Tax Center: Restricted Stock: W-2s & Tax Returns

How To Report Sales Of Company Stock On Your Tax Return

The myStockOptions.com Tax Team
UPDATED FOR 2013! Learn how to report your sales of stock on the new Form 8949 and revised Schedule D of IRS Form 1040.

VIDEO! New Tax Return Forms & Reporting Rules For Stock Sales

Bruce Brumberg
UPDATED FOR 2013! If there's a way to make learning about tax forms fun, we'll try it. Learn how to prevent costly tax return mistakes with this animated presentation on IRS Form 1099-B, IRS Form 8949, and Schedule D.

How To Avoid Paying Too Much Tax: Understanding The Revised Form 1099-B & New Form 8949 For Reporting Stock Sales On Your Tax Return

Bruce Brumberg
UPDATED FOR 2013! The stock-sale information provided by brokers on IRS Form 1099-B has changed. Cost-basis reporting, both for your broker on Form 1099-B and for you on your tax return, is now more complex, confusing, and vulnerable to errors. This article explains the crucial facts you must know to avoid overpaying tax or attracting unwanted IRS attention.

Restricted Stock & RSUs: What You Must Know To Avoid Tax Return Mistakes

The myStockOptions.com Tax Team
UPDATED FOR 2013! This tax return season has the potential to be more confusing than most if you sold stock last year. You must now file the new IRS Form 8949 along with the revised Schedule D. This change stems from the expansion of the information that brokers must report to you on IRS Form 1099-B. Read this article for tips on these and other crucial tax return topics.

Tax Return Mistakes And Error Prevention: PowerPoint Presentation

Bruce Brumberg, Editor-in-Chief
myStockOptions.com
UPDATED FOR 2013! The top 10 most common tax-return errors and questions related to stock compensation. Premium and Pro Members may request permission to use this presentation for employees or clients.

IRS Guide To Auditing Techniques For Stock-Based Compensation

Internal Revenue Service
The IRS tips its hand on what its agents look for in audits related to all types of stock pay to ensure compliance, whether by corporations or executives.

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UPDATED! When I file an extension to complete my tax return after the IRS deadline, are there any mistakes I should avoid that involve stock grant income?

Stock compensation income can raise your income tax and make your tax return complex. The IRS has a form that lets you apply for an automatic six-month extension for the due date of your tax return (until mid-October). Mistakes include not paying taxes owed with...

UPDATED! Has the likelihood of a tax audit increased?

Yes, substantially. In addition, fluctuations of income, which can be caused by stock compensation, are a red flag that can trigger an audit. According to research...

UPDATED FOR 2013! What are the biggest mistakes with restricted stock or RSUs that I can make on my tax return, and how can I avoid them?

It is easy to make tax return mistakes that lead to paying more than necessary or (perhaps worse) an IRS review. This tax season in particular will be more confusing than most because of the new Form 1099-B, the new Form 8949, and the significantly revised Schedule D...

Form 8949 and Sch. D diagrams! How do I report a sale of restricted stock on my federal income-tax return?

You need to complete Form 8949 and Schedule D for the year when you sold your stock and file them with your Form 1040 federal income-tax return. You do this even if...

Form 8949 and Sch. D diagrams! When I hold restricted stock after it vests and later have capital gains on the sale, will I get any "credit" for the income tax I paid at vesting?

The vesting and the sale are separate transactions. First the stock's value at vesting is taxed, unless...

Form 8949 and Sch. D diagrams! Do I need to report on my tax return the restricted stock I sold or surrendered to my company for the tax withholding?

You should definitely report a sale for taxes at vesting if you received a 1099-B that shows the proceeds. The IRS will...

Form 8949 and Sch. D diagrams! When my restricted stock units vested, my company automatically withheld shares to cover the taxes. Do I need to report these shares on my Form 8949 and Schedule D?

You should definitely report a sale for taxes at vesting if you received a 1099-B that shows the proceeds. The IRS will...

Form 8949 and Sch. D diagrams! How do I report a sale of shares from restricted stock units (RSUs) on my federal income-tax return?

You need to complete Form 8949 and Schedule D for the year of the sale of your stock and file it with your Form 1040 federal income-tax return. You do this even if...

Form 8949 and Sch. D diagrams! How do I report a sale of performance shares on my federal income-tax return?

You need to complete Form 8949 and Schedule D for the year when you sold your stock and file them with your Form 1040 federal income-tax return. You do this even if...

W-2 diagram! What will my W-2 show after the vesting of restricted stock?

Restricted stock results in ordinary income to you. This occurs either at the time...

W-2 diagram! What will my W-2 show after the vesting of restricted stock units?

Restricted stock units result in ordinary income to you. This occurs when...

W-2 diagram! What will my W-2 show after the vesting of performance shares?

Performance shares result in ordinary income to you. This occurs when the grant vests after specified targets are reached and shares are either delivered or paid out to you. Depending on the structure of the grant, this may occur in the year after the end of the performance period...

UPDATED! What are the big changes with reporting stock sales on my tax return? Why have these changes occurred?

Major changes in the tax reporting and filing for stock sales became effective in 2012 (i.e. starting with stock sales made in 2011). The revised reporting and filing rules now apply every tax season...

What tax statement will I receive from my broker after a sale of company stock I acquired by stock option exercise, restricted stock vesting, or ESPP purchase?

You will need to gather certain information to complete your tax return. The broker will send you IRS Form 1099-B for the proceeds...

UPDATED! How has IRS Form 1099-B changed for sales of stock acquired from my stock options, restricted stock, or ESPP?

Your brokerage firm issues IRS Form 1099-B by mid-February in the year following the year of sale. Form 1099-B is an important document that you must have to complete your tax return...

In the cost basis I use to report sales of company stock on my tax return, what part comprises the W-2 income from stock compensation or an ESPP?

When your W-2 income is added to the price you paid for the stock, this is your cost basis on your tax return. The table below presents the compensation portion of your tax basis for all types of stock grants and ESPPs...

UPDATED! What if the wrong cost basis is reported on my 1099-B? How do I report the right cost basis on Form 8949 of my tax return?

The new Form 8949 is where you now list the details of each stock sale on your tax return, while the revised Schedule D is where you now merely aggregate the column totals from Form 8949 to report your total long-term and short-term gains and losses. From our interpretation of the forms and their instructions, myStockOptions.com recommends the following reporting steps to avoid overpaying taxes...

What is the cost basis for calculating gains on Form 8949 and Schedule D of my tax return after I sell stock acquired from stock options, restricted stock/RSUs, performance shares, or ESPPs?

The cost basis, also called the tax basis, is the purchase price plus the amount of ordinary income shown on your Form W-2. In most (though not all) situations, you use the fair market value (FMV) on the date of option exercise, restricted stock/RSU vesting, or ESPP purchase. The table below lists the tax basis for each type of stock compensation...

What should I do if I don't receive a W-2 or if I lose it?

If the company has not issued a W-2 by the middle of February, the IRS suggests...

How do I report the income that results from the vesting of my restricted stock on my federal income-tax return?

For each part of the grant that vests in a tax year, the full value...

Are the tax rules, withholding, and tax return reporting for restricted stock different if I am an independent contractor, a consultant, or an outside director and not an employee?

In some ways they are similar. The tax treatment of restricted stock is the same for everyone. The reporting and withholding income is different. If you are an employee...

I acquired stock from option exercises and restricted stock vesting a few years ago. When I sell the stock, how do I rediscover the cost basis for my tax return?

Let's first review the tax rules and the W-2 reporting. The tax basis for...

The value of my restricted stock at vesting is reported on my W-2 as ordinary income. Can I use my stock-trading losses to offset this income?

You have different types of taxable income. The tax law says you can offset losses against only the...

I received a notice (CP-2000) from the IRS stating that, according to last year's tax return, I owe money for the sale of my restricted stock when it vested. I thought I paid all the taxes through withholding at vesting. How do I respond?

Because the value of the shares at vesting was added to your W-2, and withholding taxes were based on that value, you thought you did not need to file Schedule D with your Form 1040 to report the sale. It is a common mistake to think this...

How are the dividends on restricted stock taxed and reported to me?

Dividends that are earned on restricted stock are considered compensation income, which is reported on your W-2 (1099-MISC for nonemployees, such as directors). The dividends can be "qualified dividends" and thus taxed at a lower rate when...

In what ways can I pay my taxes if I don't have the money to pay them with my tax return?

If you simply lack the funds to pay your income tax, you may want to apply for a payment agreement on the...

My company's stock is now essentially worthless because of securities fraud by senior executives. Can I claim a casualty or theft loss on my tax return?

A casualty or theft loss would allow you to deduct the lost amount against your ordinary income, subject to some limits. However, Treasury regulations and court rulings would probably stand in your way. Nevertheless, what you can do is...

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