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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.


ESPPs

Employee stock purchase plans offer great benefits. Browse an overview of this section below, or explore the subtopics to the left. See also the ESPP sections of the Tax Center.

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

Listen to our podcast on the basics, or watch our videos on the core concepts and benefits, important rules, and tax issues for ESPPs.


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VIDEO! Employee Stock Purchase Plans (ESPPs): Core Concepts & Benefits

Bruce Brumberg
In this video, the editor-in-chief of myStockOptions.com explains the fundamentals of employee stock purchase plans (ESPPs). Animated examples clearly illustrate the benefits that ESPPs can provide for employees. Running time: 3:35

ESPPs 101: Key Dates And Terms You Must Know

The myStockOptions Editorial Team
Your employee stock purchase plan (ESPP) may be one of the best benefits your company offers. However, to maximize its value, you must know its key dates and terms. This article explains the basics you need to know for your ESPP participation.

VIDEO! Employee Stock Purchase Plans (ESPPs): Key Rules & Decisions

Bruce Brumberg
Presented by the editor-in-chief of myStockOptions.com, this video covers the important rules you must know and the key choices you will have to make when you participate in an employee stock purchase plan (ESPP). Running time: 2:53

VIDEO! Employee Stock Purchase Plans (ESPPs): Taxes

Bruce Brumberg
To maximize the benefits of your employee stock purchase plan (ESPP), you must understand the five key tax rules explained in this video. Illustrated by animated examples, the covered concepts include the special rules that depend on how long you hold the shares. Running time: 4:24

Six ESPP Essentials (Part 2): Holding Periods, Tax Treatment, Major Corporate Or Personal Events This is premium content

The myStockOptions Editorial Team
Your company's employee stock purchase plan (ESPP) can be a strong financial benefit, but the rules and taxation can be tricky. Part 2 delves into the complicated topics of holding periods, tax treatment, and the impact of various life events on your ESPP participation and holdings.

ESPPs 101: Taxation Made Simple This is premium content

The myStockOptions Editorial Team
Your employee stock purchase plan may be one of the best benefits offered by your company. However, to appreciate the advantages of enrolling in the ESPP you must understand the tax consequences of participation. This article explains the tax basics.

Six ESPP Essentials (Part 1): Enrollment, Plan Type, Purchase Timing This is premium content

The myStockOptions Editorial Team
An employee stock purchase plan can be a great benefit, but the rules and taxation are tricky. This two-part article presents six topics you must be familiar with to get the most from your ESPP. Part 1 covers enrollment, plan types, and offering/purchase periods.

ESPP Contribution Limits And Why They Matter To You This is premium content

Bruce Brumberg
NEW! If you are enrolled in a tax-qualified employee stock purchase plan (ESPP), the amount of company stock that you are allowed to purchase is limited. You will want to keep this in mind when you allocate part of your salary to your ESPP. Read this article to understand how the contribution limits affect your ESPP planning.

Fundamentals Of Employee Stock Purchase Plans (Part 2): Design Limitations And Enrollment Procedures This is premium content

Alisa Baker
Part 1 looked at the basic structural elements and terms of employee stock purchase plans (ESPPs). Part 2 considers more advanced design concepts, including tax code limits and enrollment rules.

ESPP Choices: Flip Or Hold? (Part 2) This is premium content

Timothy A. Farmer and Gregory G. Geisler
You can build your employee stock purchase plan into your long-range savings and retirement strategy. This article compares buying company stock at a discount through your ESPP to putting the same money into your 401(k) or another retirement plan.

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What is an employee stock purchase plan?

An employee stock purchase plan (ESPP) is a type of stock plan that permits employees to use after-tax payroll deductions to acquire shares of their company's stock. Plans can have...

What are the top 10 questions I should ask about my company's employee stock purchase plan?

Employee stock purchase plans (ESPPs) can be designed in different ways and provided with various features that make them appealing to participants. Before you enroll in your company's ESPP, however, you should be sure to know the answers to the following questions...

When I sell my ESPP shares, how will I be taxed if I have met the holding-period requirements under Section 423 for tax-qualified ESPPs? This is premium content

You may have both ordinary income and capital gain when you meet the holding-period requirements (this is a qualifying disposition under the tax code). The answer depends on whether...

If I do not meet the ESPP holding-period requirements to receive favorable tax treatment, how will I be taxed when I sell the stock? This is premium content

If you sell or otherwise dispose of the stock without meeting the holding period rules, then you owe taxes for the spread between the...

What are the biggest mistakes related to my employee stock purchase plan that I can make on my tax return, and how can I avoid them? This is premium content

It is all too easy to make costly tax-return errors that attract unwanted IRS attention. Learn how to prevent mistakes...

If I purchase shares in my company's ESPP or sell the stock in a disqualifying disposition, will I need to make estimated tax payments? This is premium content

You need to pay enough tax during the year through withholding or estimated tax payments to avoid penalties and interest. The tax that has to be paid includes...

How does an ESPP differ from a stock option plan?

Employee stock purchase plans tend to be viewed as a benefit while stock options are a form of compensation. From an employee perspective, there are some differences in operations, eligibility, and design...

Can I ever have ordinary income but no actual gain on sales of ESPP stock? This is premium content

Yes, when the market price of the stock has dropped after purchase and you make a disqualifying disposition of the shares...

What are the benefits of participating in an employee stock purchase plan?

You become an owner in your company, with all the financial upside and risks that any investment can bring. By participating in the plan...

If my company eliminates the lookback for my ESPP, will the tax treatment change? This is premium content

Assuming this is still a tax-qualified ESPP, the tax treatment stays the same even with no lookback, though it gets even more confusing when...

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