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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.


Financial Planning

Financial Planning explores various approaches to making the most of stock grant gains while minimizing taxes. The coverage includes the role of stock grants in gifts, estates and trusts, dividends, hedging, and more.

Test Your Knowledge Test and improve your knowledge with our Financial Planning quiz and its study guide in the answer key.

Want to learn more about financial planning for equity compensation? Visit our podcasts page for interviews with some of our expert contributing authors.

Advisors, Have You Heard About MSO Pro?
Made just for you, with tools to track and model grants for multiple clients, and proactive communications to build relationships. Click here for more information.


  Articles   FAQs  

Your Company Stock: The Importance Of Diversification This is premium content

Laura Tanner, PhD, CFP®
Podcast included! Through the author's personal example, this article presents the dangers of a concentrated stock position, discusses why diversification may be hard for employees with shares from equity compensation, and explores strategies for preserving your net worth.

Restricted Stock & Stock Options: Financial Planning After Your Tax Return Is Filed And At Year-End (Part 1) This is premium content

Tom Davison and Liam Hurley
The time right after you have completed your tax return is ideal for big-picture financial planning. You can more accurately project your income and likely tax situation for the remainder of this year and the next, including AMT risk and capital-loss carry-forwards, to develop your strategy.

American Taxpayer Relief Act And Medicare Surtax: Impact On Stock Option And Restricted Stock Strategies This is premium content

Alan B. Ungar
Podcast included! The American Taxpayer Relief Act and the Affordable Care Act introduced tax-rate increases you must consider in deciding when to exercise stock options, when to sell company shares, and how to plan around income from restricted stock/RSU vesting.

A Least-Regret Analysis For Equity Compensation: Maximizing Value While Minimizing Risk This is premium content

William Baldwin
Podcast included! For some employees, the value of their equity compensation plans represents their largest investment. With so much at stake, making the right decisions is critical. Intelligent planning can maximize value while minimizing risk.

How To Avoid Mistakes And Create Wealth With Your Stock Options This is premium content

Paul Palazzo, CFP®
Podcast included! Stock options can be very lucrative if handled properly, but there are situations in which people can easily make mistakes. In this article I discuss the most common mistakes I see.

Tax Planning For Options, Restricted Stock, And ESPPs After Recent Tax Law Changes: High-Income Taxpayers Impacted Most (Part 1)

Tom Davison and William Whitaker
Notable shifts in tax rates have occurred for people with high incomes. Part 1 surveys these important tax changes and considers their impact on planning.

The Equity Compensation Planning Dilemma For Corporate Executives This is premium content

Geoffrey M. Zimmerman, CFP®
Podcast included! Executives, as corporate insiders, must perform a delicate balancing act to meet the needs, demands, and perceptions of the various constituencies interested in their company's stock. This article looks at these concerns and explores ways to manage them that can improve the chances of achieving financial goals.

Tax Planning For Options, Restricted Stock, And ESPPs After Recent Tax Law Changes: High-Income Taxpayers Impacted Most (Part 2) This is premium content

Tom Davison and William Whitaker
Notable shifts in tax rates have occurred for people with high incomes. Part 2 looks at planning strategies involving capital gains rates, the AMT, and ISOs, and considers general ideas related to income-shifting.

Restricted Stock: Tax, Financial, Estate, And Retirement Planning (Part 1) This is premium content

Richard Friedman
Podcast included! Understand financial planning for restricted stock and RSUs. Part 1 discusses the growing popularity of these grants, their special features, and the related tax planning.

A Holistic Approach To Managing Equity Compensation This is premium content

Geoffrey M. Zimmerman
Podcast included! Planning for equity compensation begins with identifying the role stock grants will play in your life, whether for retirement, college funding, or other goals. This article offers points to consider for three different types of investors.

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What's the impact of the recent tax increases on my restricted stock grants? This is premium content

Increases in tax rates indirectly affect the value of grants. Most importantly...

What is a concentrated stock position, and what can I do to protect myself and get cash for other purposes? This is premium content

A concentrated stock position occurs when a significant chunk of your net worth is tied up in a single stock. Strategies for hedging, diversification, and liquidity include...

I have various stock option grants with vested options. Do I need to exercise first my oldest grants or my oldest vested options?

There's no requirement for which vested options you must exercise first. The decision of which options to exercise first is part of your...

My company is now granting restricted stock, and the current share price is much lower than I think it will be in a few years. Any tax-planning ideas? This is premium content

For restricted stock, you can make what the tax code calls a Section 83(b) election to be taxed immediately at grant instead of later at vesting, when your stock price, and thus your tax rate, may be much higher. However, before you make your decision, realize that...

UPDATES! My restricted stock will vest soon. Should I sell the shares at vesting or hold them?

When restricted stock, restricted stock units, or performance shares vest, whether you sell or hold the shares depends on various factors. Some of them are under your control...

UPDATES! If my company requires me to have a foreign bank or brokerage account because of the stock plan, what do I need to know about the FBAR and FATCA reporting rules? This is premium content

Under the FBAR and FATCA rules, you may have special IRS reporting requirements if you hold assets in a bank outside the US. This FAQ explains the requirements and the severe penalties that the IRS imposes for noncompliance...

How do I calculate whether my after-tax gains will be greater by investing my current option spread into a mutual fund or a diversified stock portfolio, as opposed to just waiting to exercise the options at the end of the term? This is premium content

Let's look at the various tax permutations for nonqualified stock options (NQSOs)...

I work and live in the United States but have non-immigrant alien status (L1 visa). My stock options vested when I worked in my home country. I plan to exercise the options while living in the US. Will I have to pay taxes to the IRS and/or the US state where I live? This is premium content

If you are a US resident at the time of exercise, the options are taxable in the United States, so you will owe federal tax on...

What is backup withholding? How do I prevent it or recover it? This is premium content

Backup withholding is a form of tax withholding on income from stock sales, along with interest income, dividends, or other types of payments that are reported on Form 1099. Your brokerage firm is required to make backup withholding if you are...

How does a non-US resident reclaim US backup withholding? This is premium content

If you are a nonresident alien and do not complete and file Form W-8BEN with the IRS upon receiving stock-sale proceeds, such as those stemming from equity awards, your brokerage firm will assess backup withholding on the proceeds. To reclaim backup withholding, take the following steps...

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