Your W-2 includes income from any other compensation sources you may have, such as stock options, restricted stock, restricted stock units, employee stock purchase plans, and cash bonuses.
Are company stocks considered income?
Restricted stock units are treated as compensation, so you’ll pay taxes at your ordinary income rate on the value of your shares on the day they vest. You’ll also pay Social Security and Medicare taxes, plus state and local taxes. If you sell them for more than their vesting-date value, you’ll owe capital-gains taxes.
What is included in W-2 income?
Your salary is a gross dollar amount earned before taxes and deductions are taken out. Meanwhile, your Form W-2 shows your taxable wages reported after pre-tax deductions. Pre-tax deductions include employer-provided health insurance, dental insurance, life insurance, disability insurance, and 401k contributions.
What does it mean to have stock on your W-2?
Your W-2 includes income from any other compensation sources you may have, such as stock options, restricted stock, restricted stock units, employee stock purchase plans, and cash bonuses. If you have income and withholding from what the IRS considers supplemental wage income…
What kind of income can be reported on a W-2?
Remember that it’s not just for reporting your salary to you and the IRS. Your W-2 includes income from any other compensation sources you may have, such as stock options, restricted stock, restricted stock units, employee stock purchase plans, and cash bonuses.
How are restricted stock units reported on the W-2?
You and your CPA or other tax-return preparer must understand where that income is reported on the W-2 to properly complete your Form 1040 tax return and avoid costly mistakes. Vesting of restricted stock, share delivery from restricted stock units (RSUs), and vesting of performance shares all trigger W-2 reporting of the income received.
When do incentive stock options appear on Form W-2?
With incentive stock options (ISOs), the value of the exercise income appears on Form W-2 only if you made what is technically called a disqualifying disposition. That means you sold or gifted the stock before you met the required holding periods of one year from exercise and two years from grant. In this situation,…
