ESPPs
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.
ESPPs

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.

Selected Articles

Taxes Advanced

12 Tax-Return Mistakes To Avoid With Stock Options And ESPPs This is premium content

Puzzled by what to do with your W-2, Form 1099-B, or Forms 3921 and 3922? Don't quite know how and where to report sales of company stock on Form 8949 and Schedule D? Tax returns involving income from stock options or ESPPs can be confusing. Recent changes in IRS reporting rules haven't helped. This article explains errors and nasty surprises to avoid.
Basics

The Great Benefits Of Your Company's Employee Stock Purchase Plan

Many employees don't take advantage of their companies' employee stock purchase plans (ESPPs). This article will show you why ESPPs are a good deal.
Basics

VIDEO! Employee Stock Purchase Plans (ESPPs): Core Concepts & Benefits

In this video, the editor-in-chief of myStockOptions.com explains the fundamentals of employee stock purchase plans (ESPPs). Animated examples clearly illustrate the benefits that ESPPs can provide for employees. Running time: 3:35
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Rules

ESPPs 101: Key Dates And Terms You Must Know This is premium content

Podcast included! An employee stock purchase plan is a great benefit. Understand the key dates and terms you need to know to make the most of your ESPP.
Taxes

ESPPs 101: Taxation Made Simple (Part 1)

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 series explains the tax basics.
Rules

VIDEO! Employee Stock Purchase Plans (ESPPs): Key Rules & Decisions

Presented by the editor-in-chief of myStockOptions.com, this video covers the important rules you must know and the key choices you will have to make when you participate in an employee stock purchase plan (ESPP). Running time: 2:53
This is simply a selection of the many articles in this section.
Use the navigation to the left to explore all of the categories in this section.

Selected FAQs

Taxes Advanced

What are the biggest mistakes related to my employee stock purchase plan that I can make on my tax return, and how can I avoid them? This is premium content

It is all too easy to make costly tax-return errors that attract unwanted IRS attention. Learn how to prevent mistakes in the 2021 tax season...
Basics

What are the top 10 questions I should ask about my company's employee stock purchase plan?

Employee stock purchase plans (ESPPs) can be designed in different ways and provided with various features that make them appealing to participants. Before you enroll in your company's ESPP, run through this checklist of questions to answer...
Taxes Advanced

Form 8949 and Sch. D diagrams If I sell ESPP shares after the required holding periods, how do I report the sale on my Form 8949 and Schedule D? This is premium content

The sale of your ESPP shares is likely to trigger both ordinary income and capital gain income, as explained...
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Taxes Advanced

Form 8949 and Sch. D diagrams If I make a disqualifying disposition with my ESPP stock, how do I report the sale on Form 8949 and Schedule D of my tax return? This is premium content

You report the sale on Form 8949 and Schedule D to show your capital gain or loss, regardless of any actual gain or loss. This is the difference between...
Taxes Advanced

Form 8949 and Sch. D diagrams My company's ESPP is not tax-qualified under Section 423 of the Internal Revenue Code. How do I report any gain that results from the sale of my ESPP shares on my federal income-tax return? This is premium content

Form 8949 is where you list the details of each stock sale, while Schedule D aggregates the column totals from this form to report your total long-term and short-term capital gains and losses. However...
Basics

What is an employee stock purchase plan? What are the key facts to know?

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...
Basics

What makes a Section 423 ESPP a good deal?

You can purchase company stock at a discount, with special tax treatment when you hold the shares long enough. The deal is even better when your ESPP has...
Basics

What are the different types of employee stock purchase plans? What are their features? This is premium content

In general, an ESPP fits into one of three categories: tax-qualified, not tax-qualified, or direct purchase...
Advanced

What are the 10 most important financial-planning rules for employee stock purchase plans?

Before you participate in your company's employee stock purchase plan (ESPP), understand the following essential points for financial planning with ESPPs...
Advanced

Can my ESPP go underwater or be affected in other ways by falling or volatile stock prices? This is premium content

Employee stock purchase plans cannot be "underwater" in the traditional sense of having a purchase price greater than the current stock price. With an ESPP, the market price at the beginning of an offering does not...
Taxes

How am I taxed if I participate in a tax-qualified (Section 423) employee stock purchase plan?

You are taxed only at sale, not when the shares are purchased. However, the rules for ESPP taxation are more confusing...
This is simply a selection of the many FAQs in this section.
Use the navigation to the left to explore all of the categories in this section.
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