Track your stock options, restricted stock, and SARs

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NQSOs: Basics

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Articles (Jump to FAQs)

Stock Option Fundamentals (Part 3): Income Taxes And Withholding

Marilyn Renninger
UPDATED! Here's some advice for financial fitness: take stock of taxes before you exercise! When and how you exercise your stock options can have a major impact on how much tax and which taxes you'll pay.

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FAQs (Jump to articles)

What is a "nonqualified stock option"?

A nonqualified stock option, or NQSO, is a type of stock option that does not qualify for...

When is a nonqualified stock option taxed?

You are taxed...

How do I determine the amount of income I get from the exercise of a nonqualified stock option?

You have income upon exercise of an NQSO...

Will my employer report to the IRS any income from an NQSO exercise?

Your employer will include the amount of the spread at exercise of an NQSO on...

Is the spread at exercise of a nonqualified stock option subject to federal income-tax withholding?

Yes. The spread at exercise is treated as wages and requires...

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NQSOs

Basics

Taxes

Taxes Advanced

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Tax 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.

NEW! How does stock compensation affect my tax rebate under the Economic Stimulus Act?
The Economic Stimulus Act of 2008, signed by into law by President Bush on February 13, 2008, may result in a tax rebate for you. However, any stock compensation that raised your adjusted gross income in 2007 counts towards the rebate's income thresholds and the phaseout, even if...

NEW! 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 Schedule D of my tax return?

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

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

Apart from applying for an extension, which delays only the filing of your tax return, not the actual payment, you have a few choices...

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