Stock Options Tax Tips

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Summary: Got stock options? It can be tricky to file them in your tax return. Get tips for doing so in this free video clip about tax deductible items.

Views: 614 | Tags: online, service, help, filing, internal, forms, files, taxes, tax, deductions, deductibles, ira, revenue

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About the Expert

Tom Choisnet Tom Choisnet was born, raised, and educated in San
Bernardino, California where he has his practice today. He has been in self-employed tax practice fo... read more

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Video Transcript

Stock Options Tax Tips

Hi, Tom Choisnet, enrolled agent, and we're going to talk about stock options and the pitfalls therein. As you may have heard here, if you have a bonafide stock option, it will show on your W-2 as ordinary income. You have to pay tax on the spread between the option price of what you sell the stock for. But the big pitfall here, sometimes people hang onto the stock, if it goes down in value you've lost some money, and you pay tax on the full value, so it's important that you do the "same day sale". The "same day sale" liquidates those shares and, in that particular area, make sure that you report the "same day sale" because we've seen cases of the Internal Revenue Service picking up what they thought was "unreported income" where a "same day sale" was made, and there's no gain or loss - there's a lot of paperwork involved in convincing them that there's no taxable event there. So, make sure on your tax return, that, if you have a stock option, that you report that "same day sale" as well as the amount that's already on your W-2. That's what I have for those stock option pitfalls, and thank you for watching this clip. Take a look at some of the others.