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Tax Season Content At myStockOptions.com Offers Crucial Tax Return Guidance For People With Stock-Based Compensation

Brookline, MA (PRWEB) March 8, 2011

For people with stock compensation (and their financial advisors), every tax season raises worries about making errors on tax returns that can lead to paying too much tax, penalties from the IRS, or even the ordeal of an IRS audit. With heightened IRS scrutiny of tax reporting, the need to avoid expensive mistakes with tax returns has never been stronger.

The clear, concise, and easy-to-read content at myStockOptions.com can help. The website has updated and expanded its guidance on the filing and reporting of tax returns that involve stock options, restricted stock, restricted stock units, performance shares, stock appreciation rights, and employee stock purchase plans. Core articles and FAQs, including diagrams of IRS forms, spell out the most common mistakes people make with stock grants on their tax returns. Annotated illustrations of Schedule D show exactly how to report sales of company stock. A fun, engaging podcast conveys key tips for tax returns, including errors to avoid.

“The tax reporting for stock compensation is complex,” states Bruce Brumberg, Editor-in-Chief of myStockOptions.com. “Even accountants and tax advisors sometimes make mistakes. Our goal is to help employees and their financial or tax advisors realize the full potential of equity grants by educating them about tax rules and helping them prevent costly errors. The last thing taxpayers want, especially now, is to pay too much tax or incur IRS penalties that take yet more money out of their pockets.”

More Than Just The Basics

The content on tax topics covers more than just the nuts and bolts of reporting and filing. The website’s award-winning content covers the full range of tax topics that stock grant holders may need to be familiar with. These topics include:

stock compensation issues that draw IRS scrutiny
interpreting Form W-2 for accurate tax-return reporting
understanding the new IRS Form 3922 for ESPPs and Form 3921 for ISOs
key changes in the income exemption amounts for calculating the alternative minimum tax
revised rules for using old AMT credits to help taxpayers stuck with ISO stock whose value has dropped
the complexity of estimated taxes with stock compensation
netting capital gains and losses with company stock
the impact of the deferred compensation provisions in IRC Section 409A
tax law changes made by the Tax Relief Act of 2010

Tax Center Makes Sense Of Reporting On Form W-2 And Schedule D

The hub of tax coverage on myStockOptions.com is the Tax Center. This part of the site includes FAQs that explain the reporting of stock compensation that employees receive on Form W-2. With clear annotations on the real IRS form, other FAQs show exactly how to report sales of company stock on Schedule D of Form 1040 (see the section Reporting Company Stock Sales on myStockOptions.com).

“Employees understand concepts much better using the straightforward illustrations provided by myStockOptions.com,” says one stock plan manager whose company has licensed the Tax Center to help its employees. “They find the tax information and annotated tax forms extremely helpful in simplifying the tax filing for stock trades. They are thrilled that this makes tax time easy.” (For information on corporate services, see the relevant section below.)

New Content Demystifies IRS Forms 3922 And 3921

A new set of content explains IRS Form 3922 for employee stock purchase plans and IRS Form 3921 for incentive stock options. With annotated examples of the forms that translate IRS jargon into understandable language, these articles and FAQs clarify what taxpayers need to understand about the information provided by the forms, which can help them better understand the complexities of ESPP or ISO taxation.

While the forms are not needed for tax-return reporting, they give the IRS new tools for catching expensive errors on the tax returns of people who sold ESPP or ISO stock. “Forms 3922 and 3921 ensure that the IRS will have more information about ESPP and ISO stock than it had before,” warns Mr. Brumberg. “This means the IRS will be better equipped to catch reporting mistakes, making accurate and timely tax return reporting now even more important.”

Clear Answers For All Types Of Stock Grants

Using concise explanations and easy-to-follow annotated diagrams of the actual IRS form, detailed FAQs show employees, accountants, and tax advisors how to complete Schedule D (“Capital Gains and Losses”) for a variety of situations involving sales of stock from:

nonqualified stock options (NQSOs)
incentive stock options (ISOs)
restricted stock
restricted stock units (RSUs)
performance shares
employee stock purchase plans (ESPPs)
stock appreciation rights (SARs)

These diagrams occur in the section Reporting Company Stock Sales, which answers a wide variety of questions, from basic to complex. Advanced reporting situations, all fully illustrated, include:

I exercised NQSOs, held the stock, and now have long-term capital gains on the sale. Do I get any “credit” on my tax return for the income tax I paid for the spread at exercise?

How am I taxed if I have made a disqualifying disposition of incentive stock option (ISO) shares in a different year than the year I exercised the option?

When I hold restricted stock and performance shares after vesting and later have capital gains on the sale, will I get any “credit” for the income tax I paid at vesting?

When my restricted stock units vested, my company automatically withheld shares to cover the tax. Do I need to report these shares on my Schedule D?

My company’s employee stock purchase plan (ESPP) is not tax-qualified under Section 423 of the Internal Revenue Code. How do I report any gain that results from the sale of my ESPP shares on my federal income-tax return?

How do I report any gain that results from the sale of my stock appreciation rights (SARs) shares on my federal income-tax return?

The answers to these questions are presented in plain English and are clearly illustrated. In an additional benefit for subscribers, all Premium and Pro Members can contact the experts at myStockOptions.com if they have complex questions not answered by the website.

Pro Membership Gives Advisors A Crucial Edge During Tax Season

myStockOptions.com Pro is a special membership for financial advisors, CPAs, and other professionals who have clients with stock compensation. MSO Pro gives advisors full access to the whole website and special features in the tools, where they can track and model stock grants for up to 25 separate clients. Access to the vast library of content at myStockOptions.com puts answers to tough client questions right at advisors’ fingertips. For more information, visit myStockOptions.com or call 617-734-1979.

Corporate Licensing Available

All the content on myStockOptions.com is ideally suited for licensing by companies and stock plan providers for their stock plan participants. A customized version of the website’s award-winning content can be seamlessly woven into companies’ HR, benefits, and/or compensation portals. Accessible through any internet browser, 24 hours a day, 7 days a week, licensed content from myStockOptions.com lets stock plan participants answer their own questions about their stock grants whenever they need to learn more–saving time for the stock plan staff and costs for the company. For more information, visit myStockOptions.com or call 617-734-1979.

About myStockOptions.com

With exclusive articles, 750+ FAQs, the Tax Center, Global Tax Guide, an extensive glossary, and interactive tools, myStockOptions.com is the premier online resource of educational content, tools, and self-study courses on stock options, restricted stock, restricted stock units, performance shares, stock appreciation rights, and employee stock purchase plans. myStockOptions.com is written and managed by leading experts in equity compensation, and is produced by a company with a long history of successful publications explaining complex legal and financial subjects in plain English.

The influential consumer magazine PC World ranks myStockOptions.com among “the most useful sites ever” that “deliver top-notch information, support, and services.” The accounting journal CPA Wealth Provider selected myStockOptions.com among companies “that have taken the lead through innovation, efficiency, initiative, or growth in the financial-planning area.” The Specialized Information Publishers’ Foundation honored MSO Pro with one of its Editorial Excellence Awards in the category of Best Interactive Content among niche publishers. The innovative Comparison Modeling Tool on myStockOptions.com is now patented.

myStockOptions.com has also received extensive favorable coverage in major publications, including BusinessWeek, The Wall Street Journal, The New York Times, the San Francisco Chronicle, and The Boston Globe, and on CNN, National Public Radio, PBS, Money.com, and MarketWatch.com.

myStockPlan.com, the publisher of myStockOptions.com, has also launched a new website: myNQDC.com, the only online educational resource devoted exclusively to nonqualified deferred compensation (NQDC). With clear writing and independent, unbiased expertise, myNQDC provides education about the financial planning, taxation, risk, and legal issues surrounding nonqualified deferred compensation and encourages participants to fully understand these topics and maximize the value of their plans. With tax rates likely to rise in the future, the tax-deferral advantages of NQDC will make these plans increasingly popular.

For more information, please contact Bruce Brumberg and Matt Simon at 617-734-1979.

http://www.mystockoptions.com

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Tax revenue is a vital part of the United States government. The income generated from taxes allows the government to finance public works programs, build infrastructure and maintain a military. When the government needs to raise more revenue it generally raises the tax rate to create more income. The idea of raising taxes to raise revenue generally works; however, history has show that more revenue is not gained from the capital gains tax. When the capital gains tax rate rises there is less revenue generated, investment capital decreases, and the economy slows.

The capital gains tax is a tax charged to the profit realized from the sale of an asset that was purchased at a lower price. Capital gains are commonly realized from the sale of stocks, bonds and property. A capital gain is treated as an income and like any income, it is taxed. Under current United States tax code there are two different types of capital gains, short term and long-term gains. A short-term gain is considered to be the purchase and sale of an asset for a gain in less than one year. Long-term capital gain requires a year or more between the purchase of an asset and the sale of the asset for a gain. Short-term capital gains are taxed at the ordinary income tax level of the investor, however; long-term capital gains are taxed differently. Currently investors in the 10% to 15% income tax range pay no long term-capital gains tax and everyone else pays a 15% tax on capital gains. (Beach, Hederman & Guinevera, 2008)

Economic growth in America is important and relies on the input of two factors: input of capital and labor, and the productivity of the inputs. For the economy to grow capital and labor in the market must increase or a more efficient way to produce products is found, or both situations occur. The need to invest in capital is directly related to the growth of the economy by increasing the amount of capital available in the economy and by enhancing labor productivity.  Labor productivity can be directly complemented capital in the economy for investment in more productive operations. (The Economic Effects of Capital Gains Taxation, 1997)

When capital gain tax rates raise the return on an investment is lowered and the cost to acquire capital increases.  When the return on investment is lower there is less investment and the amount of available capital in the economy decreases. The inverse to an increase in the capital gains tax would be a decrease to the capital gains tax. A decrease in the capital gains tax rate is believed to stimulate investing and the amount of capital in the economy by producing more profitable and successful businesses, because they are able to acquire the funds required to under go new potential income projects.  The trickledown effect would produce higher wages, raising the standard of living and create jobs. (Throning, 1995)

A recent study was conducted by DRI/McGraw-Hill it was estimated that the reducing individuals long-term capital gains taxes by 50% and corporations capital gains tax by 25% the level of business spending would have been billion dollars higher than it was in 2007 creating the GDP of America to be roughly 0.4 percent higher. The conclusion of the study notes “the evidence suggests to almost all economists that a capital gains cut is good for the economy and roughly neutral for tax collections.”(Jorgenson, Dale, Yun & Kun-Young) The lower tax rate would only have positive effects on the economy such as higher standards of living, increased productivity and increased investment. A lower capital gains tax would increase individual wealth that could be re-invested or contributed to a personal savings account.

Over one hundred million Americans own stock, the majority of Americans that hold stock hold them in mutual funds. (Chait, 2008)  In 2007 mutual fund holders paid over billion dollars in long-term capital gains taxes.  Congressman Jim Saxton, the ranking member of the Joint Economic Committee states: “…Under current law, if shareholders do nothing more than buy and hold mutual fund shares, they will be hit with taxes on long-term capital gains realized by the fund, even if they are immediately reinvested in the fund.”(Mutual Fund Shareholders Slammed Again by Higher Taxes, 2008) As stated that is capital transferred directly to the federal government rather than directly re-invested in the economy.  One recent study by the National Bureau of Economic Research stated that the each dollar in federal tax increase has led to an additional .07 in federal spending. (Tax Increase Would Damage Economic Outlook, 2008) 

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The federal government requires large amounts of funds to continue operation and generally overspends, the current solution it to raise taxes to help pay for large expenses. Despite