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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.

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Articles

12 Tax-Return Mistakes To Avoid With Stock Options And ESPPs

Bruce Brumberg and Lynnette Khalfani-Cox

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.

Tax Season 2021: What You Must Know About New Reporting Rules

The myStockOptions Editorial Team

Ready or not, tax-return reporting has changed yet again for the 2021 tax season. This article presents the key points you need to know for your federal tax return if you had income in 2020 from stock compensation and/or sales of company stock.

How To Report Sales Of Company Stock On Your Tax Return

myStockOptions Editorial Team

Form 8949 and Sch. D diagrams! If you sold shares in 2020 that you acquired from equity compensation or an ESPP, you will need to report the sale on the federal tax return that you file in 2021. Learn here what you must know to avoid expensive mistakes and unwanted IRS attention. Our annotated diagrams of Form 8949 and Schedule D can help you make sense of the reporting rules.

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VIDEO! Tax-Return Reporting Of Company Stock Sales: How To Avoid Overpaying Taxes

myStockOptions Tax Team

Learn the rules for reporting stock sales on your tax return, along with costly errors to avoid if the shares you sold came from stock options, restricted stock/RSUs, stock appreciation rights, or an employee stock purchase plan. Among other issues, you must understand your "cost basis" to avoid overpaying your taxes. Running time: 8:05.

VIDEO! Tax-Return Forms And Reporting Rules For Stock Sales

Bruce Brumberg

Learn how to prevent costly tax return mistakes with this animated presentation on IRS Form 1099-B, IRS Form 8949, and Schedule D.

Get Cost Basis Right To Avoid Overpaying Tax On Stock Sales: Understand IRS Forms 1099-B And 8949 For Tax Returns

Bruce Brumberg

UPDATES! 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.

Presentation! Preventing Costly Tax-Return Mistakes

Bruce Brumberg, Editor-in-Chief myStockOptions.com

This PowerPoint presentation explains the top 10 most frequently occurring errors involving stock compensation on tax returns and answers common questions about related tax topics.

FAQs

UPDATES! What's new for the 2021 tax-return season?

Ready or not, tax-return reporting has changed yet again for the 2021 tax season...

What are the top 10 questions I should ask before I report my stock sales on my tax return?

You should know the answers to the questions in this FAQ's checklist. They will help you be sure you report your stock sales accurately and avoid costly mistakes that attract the attention of the IRS...

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?

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...

Show More FAQs (13 more)

If I file an extension to complete my tax return after the IRS deadline, are there any mistakes I should avoid that involve stock compensation income?

In any tax year, stock compensation income, such as from an NQSO exercise, an ISO or ESPP disqualifying disposition, or the vesting of restricted stock, can raise your income tax and make your return complex. Mistakes include not paying taxes owed with...

What are some major issues to be aware of when reporting stock sales on my tax return? Why have these issues arisen?

Major changes have occurred in tax-return reporting in recent years, making accurate tax-return reporting more complex and difficult...

What tax statement will I receive from my broker after a sale of company stock? What key facts should I know about it?

Form 1099-B or the equivalent substitute statement is necessary for the accurate completion of your tax return. Five facts you must know about this reporting to avoid tax-return mistakes are...

What is the cost basis for calculating gains on my tax return after I sell stock acquired from stock options, restricted stock/RSUs, performance shares, or ESPPs?

This is an area in which mistakes often occur. The cost basis, also called the tax basis, is calculated in the following way...

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?

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...

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?

From our interpretation of the forms and their instructions, myStockOptions.com recommends the following reporting steps to avoid overpaying taxes...

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?

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...

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?

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

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?

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...

How have IRS Form 1099-B and cost-basis reporting changed for sales of stock acquired from my stock options, restricted stock, or ESPP? What do I need to do differently?

If you sold shares during the calendar year, your brokerage firm will issue IRS Form 1099-B by mid-February of the following year. This is an important document that you must have to complete your tax return for the year of sale...

Can I ever have ordinary income but no actual gain on sales of ESPP stock?

Yes, when the market price of the stock has dropped after purchase and you make a disqualifying disposition of the shares...

I just sold stock that I acquired from option exercises and restricted stock vesting a few years ago. How do I rediscover the cost basis for my tax return?

Let's first review the tax rules and the W-2 reporting. The tax basis for...

My company's stock is now essentially worthless because of securities fraud by senior executives. Can I claim a casualty or theft loss on my tax return?

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...