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Taxes and tax filing

Shares of stock received or purchased through a stock plan are considered income and generally subject to ordinary income taxes.¹ Additionally, when shares are sold, you’ll need to report the capital gain or loss. Learn more about taxes, when they’re paid, and how to file your tax return. You may want to talk with a qualified tax advisor about your specific situation.

When you pay tax—and how much—depends on your stock plan and what you did with your shares. See which activities trigger taxes and what gets reported by your company and you.

Understanding stock plan taxes (PDF)

Because stock plan shares are considered income, ordinary income and FICA taxes² apply (except for tax-qualified employee stock purchase plans (ESPPs) and incentive stock options (ISOs)). Your company reports these amounts on your W-2 for tax-filing purposes.

Under some plans, you may be able to choose how you want your company to withhold your taxes. Generally, the methods include netting shares, selling to cover, and paying with cash. Check your company's plan documents to see what methods might be available to you.

See an overview of withholding methods (PDF)

Watch the video: Restricted stock units that settle in shares and restricted stock awards (2:33)

Watch the video: Restricted stock units that settle in cash (1:04)

We'll help you understand which documents to gather and how to read—and use—the tax forms you'll receive from Fidelity. To learn more, watch this on-demand workshop or jump to the appropriate tax-filing guide below for step-by-step instructions to prepare for filing. If you’re not sure which plan you're in, log in to NetBenefits^®Log In Required and look for your stock plan on the home page.

You can view your personal tax form schedule to see what forms to expect and when.

No more waiting. Sign up and get notified as soon as your tax forms and documents are available online.

Use the right cost basis to avoid overpaying taxes

Cost basis is just a fancy term given to the purchase price paid to acquire shares—and it’s used to determine the gain or loss when those shares are sold. For stock plans, your cost basis may need to be adjusted to reflect the compensation income you already reported and paid tax on. But don’t worry—Fidelity will calculate your cost basis and provide it on the tax forms you receive.

Watch for more about cost basis (6:28)