Tax Center

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Tax 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.

Tax Center › ESPP Withholding

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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...

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?

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 sell ESPP shares after the required holding periods, what will appear on my W-2? What if income is missing from the form?

If you sell ESPP shares in a qualifying disposition, you still...

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

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...

W-2 diagram My company's employee stock purchase plan is not tax-qualified under Section 423 of the Internal Revenue Code. What will my W-2 show after an ESPP purchase?

The gain from your ESPP purchase is totaled on the W-2 with other income in the following boxes...

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

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?

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?

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...

Will my company withhold taxes at the sale of stock that I purchased under my employee stock purchase plan?

In these situations most employers do not...

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

When too much Social Security tax is withheld above the Social Security wage base during a calendar year, your recovery approach depends on whether...