SO YOU'RE ROLLING in employer stock options — and, hey, they're actually worth something. Congratulations. But before you start shopping for a sailboat to whisk you far away from corporate life, remember that Uncle Sam is holding out his hand looking for his share of the profits. And if you don't understand how your options will be taxed, you just might wind up giving him more than you have to. You haven't worked so long and hard for that, have you?
Not to worry. We'll tell you how to keep the maximum amount of profit in your own pocket. In this package of advice and worksheets, we'll go over the basics regarding the two types of options granted by corporate employers. There are incentive stock options, also commonly referred to as ISOs, qualified options or statutory options. And there are nonqualified stock options, also called NQSOs. Once you've figured out what kind you have (if you're not sure, check with your benefits department), click on the appropriate link below. You'll learn how to understand your tax burden and find calculators to help you estimate your tax hit.