Bruce Brumberg
Restricted stock or restricted stock units (RSUs) bring their own special issues to your tax return, and they can be more complicated than you think. Avoid pitfalls with reporting any shares sold for withholding, your income at vesting, any dividend income, your capital gains at sale, and more.
Stanley Trotta with Robert Gordon
President Obama's tax proposals seem likely to raise rates after 2010. Should you take action with stock compensation now or wait until new rates apply? Part 2 looks at restricted stock and restricted stock units.
The myStockOptions.com Tax Team
UPDATED FOR 2010! Learn how to report your sales of company stock on Schedule D of IRS Form 1040. Our comprehensive guide to Schedule D reporting covers sales of stock from nonqualified stock options, incentive stock options, restricted stock, restricted stock units, performance shares, employee stock purchase plans, and stock appreciation rights.
Richard Friedman
Careful planning can help you maximize the value of restricted stock and RSUs by preparing you for decisions you must make. Part 2 covers complex issues in financial, estate, and retirement planning.
Mark Miller
UPDATED! For employees and executives, international travel and relocation are increasingly common. The taxation of "mobile employees" is always complex, and never more than with equity compensation. Part 1 introduces the key concepts and rules, including the sourcing and apportioning of income.
Mark Miller
International assignments or relocations can present attractive opportunities for career advancement. However, the taxation of equity compensation for mobile employees raises complex issues. Part 2 looks at specific scenarios, withholding taxes, and tax equalization.
Tom Davison
Now that you understand the risks of choosing to be taxed at grant with a Section 83(b) election, should you do it? Part 3 takes you through the analysis.
Bruce Brumberg
NEW! As part of your year-end and year-beginning tax planning, don't forget to review any restricted stock grants that vested this year, plus other company stock holdings. This article presents five strategies that many experts suggest.
W.E.B. Bantling and Michael Beriss
The time for tax planning is
before the year ends; tax season is too late. For year-end 2009, learn about several ideas that apply to nonqualified stock options (NQSOs) and restricted stock/RSUs. Meanwhile, look ahead at the likelihood of tax rate changes under President Obama.
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For restricted stock, you can make what the tax code calls a Section 83(b) election to be taxed immediately at grant instead of later at vesting, when your stock price, and thus your tax rate, may be much higher. However, before you make your decision, realize that...
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...
The IRS can seize your stock options if it applies a federal tax lien to you for unpaid taxes. After seizing your stock options, the IRS can also...
Let's first review the tax rules and the W-2 reporting. The tax basis for...
The value at vesting is all ordinary income. You have capital gain only for the increase in the stock price after vesting. Only this gain at sale can be...
It is easy to make mistakes that lead to paying more tax than you need to, or that may even prompt a review by the IRS. When the restricted stock vests, the full value of the shares at vesting is reported on your...
You need to complete a Schedule D, Capital Gains and Losses, for the year of the sale of your...
The reporting for the income at vesting and at the later sale of the remaining shares can cause confusion. You should definitely report a sale for taxes if you received a...
The vesting and the sale are separate transactions. You will first be taxed on the stock value at vesting...
The "lapse" is the end of the restriction that prevented the shares from vesting and being transferred to you. The lapse election is the method by which you choose withholding methods and what will be done with the...
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...
At some companies, international assignments are often accompanied by what is commonly called an equalization package. To give you an incentive to accept the international assignment, the company agrees to...
At a minimum, when the restricted stock vests your company will withhold taxes at the required federal withholding rate for supplemental income (assuming you didn't make a 83(b) election to pay the taxes at grant instead). However, depending on your income, this minimum withholding may not be enough. If so, you will need to...
Estimated-tax periods end on the last days of March, May, August, and December, with payments due by the 15th (or the next business day) of the following month. If you are paying estimated taxes, one strategy is that just after the start of an estimated-tax period you can...
This depends on how restricted stock (or restricted stock units) is treated in the acquisition. For example, if the vesting is accelerated, then you will be...
A number of tax law provisions and interpretations that may affect your stock grants occur in the wide-ranging American Jobs Creation Act (AJCA); the final regulations on deferred compensation under Section 409A, which adopt the...
When you have more than one job in a year, each company must withhold Social Security tax without considering what the other company withholds. The result could be...
Companies are still uncertain about the exact timing. With NQSOs, the clock doesn't start ticking until you take action to exercise. However, with restricted stock and RSUs...
This can depend on different factors. Whether you can withhold more or not, the mandatory federal withholding rate is...
This depends on your financial situation, on whether your decisions should be entirely tax-driven, on what you did earlier in the year, on your outlook for your company's stock price, and on the prospects for changes in tax law during the year ahead. Below we present 10 ideas...
The vesting and the sale are separate transactions and generate different types of income. Unless you made an 83(b) election to be taxed at grant, you were first taxed on the stock's value at vesting, which created ordinary income to you. With restricted stock units (RSUs), taxation occurs...
There is no simple answer to questions involving the taxation of mobile employees. Generally, each state you live in determines what income is taxable and when. For administrative ease, many companies...
The United States taxes the worldwide income of US citizens regardless of whether the income arises from activities in the US. In addition, the other country may impose taxes too. But the US has tax treaties with certain nations to help taxpayers avoid double taxation...
Former employees' transactions, regardless of the reason for termination, follow the same withholding and reporting requirements that apply to...
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...
You pay Social Security and Medicare taxes on all wage and self-employment earnings, regardless of...
As long as you meet the other requirements, to be eligible to make contributions under the tax rules you must have "compensation income" that is at least equal to...
Uncertainty, and even inconsistency, surrounds this situation. For tax purposes it does not matter that you must actually retire to vest the shares. With restricted stock, taxation is triggered when the grant is...
Apart from applying for an extension, which delays only the filing of your tax return, not the actual payment, you have a few choices...
You have different types of taxable income. The tax law says you can offset losses against only the...
The wash sale rule disallows the loss on a sale of stock if the same type of stock is...
There is a choice. On the date of death, shares of publicly traded companies are generally...
Typically, all or a
pro rata portion of any restricted stock vests at death. The value of restricted stock that vests and is payable at your death will...
The acceleration and vesting trigger ordinary income. Whether this is W-2 income and taxes are withheld, or whether it is 1099 income, depends on...
For federal income tax purposes, your estate or beneficiaries will receive a "step-up" in the tax basis of the shares to the market value of the stock at the time of death...
With stock grants of normal size, you face no tax impact beyond the standard tax treatment. ISOs may be converted to NQSOs should any acceleration of vesting cause...
You are taxed on the full value of the shares at vesting, when the restrictions lapse. It does not matter whether...
This depends on what triggers vesting. Section 162(m) of the tax code limits your company's deduction to $1 million unless a senior officer's compensation over this amount meets the performance-based exception. Stock grants are structured to meet this by...
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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.
