, the special section Reporting Stock Sales presents FAQs with clearly annotated diagrams of Form 8949 and Schedule D. Each FAQ explains and illustrates a different reporting situation involving stock options, restricted stock, restricted stock units, performance shares, employee stock purchase plans, or stock appreciation rights. Clear instructions and diagrams show how to complete the forms, whether the cost-basis information in Box 1e of Form 1099-B is accurate, too low, or omitted.
Demystifying IRS Forms 3922 And 3921
Elsewhere on myStockOptions.com, a pair of articles explains IRS Form 3922 for employee stock purchase plans and IRS Form 3921 for incentive stock options. With annotated examples of the forms that translate IRS jargon into understandable language, these articles, along with detailed FAQs (for both ESPPs and ISOs), clarify what taxpayers need to understand about the information provided by the forms, which can help them better understand the complexities of ESPP or ISO taxation. The forms can help with tax-return reporting. They also give the IRS tools for catching errors on the tax returns of people who sold ESPP or ISO stock.
Corporate Licensing Available
For companies, education is vital for ensuring that stock compensation motivates and retains highly valued employees and executives. The expert yet reader-friendly content at myStockOptions.com is ideally suited for licensing by companies and stock plan providers for their stock plan participants. A customized version of the website's award-winning content can be seamlessly woven into companies' HR, benefits, and/or compensation portals. Accessible through any internet browser, 24 hours a day, 7 days a week, licensed content from myStockOptions.com lets stock plan participants answer their own questions about their stock grants whenever they need to learn more—saving time for the stock plan staff and costs for the company. Contact us for more information ([email protected] or 617-734-1979).
myStockOptions 2020 Conference: Register Now!
Registration is now open for the 2020 myStockOptions conference: Financial Planning For Public Company Executives & Key Employees, taking place on June 15 and 16 at the Hilton San Francisco Airport Bayfront. The conference is for financial advisors working with executives, directors, and highly compensated employees at public and private companies, as well as others interested in those topics. The event will start on the afternoon of June 15 with our Stock Compensation Bootcamp For Financial Advisors. A full day of conference sessions with expert speakers will follow on June 16. The agenda, speakers, and other details are available at the conference website.
Along with colored lights, Christmas trees, and office holiday parties, year-end is also a key time for financial and tax planning, especially for the millions of employees who have stock compensation or holdings of company shares.
Tax changes introduced in 2018 by the Tax Cuts & Jobs Act (tax reform) continue to affect their year-end-planning decisions. Meanwhile, the election year ahead in 2020 presents uncertainty about the future of tax laws that affect financial- and tax-planning strategies.
To help keep the season merry and bright, myStockOptions.com provides education and guidance on major issues, choices, and innovative financial-planning strategies for the end of 2019 and the start of 2020. This content is available in the website's section Financial Planning: Year-End Planning and through content licensing.
Tax Brackets And Rates Affect Year-End Planning For Equity Compensation And Company Shares
Financial planning at year-end 2019 is more important than ever for employees with equity compensation who are:
evaluating whether to exercise stock options
planning to sell shares acquired from restricted stock, restricted stock units, or an employee stock purchase plan (ESPP)
donating company stock to charities
Multi-year planning for income from stock compensation and stock sales is especially crucial. "You can control the timing of stock sales and option exercises, and you know when restricted stock/RSUs will vest," notes Bruce Brumberg, the Editor-in-Chief of myStockOptions.com. "Employees with equity grants, employee stock purchase plans, and company shares should be aware of the 2019 and 2020 thresholds for higher tax rates on compensation income and capital gains, the additional Medicare tax on compensation income, and the Medicare surtax on investment income." These employees, for example, may want to consider keeping their income below those known thresholds, if possible, while evaluating whether there is enough withholding to cover the taxes owed.
"A big restricted stock/RSU vesting could push your income above the level that triggers the highest capital gains tax rate of 20% and/or the Medicare surtax of 3.8% on investment income," continues Mr. Brumberg. "If your income in the next calendar year will be less than the level that triggers those higher rates, waiting until 2020 to sell stock could give you a capital gains tax rate of just 15% and no Medicare surtax."
Factors That Drive Year-End Decisions
However, tax rates should not be the only consideration, cautions Mr. Brumberg. "Even if you predict that you will be in a lower tax bracket in the future, many experts maintain that tax rates should never be the main reason for exercising options or selling shares, or waiting to do so, at the end of the year. Instead, make investment objectives and personal financial needs, not tax considerations, the driver of your decisions."
Year-End Content Provides Education And Guidance
At myStockOptions.com, the section Year-End Planning has been fully updated for 2019, including revisions for what's different after tax reform. This content includes the following articles and FAQs.
How can employees save taxes on company stock by making gifts and donations, including those to private foundations or grantor-retained annuity trusts?
All of these questions, and many others, are answered in the section Financial Planning: Year-End Planning. In addition, the calculators and modeling tools at myStockOptions.com allow users to play out various "what if" scenarios with different tax rates and stock prices.
For similar education and guidance on year-end planning for nonqualified deferred compensation, employees can turn to myNQDC.com, a separate sibling publication of myStockOptions.com. Key year-end content there includes the following FAQs:
For companies, education is vital for ensuring that stock compensation motivates and retains highly valued employees and executives. The expert yet reader-friendly content at myStockOptions.com is ideally suited for licensing by companies and stock plan providers for their stock plan participants. For more information, visit myStockOptions.com, email [email protected], or call 617-734-1979. Content from myNQDC.com on nonqualified deferred compensation plans is also available for licensing.
myStockOptions 2020 Advisor Conference: Save The Date!
The 2020 myStockOptions conference, Financial Planning for Public Company Executives & Key Employees, will be held on June 15 and 16 at the Hilton San Francisco Airport Bayfront. The conference is for financial advisors working with executives, directors, and highly compensated employees at public and private companies, as well as others interested in those topics. The event will start on the afternoon of June 15 with an advisor boot camp on equity comp. A full day of conference sessions with expert speakers will follow on June 16.
It's one of the most frequent questions we get from hard-working executives and key employees who are eligible to participate in nonqualified deferred compensation plans, along with their financial advisors. Do the current lower tax rates make salary and bonus deferral less appealing?
In short, the general guidance from the expert contributors to myNQDC.com, a sibling website of myStockOptions.com, is that you need to consider whether your tax rate at the time of distribution is likely to be lower or higher than it is at the time of deferral. If you think your rate will be lower and you feel secure about your company’s financial situation, then pre-tax deferrals make sense. Deferrals can also keep your income below the current triggers for higher taxes.
The 2020 presidential election, already constantly in the news, may be worrying you with the prospect of higher tax rates should the White House and Senate change parties. The following content from our financial planning and taxes sections has useful insights. (For full access to myNQDC.com, please email us at [email protected] to inquire about individual premium memberships.)
Tax Reform: Good Or Bad For Pretax Compensation Deferral? David Hauptman Tax reform has complicated the decision of whether to participate in your company’s NQDC plan. This article provides a perspective on how to decide whether or not to defer pretax compensation.
Tax Reform And The Impact On Nonqualified Deferred Compensation Plans Michael Nolan Tax changes have spurred an unprecedented level of curiosity about NQDC plans. The timing for these plans could not be better for high earners and their employers. This article presents some key deferred compensation trends to watch.
Advantages To Pre-Tax Deferral Of Income After Tax Reform Steve Broadbent and Chris Nyland Employees who once routinely deferred compensation are now rethinking those habits after tax reform under the Tax Cuts and Jobs Act. One concern is whether it may be better to take income today because of uncertainty about tax increases in the future. This article shows how you should consider tax changes and investment returns when analyzing whether to participate in your company's NQDC plan.
Future Higher Tax Rates Would Not Reduce The Current Appeal Of Nonqualified Plans William L. MacDonald NQDC arrangements remain a valuable planning tool for people with high incomes. This article discusses the reasons why current tax rates have made NQDC plans attractive. It also examines how certain features of plan design can cause you tax problems.
Tax Changes That Affect Your Planning For Nonqualified Deferred Compensation Bruce Brumberg The enhanced capacity for tax planning is one of the main attractions of nonqualified plans. When your tax rates increase, the advantages of NQDC plans grow. This article explains the impact of tax changes on your NQDC.
Want to license readable, high-quality content on NQDC to distribute to plan participants, clients, and prospects? Find out about our corporate services in the About Us and Licensing sections of myNQDC. Please contact us (617-734-1979, [email protected]) to obtain more information about licensing content for your website, print materials, and/or newsletters, and for premium memberships at special bulk rates for your staff.
