Tax Center Global Tax Guide / Glossary / Discussion / Newsletters / About Us
Register Log In
Taxes Advanced   

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.

NQSOs: Basics

Test Your Knowledge Test your knowledge with our NEW! NQSOs quiz.

Test Your Knowledge Test your knowledge with our Stock Options quiz.

Listen to our podcast on the basics of stock options, or watch our videos on core concepts and taxes.

  Articles   FAQs  

Stock Options 101: The Essentials

Matt Simon
Your company has granted you stock options. Now what? This article explains the essential facts that you must know to understand your stock options and make the most of them.

VIDEO! Employee Stock Options: Core Aspects To Know

Bruce Brumberg
With expert insights from the editor-in-chief of, this video covers the essential aspects of employee stock options that you must know to make the most of them, including the key concepts of vesting, exercise, and the option term. Running time: 4:12.

Stock Option Fundamentals (Part 1): Know Your Goals And Terms

Marilyn Renninger
Stock options aren't just for the folks on mahogany row any more. But turning stock options into the real green stuff takes some know-how. You need to know certain features of your grant to decide when to exercise your options and sell the stock.

Getting The Most From Your Stock OptionsThis is premium content

William Baldwin
Podcast included! Stock options are a major element of your long-term incentive compensation, offering tremendous potential to accumulate personal wealth. Given your stock options' complexity, it’s essential to develop a strategy to realize their full potential.

Stock Option Fundamentals (Part 2): Vesting And ExpirationThis is premium content

Marilyn Renninger
You cannot cash in your stock options immediately. The options must first be vested, and you don't own them forever.

How To Avoid The Most Common Stock Option Mistakes (Part 1)

Beth Walker
Avoid the mistakes others made with options during past ups and downs in the stock markets. Situations where common errors tend to arise can be classed into nine categories, including option-term expiration, job termination, corporate mergers, financial planning, and various life events.

How To Avoid The Most Common Stock Option Mistakes (Part 2)This is premium content

Beth Walker
Avoid the mistakes others made during prior ups and downs in the stock markets. Common errors arise in nine different situations, including job termination, mergers, financial planning, term expiration, and various life events.

Stock Option Fundamentals (Part 6): Exercise MethodsThis is premium content

Marilyn Renninger
Exercising stock options is like playing a hand of cards: if your plays are strategic, you'll probably "know when to hold them and when to fold them." But, as always, rules and regulations apply to what you can do.

Stock Option Terms: What You Can ExpectThis is premium content

Richard Friedman
Podcast included! Get a sense of what you should, and should not, expect in the terms of your stock option grant. A major survey of companies looks at trends in vesting schedules, post-termination exercise rules, and other plan features.

Presentation! Nonqualified Stock Options: An Overview Editorial Staff
PowerPoint presentation (in PDF) that the editorial team of developed to provide a convenient crash course on the basics of nonqualified stock options. (Premium members may request permission to use it at their companies.)

Return to top of this page

What are the top 10 questions I should ask about my stock options?

You should know the answers to the following questions. Understanding the topics involved will help you make the most of your stock options and prevent costly mistakes...

What is a "nonqualified stock option"?

A nonqualified stock option, or NQSO, is a type of stock option that does not qualify for...

How do I determine the amount of income I get from the exercise of a nonqualified stock option?This is premium content

You have income upon exercise of an NQSO...

When are nonqualified stock options taxed?

You are taxed when you exercise nonqualified stock options and thus acquire the underlying shares of your company's stock. The difference between the market price of the stock at exercise and your exercise price is...

Will my employer report to the IRS any income from an NQSO exercise?

Your employer will include the amount of the spread at exercise of an NQSO on...

Is the spread at exercise of a nonqualified stock option subject to federal income-tax withholding?

Yes. The spread at exercise is treated as wages and requires...

Return to top of page