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Alert: Key Updates & Additions At myStockOptions.com (Oct. 19, 2011)

We continue to follow developments in Congress and the various proposals on tax rates and reform. Given the current political stalemate over all types of tax and spending, the only legislative move affecting stock compensation that may occur in the near future is the continuation of the 2% reduction in the Social Security rate. This would keep the rate at 4.2% for 2012 (President Obama proposed a reduction to 3.1% that was defeated). Without the extension, the rate would return to the former 6.2% after 2011.

Announced today, the 3.6% cost-of-living increase in Social Security benefits next year means a commensurate increase in the wage base used to calculate the tax. The yearly wage base, which has been $106,800 since 2009, will rise to $110,100 in 2012. Starting next year, this will affect the withholding for salary, bonuses, and certain types of equity compensation, such as nonqualified stock options and restricted stock.

Below we summarize a few key recent additions or updates to the award-winning content of myStockOptions.com. A list of content added and updated during the third quarter of 2011 is also available. Don't want to wait for these quarterly updates? Keep up in real time at The myStockOptions.com Blog, or follow us on Facebook and Twitter.

Guidance On Financial Planning Amid Market Volatility

Stormy stock markets and the uncertain economy make financial education more important than ever. While the volatility of 2011 has affected both stock prices and market confidence, the long-term value of investing and employee stock compensation remains. We have updated and expanded our award-winning articles, FAQs, and interactive tools to help you understand the effects of market turbulence and appreciate the ongoing potential of company stock grants. For a full list of our articles on stock compensation and market volatility, see our recent press release.

Job Loss: What Happens To Stock Compensation?

Corporate layoffs continue, and job creation remains feeble. Too many laid-off employees have lost valuable potential income because they were unaware of the post-termination rules of their stock grants. In the section Job Events: Termination, our new two-part article Job Loss And Your Stock Grants explains common corporate practices with stock compensation upon involuntary job loss. Part 1 explains the specifics of restricted stock/RSUs, stock options, and employee stock purchase plans. Part 2 covers general important aspects of job termination that apply to all stock grants.

When you're ready, test your knowledge of job-termination issues with our quick quiz on stock compensation and job loss. We have also published another new quiz based on our content section Life Events.

ESPP Essentials

Other new content at myStockOptions.com includes a two-part article that clearly lays out the most important basic facts that you must know before participating in an employee stock purchase plan. Six ESPP Essentials explains fundamental points to demystify the rules and taxation that can make ESPPs tricky for participants. Part 1 covers enrollment, plan types, and offering/purchase periods. Part 2 delves the complicated topics of holding periods, tax treatment, and the impact of various life events on your ESPP participation and holdings.

Alert: Changes In IRS Form 1099-B You Must Know About

Issued to you by your brokerage firm soon after the end of the calendar year, IRS Form 1099-B is an important document you must have to complete your tax return. The IRS also receives the information on the form and will match it against the information reported on Schedule D of your tax return.

New rules have introduced changes for 1099-B reporting and for identifying the lots of stock you sell, which is important for calculating your tax basis. For sales of shares acquired on or after January 1, 2011, stockbrokers must report to you the stock acquisition dates, your tax basis (i.e. the cost basis), and whether capital gains are long- or short-term (previously, they had to report only the proceeds). For stock comp, these changes raise special issues: at least until 2013, your 1099-B is required to report only the purchase price of your stock grants. The compensation element, which is part of your tax basis, will not be included on your 1099-B unless the brokerage firm chooses to do so. For restricted stock, the tax reporting is even more confusing, as there is no purchase price. Find out what this means for you and your tax return, and how to avoid overpaying your taxes, in our new FAQ on this topic.

Global Tax Guide: Key Updates For Mobile Employees

Covering over 30 countries, our Global Tax Guide is one of the most popular sections of myStockOptions.com. Here are some of the recent updates, with links to the country profiles:

  • As of October 15, 2011, all foreigners working in China, regardless of their residency status, must contribute to China's social security system.
  • France enacted a new exit tax in July; taxable assets include company shares.
  • In Ireland, the government has clarified that the Pay-Related Social Insurance, a social tax, applies to all stock compensation after Jan. 1, 2012, regardless of the grant date, even for equity awards made under government-approved share plans.
  • The first tax treaty between Japan and Hong Kong took effect on Aug. 14 and will help to prevent double taxation on mobile employees moving between the two jurisdictions.

See the Global Tax Guide for other developments that occurred earlier this year, including updates in Australia, Russia, and the United Kingdom.

With IPOs On The Way, Questions Arise On Post-IPO Stock Sales

As fast-growing young companies such as Facebook, Groupon, and Zynga prepare to follow their peer LinkedIn down the road of an initial public offering (IPO), we at myStockOptions.com expect lots of questions in the coming months about post-IPO stock sales. In particular, shareholding employees often want to know how soon after the IPO they can sell their company stock, given SEC rules and contractual restrictions. We also receive questions about stock comp trends after the IPO. This topic is discussed in a new article: Your Company Goes Public: How Your Stock Compensation May Change.

Details on these and many more IPO topics are available in the FAQs of our section Pre-IPO: Going Public.

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