topic Are FICA taxes paid on short term capital gains from selling private stock? in Investors & landlords

Are FICA taxes paid on short term capital gains from selling private stock?

sam123450 — Mon, 03 Jun 2019 18:57:11 GMT

I'm trying to find out if FICA taxes (Social Security and Medicare) are paid on short term capital gains from selling private stock. The answers around the web are conflicting.

These links say there is no difference between short term capital gain income and regular income, they don't mention FICA taxes:

https://turbotax.intuit.com/tax-tips/investments-and-taxes/guide-to-short-term-vs-long-term-capital-...

http://time.com/money/collection-post/2791159/how-are-stocks-taxed/

Here I read that FICA taxes aren't due on capital gains, but the answer doesn't explicitly state short term capital gains:

https://www.nerdwallet.com/ask/question/capital-gains-income-tax-social-security-42895

On the Social Security website I read that the sell of stocks are not exempt from the earnings test, which implies they count as regular earnings, and require social security taxes:

https://www.ssa.gov/OP_Home/handbook/handbook.18/handbook-1812.html

You misread the SSA website info. It says this: "What typ...

SweetieJean — Mon, 03 Jun 2019 18:57:13 GMT

You misread the SSA website info. It says this:
"What types of income do NOT count under the earnings test?
Gain or loss from the sale of capital assets, or sale, exchange, or conversion of other property that is not stock in trade nor considered inventory;"

Capital gains are considered "unearned" income and theref...

TomD8 — Mon, 03 Jun 2019 18:57:16 GMT

Capital gains are considered "unearned" income and therefore are not subject to FICA taxes.

here is a reason why there may be FICA takes on the stock...

Anonymous — Mon, 03 Jun 2019 18:57:17 GMT

here is a reason why there may be FICA takes on the stock sale. If the stock was acquired through a qualified employee stock ownership plan, taxes are due when the stock is sold. the net income is considered compensation and is subject to payroll taxes. however, it would help if you explained what you mean by private stock and how it was acquired.

It’s an employee stock option plan. I was offered X numbe...

sam123450 — Mon, 03 Jun 2019 18:57:19 GMT

It’s an employee stock option plan. I was offered X number of shares at an exercise price. I can’t buy all stocks at once, they vest over a period of 3 years. The stock has gone up, and I have vested shares. Now I want to buy, and sell shortly afterwards. You answer conflicts with TomD8’s, what’s your reference for this?

It’s an employee stock option plan. I was offered X numbe...

sam123450 — Mon, 03 Jun 2019 18:57:20 GMT

Taxation of ESOP options is well-explained in this web re...

TomD8 — Mon, 03 Jun 2019 18:57:21 GMT

Taxation of ESOP options is well-explained in this web reference: <a rel="nofollow" target="_blank" href="https://www.thebalance.com/taxation-of-employee-stock-options-2388965">https://www.thebalance.com/taxation-of-employee-stock-options-2388965</a>
I did not realize you were referring to an ESOP when I gave my first answer.