WEBINAR: Our year-end webinar is available on demand: Year-End Financial & Tax Planning For Equity Comp. Agenda and panelist details are on the webinar registration page.
The checklist below summarizes what you need for comprehensive year-end and year-start planning with stock compensation and company stock holdings.
Review:
- exercises, vestings, and ESPP purchases in current year
- holdings of NQSOs, ISOs, restricted stock/RSUs, and company shares
- whether any ISO exercises triggered the AMT and how to eliminate or minimize it
- if you pay estimated taxes, whether adjustments are needed for your 4th quarter payment or a change in your salary withholding
- scheduled vestings in the year ahead, including the end of the cycle for a performance share grant and when payout occurs
- salary contributions allocated for ESPP purchases
- any estimated adjustments needed for the year ahead in the Form W-4 used for salary withholding, as your W-4 rate is sometimes applied to stock compensation withholding too
Know:
- deadlines for option or SAR exercises and the expiration dates of option grants
- expected new grants in year ahead and ESPP enrollment/change dates
- trading windows and blackouts, company ownership guidelines, and any post-vest holding-period requirements
- your ability to spread the recognition of income from certain sources over this year and next year
- your marginal tax rate after the 2018 tax reforms, whether the flat rate for federal supplemental withholding that applies to stock compensation will cover it, and what to do if it does not
- whether sales of company stock will trigger short-term or long-term capital gains or losses and the rules of tax-loss harvesting and wash sales.
- income-phaseout trigger points for any tax credits you're using, such as the American Opportunity Tax Credit for college funding
- at newly public companies or those announcing an upcoming IPO: when the lockup or other stock resale restrictions will end; any ability to sell some shares sooner; when shares will be delivered with double-trigger RSUs
Consider:
- your situation, including short-term cash needs that may prompt you to sell company stock and/or exercise options
- whether your decisions should be entirely tax-driven
- your outlook for both your company's stock price and your job
- how comfortable you are with your concentration in company stock and whether you should diversify
- multi-year projections for your income and taxes
- donations in company shares instead of in cash
- Any changes needed in beneficiary designations, when allowed, for your stock compensation and/or your brokerage account holding company shares.
- Whether to pay estimated taxes in the year ahead because of substantial income expected from restricted stock/RSU vesting, NQSO exercises, ISO exercises, or an ESPP purchase/sale.
Collect:
- Company and brokerage firm statements, whether online or in print. You will need them for tax-return reporting.
For year-end financial-planning points to consider with stock compensation, see a related FAQ.
