Restricted Stock: Taxes

Decisions At Grant With Restricted Stock (Part 1): Tax Fundamentals

Tom Davison
Thanks to the IRS, with restricted stock you have to make decisions immediately at grant. Learn the rules that accompany this increasingly popular type of equity compensation.

Restricted Stock Taxation: What You Need To Know (Part 2)

Bruce Brumberg and Kate Victory
Along with stock options, your company has awarded you restricted stock. Restricted stock grants carry their own requirements and tax rules, which can significantly differ from those of stock options.

Decisions At Vesting With Restricted Stock (Part 1): Withholding

Tom Davison
Vesting is a crucial moment for making decisions about your restricted stock. This article series examines your alternatives. Part 1 discusses withholding.

Stock Options Versus Restricted Shares: A Case Of Risk Versus Reward

Sandra Block
USA Today
Know how restricted stock and options differ, including in tax rules.

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Does this website's content on restricted stock also apply to restricted stock units (RSUs)?

Generally, yes, with two exceptions. First, with RSUs you cannot...

When and how is a grant of restricted stock or RSUs taxed?

The timing of taxation is different than that of stock options. You pay tax at the time the restrictions on the stock lapse. This occurs when...

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...

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...

What is "substantial risk of forfeiture" and how does it affect the taxation of restricted stock?

This tax term applies when rights to compensation are conditioned upon future performance of services or the occurrence of...

Can I control when I will be taxed on a restricted stock grant?

Not as you can with stock options. With stock options, tax consequences occur when...

How and when are taxes withheld from my restricted stock?

Restricted stock withholding is similar to withholding for most other forms of supplemental compensation. You can have different choices for paying taxes, or your company may automatically...

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...

Is the value of my restricted stock at vesting subject to state and local taxes? What if I move?

Many states, counties, and cities impose income tax on their residents. Those that do have income tax almost always...

When my restricted stock vests, how does my company choose the stock price for calculating my W-2 reporting and my share withholding?

This depends on how your stock plan defines fair market value (FMV). Some companies may use the closing price on the vesting day, which...

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. The dividends can be "qualified dividends" and thus taxed at a lower rate when...

When does my capital gains holding period begin for grants of restricted stock and restricted stock units (RSUs)?

For restricted stock, it begins on the day after vesting, unless...

What long-term capital gains rate applies to sales proceeds from restricted stock granted or vested before May 6, 2003, when the capital gains rate fell to 15%?

The holding period for capital gains and the date of your sale, not the grant or vesting date of the restricted stock, are what matter. The tax on the capital gains is...

My company will let me exchange my underwater options for restricted stock. What is the tax impact?

The standard option-for-option exchange is not taxable. When you exchange underwater options for restricted stock, the value of the shares...

Is my spouse entitled to part of my stock options and other stock grants upon our divorce?

While there are some general trends, the treatment of stock options and other stock grants in divorce is far from similar in all states. In general, the outcome depends on four factors...

Who pays taxes when restricted stock or vested company shares are transferred in a divorce settlement? How is restricted stock handled in divorce?

The basic principles that apply to options transferred in a divorce settlement also should apply to the transfer of restricted stock...

If I die, the vesting of my restricted stock will accelerate. How would this be taxed as part of my estate?

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...

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