Tax Center Global Tax Guide / Glossary / Discussion / About Us
Register Log In
myRecordsmyToolsmyClients
   Tax Center   
Reporting Company Stock Sales 2018 UPDATES!   
Form W-2 Diagrams   
Tax Changes 2003–2018   
NQSO Basics   
NQSO Withholding   
NQSOs: W-2s & Tax Returns   
ISO Basics   
ISO Withholding   
ISOs: W-2s & Tax Returns   
Restricted Stock Basics   
Restricted Stock Withholding   
Restricted Stock: W-2s & Tax Returns   
Section 83(b)   
ESPP Basics   
ESPP Withholding   
ESPPs: W-2s & Tax Returns   
SARs: W-2s & Tax Returns   
Global Tax Guide   

Annotated diagram of Schedule DTax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.

Tax Center: NQSO Withholding

Will my employer report to the IRS any income from an NQSO exercise?
Yes. Your employer will include the amount of the spread at exercise of an NQSO on the Form W-2 it sends to you and the IRS. For federal income tax, the spread will be included as additional wages paid to you. Companies use Code V in box 12 of the W-2 to identify the NQSO income included in boxes 1, 3, and 5. For more information on tax withholding and reporting for NQSOs, see the relevant FAQs in the Tax Center. To learn how your company may calculate the withholding amount, see a related FAQ.

For nonemployees, the spread is reported to the IRS in a similar manner but on IRS Form 1099 (Miscellaneous Income). Copies of Form W-2 and 1099 are required to be sent to employees and service providers by January 31 of the year after the year in which the income was earned. Similar filings are made with your state and local tax authorities, if applicable.

Print this FAQ: Printer icon
Share this FAQ:
Share this article on LinkedIn Share this article on Facebook Share this article on twitter
Prior FAQ in list Return to list Next FAQ in list