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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 KnowledgeTest and improve your knowledge with our ESPP quiz and its study guide in the answer key.


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IRS Form 3922 For ESPPs: What You Need To Know, And How It Can Help You Understand ESPP Taxation This is premium content

Bruce Brumberg
Stock purchases made through an ESPP during a calendar year are reported to you and the IRS on Form 3922 early in the following year. This article explains what you need to know about the information on the form, and how the form can help you better understand the complexities of ESPP taxation.

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

Matt Simon
Your company's employee stock purchase plan (ESPP) can be a strong financial benefit. However, the rules and taxation can be tricky. This two-part article presents six topics you must be familiar with to get the most from your ESPP participation. Part 1 covers enrollment, plan types, and offering/purchase periods.

Key Dates And Terms You Must Know For Your Company's ESPP This is premium content

Matt Simon
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.

ESPP Taxation Made Simple This is premium content

Matt Simon
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 2): Holding Periods, Tax Treatment, Major Corporate Or Personal Events This is premium content

Matt Simon
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 the complicated topics of holding periods, tax treatment, and the impact of various life events on your ESPP participation and holdings.

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

Bruce Brumberg
NEW! 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.

Avoid Tax Return Mistakes With Stock Options & ESPPs: What You Need To Know In 2012 This is premium content

Bruce Brumberg and Lynnette Khalfani
UPDATED! 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.

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!

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.

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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 do I need to know about the information on IRS Form 3922 for ESPPs? This is premium content


Your company is required to file Form 3922 with the IRS and either give you a copy or present the same information on a substitute document. The form contains information about your purchases in your company's tax-qualified ESPP during the prior tax year. With this reporting, the IRS now knows more information about your ESPP purchases than it did before, particularly with regard to your...

Will I receive information statements from my company about ESPP purchases or option exercises? Will I receive Form 3922 or Form 3921? This is premium content


Companies make some information available voluntarily, while the reporting of other information is mandatory. Section 6039(a) of the Internal Revenue Code requires companies to send an information statement to employees who have exercised incentive stock options or have made purchases in a tax-qualified Section 423 employee stock purchase plan. ISO exercises are reported on IRS Form 3921. ESPP purchases are reported on IRS Form 3922...

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...

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


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! 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? This is premium content


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...

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? This is premium content


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...

W-2 diagram! If I sell ESPP shares after the required holding periods, what will appear on my W-2? This is premium content


If you sell ESPP shares in a qualifying disposition, you still...

W-2 diagram! If I make a disqualifying disposition with my ESPP stock, what will appear on my W-2? This is premium content


With a tax-qualified ESPP, nothing appears on your W-2 until you sell the shares. In that year, income is reported in the following boxes of your W-2...

W-2 diagram! My company's employee stock purchase plan is not tax-qualified under Section 423 of the Internal Revenue Code. What will my W-2 show after an ESPP purchase? This is premium content


The gain from your ESPP purchase is totaled on the W-2 with other income in the following boxes...

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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.