Press Release

Tax Season 2021: myStockOptions.com Resources Include Crucial Guidance On IRS Reporting Changes

Issued by myStockOptions.com

Feb. 24, 2021

Feb. 17, 2021 – IRS tax forms and reporting have changed yet again for the 2021 tax season (for 2020 tax returns), adding confusion to an already complicated process. Key changes include where capital gains and the alternative minimum tax (AMT) are reported on tax returns. With these and the many other tax changes of recent years, the 2021 tax season presents more risk than ever for expensive mistakes on tax returns, especially the millions of people in the United States who received income in 2020 from employee stock compensation and sales of company shares.

myStockOptions.com explains the tax-return forms and reporting that taxpayers need to know in its fully updated Tax Center. This clear and reliable information includes easy-to-understand guidance and annotated tax forms.

"The tax reporting for stock compensation is complex," emphasizes Bruce Brumberg, Editor-in-Chief of myStockOptions.com. "The changes for 2021 expand what you must understand before you prepare your tax return. Even accountants and tax advisors sometimes make mistakes. Our goal is to help employees and their financial or tax advisors realize the full potential of equity compensation by educating them about tax rules and helping them prevent costly errors. The last thing taxpayers want is to pay too much tax or incur IRS penalties that take yet more money out of their pockets."

What Taxpayers Need To Know About The Changes In Tax Forms And Reporting

The IRS Form 1040 tax return has been revised again for the 2020 tax year. The 2020 form has expanded to 38 lines from 24 lines in the past. New lines include those for the Recovery Rebate Credit (stimulus check) and for estimated tax payments, sometimes made by taxpayers who have stock compensation. Among the line changes, total capital gain or loss from Schedule D is entered on a different line of Form 1040. The totals on Schedule 2 and Schedule 3 are also now entered on different lines of Form 1040 (this applies to anyone with incentive stock options who has triggered the alternative minimum tax). For nonemployees, income is now reported on IRS Form 1099-NEC, not Form 1099-MISC.

An article and an FAQ at myStockOptions.com explain everything that taxpayers with stock compensation must know about the changes in tax forms and reporting:

• Article: Tax Season 2021: What You Need To Know About New Reporting Rules
• FAQ: What's new for the 2021 tax-return season?

Tax Center At myStockOptions.com: All The Tax-Return Answers

For the millions of employees in the United States who have equity compensation and shares of their companies' stock, tax-return season always raises worries about errors that can lead to overpaid tax, underreported income, IRS penalties, or even an IRS audit. The myStockOptions Tax Center has all the answers on the filing and reporting of tax returns that involve stock options, restricted stock, restricted stock units, performance shares, stock appreciation rights, and employee stock purchase plans.

• Core articles and FAQs spell out the most common mistakes people make with stock grants on their tax returns. Taxpayers, their financial advisors, and their accountants can quickly run through these to be sure they submit error-free returns.
• The reporting of stock sales is made clear by special FAQs with annotated how-to diagrams of IRS tax-return forms.
• Diagrams of Form W-2, Form 3922 (for employee stock purchase plans), and Form 3921 (for incentive stock options) show how companies report equity compensation income to employees.
• Animated videos include a succinct tutorial on key IRS tax forms related to stock-sale reporting and a video guide to avoiding costly mistakes that can lead to the overpayment of taxes.
• Engaging podcasts convey tips for tax returns.
• A fun interactive quiz on tax-return topics lets users test their reporting knowledge in a painless way, before they file their returns, and links to related content from the answer key.

Taxpayers Must Understand The Confusing Rules For Reporting Stock Sales

By mid-February, each brokerage firm sends IRS Form 1099-B, or the firm's equivalent substitute statement, to clients who sold shares during the tax year. The information on Form 1099-B is also reported to the IRS. The required stock-sale information on Form 1099-B was recently expanded and now includes not only the gross proceeds from stock sales but also their cost basis (sometimes called the tax basis), the date when the shares were acquired, and whether gains or losses were short-term or long-term.

In general, cost-basis reporting is now more complex and vulnerable to errors. A diverse set of content at myStockOptions.com relates the background issues, explains how to understand Form 1099-B after selling shares from stock compensation or an ESPP, and shows how to avoid mistakes with the cost basis that can lead to the overpayment of taxes:

• Article: How To Avoid Paying Too Much Tax: Understanding Form 1099-B And Form 8949 For Reporting Stock Sales On Your Tax Return
• FAQ: How have IRS Form 1099-B and cost-basis reporting changed for sales of stock acquired from my stock options, restricted stock, or ESPP? What do I need to do differently because of the changes?
• FAQ: What if the wrong cost basis is reported on my 1099-B? How do I report the right cost basis on Form 8949 of my tax return?
• Video: Tax-Return Reporting Of Company Stock Sales: How To Avoid Overpaying Taxes
• Video: Tax Return Forms & Reporting Rules For Stock Sales

Expertise That Helps Prevent Costly Tax-Return Mistakes

Form 1099-B is essential for completing IRS Form 8949 and Schedule D. Taxpayers who sold shares during the tax year must submit those forms with their IRS Form 1040 tax returns. Form 8949 is where taxpayers list the details of each stock sale, using the information on Form 1099-B. Schedule D aggregates the column totals from Form 8949 to report total long-term and short-term capital gains and losses. The total from Schedule D is entered on the Form 1040 return. "However," points out Mr. Brumberg, "the cost-basis information in Box 1e of Form 1099-B may be too low, or the box may be blank. This is because the rules for cost-basis reporting are somewhat counterintuitive. Also, no basis is reported for restricted stock or restricted stock units."

Sound confusing? It is!

Fortunately, myStockOptions.com is always here to help. In the Tax Center, the special section Reporting Company Stock Sales presents FAQs with clearly annotated diagrams of Form 8949 and Schedule D. Each FAQ explains and illustrates a different reporting situation involving stock options, restricted stock, restricted stock units, performance shares, employee stock purchase plans, or stock appreciation rights. Clear instructions and diagrams show how to complete the forms, whether the cost-basis information in Box 1e of Form 1099-B is accurate, too low, or omitted.

In the Tax Center, articles on general tax-return topics include:

• 12 Tax-Return Mistakes To Avoid With Stock Options And ESPPs
• Restricted Stock & RSUs: 10 Tax-Return Mistakes To Avoid
• NQSOs: Tax Return Tips And Traps
• ISOs: Tax Return Tips And Traps

Demystifying IRS Forms 3922 And 3921

Elsewhere on myStockOptions.com, a pair of articles explains IRS Form 3922 for employee stock purchase plans and IRS Form 3921 for incentive stock options. With annotated examples of the forms that translate IRS jargon into understandable language, these articles, along with detailed FAQs (for both ESPPs and ISOs), clarify what taxpayers need to understand about the information provided by the forms, which can help them better understand the complexities of ESPP or ISO taxation. The forms can help with tax-return reporting. They also give the IRS tools for catching errors on the tax returns of people who sold ESPP or ISO stock.

Pro Membership Gives Advisors A Crucial Edge During Tax Season

myStockOptions.com Pro is a special membership for financial advisors, CPAs, and other professionals who have clients with stock compensation. MSO Pro gives advisors full access to the whole website and special features in the tools, where they can track and model stock grants for multiple clients (5, 10, 25, or more). Access to the vast library of content at myStockOptions.com puts answers to tough client questions right at the fingertips of advisors, who can create PDFs of crucial content with their logo on it for distribution to clients. For more information, visit myStockOptions.com, email sales@mystockoptions.com, or call 617-734-1979.

Corporate Licensing Available

For companies, education is vital for ensuring that stock compensation motivates and retains highly valued employees and executives. The expert yet reader-friendly content at myStockOptions.com is ideally suited for licensing by companies and stock plan providers for their stock plan participants. A customized version of the website's award-winning content can be seamlessly woven into companies' HR, benefits, and/or compensation portals. Accessible through any internet browser, 24 hours a day, 7 days a week, licensed content from myStockOptions.com lets stock plan participants answer their own questions about their stock grants whenever they need to learn more—saving time for the stock plan staff and costs for the company. For more information, visit http://mystockoptions.com, email sales@mystockoptions.com, or call 617-734-1979. Content from myNQDC.com on nonqualified deferred compensation plans is also available for licensing.

About myStockOptions.com

With exclusive articles, 830+ FAQs, podcasts, videos, the Tax Center, interactive quizzes, the Learning Center with courses for CE credit, the Global Tax Guide, an extensive glossary, a smartphone app for iOS and Android devices, and dynamic patented tools, myStockOptions.com is the premier online resource of educational content and tools on stock options, restricted stock, restricted stock units, performance shares, stock appreciation rights, and employee stock purchase plans. myStockOptions.com is written and managed by leading experts in equity compensation, and is produced by a company with a long history of successful publications explaining complex legal and financial subjects in plain English.

The accounting journal CPA Wealth Provider selected myStockOptions.com among companies "that have taken the lead through innovation, efficiency, initiative, or growth in the financial-planning area." The Specialized Information Publishers' Foundation honored MSO Pro with one of its Editorial Excellence Awards in the category of Best Interactive Content among niche publishers. The influential consumer magazine PC World has ranked myStockOptions.com among "the most useful sites ever" that "deliver top-notch information, support, and services."

myStockOptions.com has also received extensive favorable coverage in the media, including BusinessWeek, The Wall Street Journal, The New York Times, the San Francisco Chronicle, and The Boston Globe, and on CNN, National Public Radio, PBS, Money.com, and MarketWatch.com.

myStockOptions.com has a related site on nonqualified deferred compensation at http://www.myNQDC.com. The staff also created the successful insider trading prevention video series Think Twice, available at http://www.insidertradingvideos.com.

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