Stock awards

Great question! and congrats on your new role!

 

Stock awards can come in different forms, such as restricted stock unites (RSUs), stock options, or performance shares.  The most common stock we see is RSU.  

Understanding your RSUs:

1. Vesting: RSUs are granted on a schedule (vesting period).  You don't owe the stock until it vest.
2. Taxation at vesting:  When RSUs vest, they are considered taxable income.  The fair market value on stock on the vesting date is treated as ordinary income and will be included in your W-2.
3. Withholding:  Your employer might not withholding the proper amount to cover this tax liability and I recommend you using the IRS Tool Estimator. 

Tax implications

1. Income Tax:  the value of vested RSUs is taxed as ordinary income.
2. Capital Gains Tax:  If you sell the stock after it vests, any gain or loss is subject to capital gains tax:
   1. Short-term: If sold within a year, gains are taxed at your ordinary income tax rate
   2. Long-term: if held for more than one year, gains are taxed at the lower long term capital gains rate. 

Any stock sold that is not taxes, utilized the IRS tool estimator to assist you in what tax implications you might have.  You can also make quarterly tax deposits to cover your tax for stock sold that is the having any withholding taken out of. 

 

https://www.irs.gov/individuals/tax-withholding-estimator

 

Thank you @jhanrahan81 for being apart of today's event!