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

Tax returns involving income from stock options or employee stock purchase plans (ESPPs) can be confusing. Recent changes in IRS reporting rules haven't helped. This article explains errors and nasty surprises to avoid.

Tax Season 2023: What You Must Know About Reporting Rules

Surprise! (Or maybe not.) The federal tax-return reporting for stock compensation and company shares is complicated. For taxpayers who had income from stock compensation and/or company shares in 2022, this article presents key aspects of the Form 1040 tax return, its associated schedules and forms, and more details on changes for the 2023 tax season.

How To Report Sales Of Company Stock On Your Tax Return

Form 8949 and Sch. D diagrams! If you sold shares in 2021 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 2022. 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

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.

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

Video included! 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 This is premium content
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.


What's new for the 2023 tax-return season?

While changes in tax-return reporting that involve equity compensation and company shares are slighter than in recent years, there are a few modifications you should be aware of when preparing your tax return for 2022. The key changes are summarized in brief below. For a fuller discussion...

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? 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...
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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? This is premium content

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 premium content

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? This is premium content

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? This is premium content

From our interpretation of the forms and their instructions, 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? 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...

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...

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...

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? This is premium content

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? This is premium content

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

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? This is premium content

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...
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