myStockOptions Alert: Key Updates And Additions (July 21, 2016)
This alert presents some noteworthy additions and updates in the award-winning content of myStockOptions. Click here to see a full list of recent additions and updates.
Living And Working In Different States: Tax Risks With Equity Comp
State-to-state employee mobility has become a big tax issue. The tax consequences of living in one state and working in one or more other states can be surprising—and the impact on equity compensation can be significant. Taxes and tax-filing rules are not uniform across all states. Furthermore, your tax obligations may continue to apply for many years after you have ceased to live or work in a particular state. A new article at myStockOptions explains the complex tax issues: Living And Working In Multiple States: Challenges For Mobile Employees In The USA, by Deloitte consultants David Johnson and Mark Miller. A companion podcast features an interview with Mr. Johnson about state-to-state tax issues.
Incentive Stock Options: New Article And Video Provide Practical Core Education And Guidance
Incentive stock options (ISOs) are potentially quite valuable. However, they are more rule-bound, complex, and risky than the more commonly granted nonqualified stock options. A new article at myStockOptions, Incentive Stock Options: What You Must Know To Make The Most Of ISOs And Avoid Costly Mistakes, explains the crucial facts to understand at grant, before you exercise the options, and when you sell the shares. Meanwhile, a new video offers an engaging introduction to the special taxation of ISOs.
Stock Options In Startup Companies Could Become More Popular Than Ever Under Proposed Tax Change
Recently proposed bipartisan legislation in Congress could provide a new optional tax treatment (pun intended) and make stock options more appealing than ever at startups and other pre-IPO companies. Introduced in the House of Representatives and the Senate on July 12, the Empowering Employees Through Stock Ownership Act seeks to give employees in privately held companies extra time to pay taxes on the income they recognize at exercise. Instead of paying taxes at exercise with nonqualified options (or at RSU vesting when settled in shares), this legislation would allow tax deferral for up to seven years. For details, see the commentary on the proposed bill at the myStockOptions blog.
myStockOptions Podcasts Now Available At iTunes And Google Play
myStockOptions offers podcasts on a variety of topics in equity compensation, whether concise Q&As or in-depth interviews with our contributing experts. You can hear our audio content via your web browser or listen on your mobile phone. Subscribe to the convenient RSS feed and have our podcasts delivered straight to your feed aggregator or podcatcher. Alternatively, you can now download our podcasts at iTunes or Google Play Music.
Proposed IRS Changes To IRC Section 409A Affect Stock Plans
On June 21, 2016, the IRS issued proposed regulations that modify and clarify various parts of the final regulations on IRC Section 409A. While the proposed regulations mainly involve nonqualified deferred compensation plans, they also affect certain situations with stock options, restricted stock units, and stock appreciation rights. For details about the stock plan impact, see the FAQ about 409A on myStockOptions. For background and details on the NQDC impact, see the related FAQ at our sibling website myNQDC and our blog commentary on the proposed regulations.
International Employees With Equity Compensation: Important Updates In Our Global Tax Guide The Global Tax Guide at myStockOptions explains the taxation of equity compensation in 38 countries, including the rules on income tax, social taxes, capital gains tax, income-sourcing, tax residence, exit tax, and asset reporting. In several countries, the past few months have witnessed significant tax developments that have a beneficial effect on employees with equity compensation.
Denmark: The tax treatment of equity awards in Denmark changed on July 1, 2016. With effect from that date, income from equity awards granted in accordance with Section 7P of the Danish Tax Assessment Act are taxed when the shares are sold rather than at exercise or vesting, and the income is taxed as capital gain rather than employment income. This means a lower tax rate for many employees.
Sweden: A government committee has recommended changes in the taxation of restricted stock and stock options. Under the proposal for restricted stock, a grant with a sale restriction of two years or less would be taxed on the value at grant, not at vesting. Restricted stock grants with a sale restriction of more than two years, or with any type of forfeiture risk (even less than two years), would continue to be taxed on the value at vesting.
United Kingdom: On April 6, 2016, the tax rate on capital gain from sales of shares was significantly lowered. Capital gain is now taxed at 20% (previously 28%) if the sum of your taxable gain plus all other annual taxable income is over £43,000. Capital gain is now taxed at 10% (previously 18%) if the sum of your taxable gain plus all other annual taxable income is at or below £43,000.
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