Tax Center: SARs: W-2s & Tax Returns

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Articles (Jump to FAQs)

How To Report Sales Of Company Stock On Your Tax Return

The myStockOptions.com Tax Team
UPDATED FOR 2012! 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
If there's a way to make learning about tax forms fun, we'll try it. Watch and hear this animated presentation on the expanded IRS Form 1099-B, the new IRS Form 8949, and the revised Schedule D. Learn now to prevent costly tax return mistakes later!

Tax Return Mistakes And Error Prevention

Bruce Brumberg, Editor-in-Chief
myStockOptions.com
Adapted from a webinar by the editor-in-chief of myStockOptions.com, this PowerPoint (in PDF) covers the top 10 most common tax-return errors and questions related to stock compensation, whether options, restricted stock, or ESPPs. Most of these points are applicable every year, though we are currently updating the material for the new Form 8949 and revised Schedule D. (Upon request, Premium Members can obtain permission to use the presentation for employees or clients.)

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FAQs (Jump to articles)

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

For people who sold shares in 2011, major changes in tax reporting and filing are taking effect this tax season...

W-2 diagram! What will my W-2 show after I exercise stock appreciation rights?

The gain from your SARs exercise(s) is totaled on the W-2 with other income in the following boxes...

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...

NEW! How is IRS Form 1099-B changing for sales of stock acquired from my stock options, restricted stock, or ESPP?

More information is now reported on this form than in past years. This may prove to be more helpful, but it also may be more confusing. Issued to you by your brokerage firm, IRS Form 1099-B is an important document that you must have to complete your tax return. Recent legislation has changed the form in significant ways that you must understand...

NEW! 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 are the biggest mistakes related to stock appreciation rights (SARs) 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...

What is the tax 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 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...

Form 8949 and Sch. D diagrams! How do I report sales of shares from stock appreciation rights on my federal income-tax return?

Whether you sell all the stock at exercise or hold the stock and later sell it, you need to complete Form 8949 and Schedule D for the year of...

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...

How are stock appreciation rights taxed?

When you you exercise stock appreciation rights, depending on the plan's design and practices, you receive...

I acquired stock from 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...

When I exercise my stock appreciation rights (SARs), will the amount of tax withheld cover the amount of tax that I must pay when I file my return?

Employers usually withhold federal income taxes at the flat rate required for supplemental wages, which is...

NEW! What is backup withholding? How do I prevent it or recover it?

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...

If I exercise stock appreciation rights (SARs), will I need to make estimated tax payments?

At a minimum, at the time of your SARs exercise your company will withhold taxes from the proceeds at the required federal withholding rate for supplemental income. However, depending on your income, this minimum withholding may not be enough. If so, you will need to...

Does the tax-withholding rate for supplemental income differ for amounts less than $1 million and for amounts over $1 million?

Depending on the aggregate amount of supplemental income for the year, a two-tier rate applies. The withholding rate for supplemental wages that exceed $1 million in a calendar year is...

Are my stock grants affected by the rules of deferred compensation under IRC Section 409A and other parts of the American Jobs Creation Act?

A number of tax law provisions that may affect your stock grants were introduced in the American Jobs Creation Act (AJCA); the final regulations on deferred compensation under IRC Section 409A, which adopt the...

I may leave my company to become a consultant, retire, or take another job. Will taxes still be withheld on my NQSOs, SARs, and/or restricted stock as they were when I was an employee? What if I live in another state when I exercise them?

Most companies base withholding on your employment status at the time of grant. If you work elsewhere or are retired at exercise or vesting, then...

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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