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Home / Tolley's Global Mobility: Employment Taxes (Worldwide excluding Europe) / United States / 3. Payroll and particular aspects of employee remuneration / 3.1 Employee stock options

3.1 Employee stock options

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3.1 Employee stock options | United States


United States

3.1ÌýÌýÌýÌý Employee stock options

In the US system, there are three main types of stock options:

  1. Ìý

    •ÌýÌýÌýÌý Incentive Stock Options (ISO's)

  2. Ìý

    •ÌýÌýÌýÌý Non-statutory (non-qualified) stock options (non-quals)

  3. Ìý

    •ÌýÌýÌýÌý Employee Stock Purchase Plan Options (ESPP)

The payroll reporting and tax withholding vary based on the type of option income incurred by the employee.

Incentive stock options

  1. Ìý

    •ÌýÌýÌýÌý Grant of stock option: not taxable to the employee.

  2. Ìý

    •ÌýÌýÌýÌý Exercise and holding of the stock option: no federally reportable wage income for federal income tax withholding purposes, social tax or FUTA:

  3. Ìý
    1. Ìý

      –ÌýÌýÌýÌý Employee may have reportable income related to the Alternative Minimum Tax (AMT). The employee would calculate and pay this tax through the employee's federal income tax return.

  4. Ìý

    •ÌýÌýÌýÌý Exercise and Sale

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Web page updated on 28 Aug 2024 11:38