Tax Center - ESPP Withholding

Tax Center › ESPP Withholding

Want to know more? Listen to our podcast on tax return tips and how to avoid reporting mistakes!

Check out our podcast and video on the tax forms and reporting rules for stock sales.

FAQs

Are taxes withheld when shares are bought under a tax-qualified employee stock purchase plan? Do FICA taxes apply?

There is no withholding at purchase when shares are bought through a tax-qualified ESPP. However, when you sell the shares, income will be reported...

Are taxes withheld when shares are bought under an employee stock purchase plan that is not tax-qualified?

In a nonqualified ESPP, the full spread of any discount between the purchase price and the market price is...

UPDATES! If I purchase shares in my company's ESPP or sell the stock in a disqualifying disposition, will I need to make estimated tax payments? This is premium content

You need to pay enough tax during the year through withholding or estimated tax payments to avoid penalties and interest. The tax that has to be paid includes...
Show More FAQs (8 more)

W-2 diagram If I make a disqualifying disposition with my ESPP stock, what will appear on my W-2? This is premium content

With a tax-qualified ESPP, nothing appears on your W-2 until you sell the shares. In that year, income is reported in the following boxes of your W-2...

What should I do if I don't receive a W-2 or if I lose it? This is premium content

Each company you worked for as an employee in the prior tax year should give you an IRS Form W-2, usually no later than January 31. If you have not received your W-2 by the middle of February...

What is backup withholding? How do I prevent it or recover it? This is premium content

Backup withholding is a form of tax withholding on income from stock sales, along with interest income, dividends, or other payments that are reported on...

How does a non-US resident reclaim US backup withholding? This is premium content

If you are a nonresident alien and do not complete and file Form W-8BEN with the IRS upon receiving stock-sale proceeds, such as those stemming from equity awards, your brokerage firm will assess backup withholding on the proceeds. To reclaim backup withholding, take the following steps...

Too much Social Security tax was withheld. How do I recover the excess amount? This is premium content

When too much Social Security tax is withheld above the Social Security wage base during a calendar year, your recovery approach depends on whether...
We've updated our Privacy Policy, and this site uses cookies. Read the Privacy Policy to learn more.