Non-qualified Stock Option (NQSO) taxes can be complex to navigate. This NQSO tax overview helps you understand how your NQSOs are taxed and what documents you'll need to file in the U.S.

NQSO overview
When are NQSOs taxed?
Taxes when you exercise stock
Taxes when you sell shares
What documents will I need to file taxes?
Document | Why you need it | When to use it | Where you get it |
---|---|---|---|
Form W-2 | Form reports ordinary income and taxes withheld on your behalf. | To report taxable compensation after purchasing shares. | Your employer will provide it during tax season. |
Form 1099-B | Form that reports your proceeds from investment sales. | To help calculate stock sale gains/losses when preparing your tax return. | From the broker that managed the stock sale (e.g. Charles Schwab). |
Schedule D; Form 8949 | Forms where you detail the gains/losses from Form 1099-B and calculate capital taxes due. | To help calculate and report on stock sales capital gains/losses when you prepare your taxes. | From the IRS. |
Form 1040 | Form you use to report income to the IRS. | When reporting annual taxes—you'll report award income and gains/loss from sale on the form. | From the IRS. |