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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.

4 Big Tax-Return Mistakes To Avoid With Stock Options, RSUs, And Stock Sales This is premium content

Tax returns involving income from equity comp and stock sales are prone to mistakes that can lead to overpaid tax, overreported income, IRS penalties, or even an IRS audit. Ouch. This article has insights from tax experts on how to avoid some of the most common errors.

NQSOs: Tax-Return Tips And Traps This is premium content

Understand the basic tax-reporting requirements of stock options. This article reviews what you need to report on your tax return.
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How To Report Sales Of Company Stock On Your Tax Return

Form 8949 and Sch. D diagrams! If you sold shares in 2022 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 2023. 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.

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 last year, 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.

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.

IRS Guide To Auditing Techniques For Stock-Based Compensation

The IRS tips its hand on what its agents look for in audits related to all types of stock pay to ensure compliance, whether by corporations or executives.


NEW! What key forms do I need to report stock sales on my tax return?

The table in this FAQ provides a handy checklist of documents you need to report stock sales acquired from equity awards or an ESPP...

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

There are a few reporting modifications you should be aware of when preparing your tax return in 2023 (income received in 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...
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What are the biggest mistakes related to stock options 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...

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...

I received a notice (CP2000) from the IRS stating that, according to last year's tax return, I owe money for the cashless exercise of my stock options. I thought I paid all the taxes through withholding at exercise. How do I respond? This is premium content

The mistake that triggered the notice is easy to make with a cashless exercise. Because the stock sale upon a cashless exercise does not generate any gains, taxpayers often do not realize that they still need to report the sale on Form 8949 and Schedule D of the Form 1040 tax return...

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...

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...

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...

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...

Form 8949 and Sch. D diagrams How do I report a sale of NQSO shares on my federal income-tax return? This is premium content

You need to complete Form 8949 and Schedule D for the year of your stock sale and file them with your IRS Form 1040 tax return. You must...

Form 8949 and Sch. D diagrams How do I report a sale of shares in an NQSO sell-to-cover exercise? This is premium content

To report the sale of shares in a sell-to-cover exercise, you complete Form 8949 along with Schedule D for the year of...

Form 8949 and Sch. D diagrams I did cashless exercises/sales of stock options from several grants simultaneously. Do I need to report each sale separately, or can I attach the 1099-B statement from my broker and aggregate them on one line? This is premium content

The details of the shares you sold go on Form 8949, and Schedule D collects just the column totals from that form. The instructions of Form 8949 require you to...

UPDATES! 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? This is premium content

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...

How do I report the income that results from the exercise of a nonqualified stock option on my federal income-tax return? This is premium content

The full spread is included in your gross income for the year of exercise and is taxed in the same way that your...

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...

Do I always get a Form 1099-B for a same-day-sale cashless exercise? Are there exceptions, and if so how do I report the sale on my tax return? This is premium content

You should almost always receive Form 1099-B. The only exception occurs if certain requirements under IRS Rev. Proc. 2002-50 are met. This revenue procedure allows...

The spread on my NQSO exercise is reported on my W-2 as ordinary income. Can I use my stock-trading losses to offset this income? This is premium content

The tax law says that you can offset losses against only the same type of income. This means you cannot use capital losses to offset ordinary income. However...

In what ways can I pay my taxes if I don't have the money to pay them with my tax return?

If you simply lack the funds to pay your income tax, you may want to apply for a payment agreement on the...

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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