Tax season is here, and if you’ve had stock options vest, exercised options, or sold shares, you’re going to need some key tax documents.
The problem? These forms don’t all come from one place.
Some come from your employer, some from your brokerage, and some are buried in different portals you might not even remember signing up for.
So, where exactly do you find your stock option tax documents? We’re breaking it all down so you know what you need, where to find it, and why it matters.
Step 1: Find Your W-2 (Reports Taxable Wages from Stock Options)
Your W-2 is the most important tax document your employer provides. If you exercised stock options, received RSUs, or participated in an ESPP, those transactions may already be included in your W-2 wages.
Where to Find It:
- Your employer’s payroll portal (think Workday, Gusto, ADP, etc.)
- Your email (most companies send a notification when it’s available)
- Mail (if you opted for a paper copy)
When You’ll Get It:
Your employer must issue your W-2 by January 31st, so it should be available by early February at the latest.
How Stock Compensation Appears on Your W-2:
- Box 1 (Wages, Tips, Other Compensation): This includes RSUs, non-qualified stock option (NQSO) exercises, and ESPP disqualifying dispositions. These amounts are included in your taxable wages, but you won’t see them specifically broken out.
- Box 12, Code V: This is where your NQSO exercises will show up. If you exercised NQSOs during the year, check here.
- Box 14 (“Other”): Some companies use this box to list stock compensation details, like ESPP or ISO disqualifying dispositions.
Why It Matters:
If you don’t realize stock income is already included in your W-2, you might report it again when filing your taxes—leading to double taxation. That’s why it’s so important to properly match up your W-2 with other stock-related forms.
Step 2: Find Your 1099-B (Reports Stock Sales)
The next document you’ll need is Form 1099-B—which reports any stock sales you made during the year. If you sold shares, even if it was just to cover taxes, you’ll get this form.
Where to Find It:
- Your brokerage account (Fidelity, Schwab, E*TRADE, etc.)
- Your brokerage’s tax documents section
- Mail (if you opted for a paper copy)
When You’ll Get It:
By February 15th, your brokerage must issue your 1099-B.
Common Pitfall: “I Didn’t Sell Any Shares”
Many people think they didn’t sell stock, but they actually did—because their company sold shares automatically to cover taxes. This is called a “sell-to-cover” transaction, and it still gets reported on a 1099-B.
Why It Matters:
If you don’t include your 1099-B when filing your taxes, the IRS will think you underreported income and send you a tax notice. If you do report it, but don’t properly adjust your cost basis, you could pay taxes twice on the same income.
Step 3: Find Your Stock Plan Supplement (If Available)
Some brokerages (like Fidelity and E*TRADE) provide an extra document called a Stock Plan Transaction Supplement. This form isn’t required, but it helps correct cost basis issues that come up on your 1099-B.
Where to Find It:
- Same place as your 1099-B (brokerage tax documents)
- Some brokerages include it inside the 1099-B itself
When You’ll Get It:
It’s usually issued at the same time as your 1099-B (by February 15th).
Why It Matters:
Your 1099-B often shows a cost basis of $0, making it look like you owe taxes on the entire stock sale. The Stock Plan Supplement corrects this by showing the actual cost basis—including what you already paid taxes on in your W-2.
Without this form, you could pay way more in taxes than you should.
Step 4: Find Form 3921 (Reports ISO Exercises)
If you exercised Incentive Stock Options (ISOs) during the year, you’ll receive Form 3921, which tracks those exercises.
Where to Find It:
- Your company’s stock plan administrator (Carta, Shareworks, etc.)
- Your email (if they notify you when it’s available)
- Mail (some smaller companies send paper copies)
When You’ll Get It:
By February 28th.
Why It Matters:
This form shows:
- The date you exercised ISOs
- The number of shares exercised
- The exercise (strike) price
- The fair market value on the exercise date
If you held onto the shares, this information is crucial for calculating the Alternative Minimum Tax (AMT). If you sold within a year, it helps determine how much income gets reported on your W-2.
Step 5: Find Form 3922 (Reports ESPP Purchases)
If you participated in an Employee Stock Purchase Plan (ESPP), you’ll receive Form 3922, which tracks ESPP purchases.
Where to Find It:
- Your company’s stock plan administrator
- Your email (if they notify you when it’s available)
- Mail (some smaller companies send paper copies)
When You’ll Get It:
By February 28th.
Why It Matters:
This form is used to:
- Track ESPP discounts that are taxable
- Calculate disqualifying dispositions (if you sold ESPP shares too soon)
- Determine long-term capital gains for ESPP shares
ESPP shares can have complicated tax rules, especially if you sell them within a certain timeframe. This form helps ensure you’re reporting the right income and paying the correct tax.
Step 6: Find Your Statement of Taxable Income (If Available)
Some employers provide a Statement of Taxable Income, which breaks down how stock-based compensation impacted your W-2.
Where to Find It:
- Your HR or payroll department
- Inside your W-2 package (if provided)
When You’ll Get It:
If issued, it usually arrives by January 31st, alongside your W-2.
Why It Matters:
This document helps explain why your W-2 income is higher than your base salary—which is important when reconciling stock compensation with your 1099-B.
How KB Financial Advisors Helps: CSI for Your Tax Docs
If you’ve ever looked at your tax documents and thought, “Wait, I didn’t make this much money”, you’re not alone.
One of the biggest issues with stock option taxation is double-reported income. Your stock option activity is reported in multiple places—your W-2, 1099-B, and other tax forms—but these forms don’t always communicate with each other. If you don’t adjust for this properly, you could end up paying taxes twice on the same income.
The Problem of Double-Reported Income
Let’s say you exercised and sold non-qualified stock options (NQSOs). Your employer already included the income in your W-2, but when you get your 1099-B from your brokerage, the form shows a cost basis of $0.
If you don’t correct this, it looks like you made the full amount as a capital gain—even though you already paid taxes on it in your W-2. That means:
🚨 You’d be taxed twice on the same income! 🚨
We see this all the time, and it happens with RSUs, ESPPs, and ISO disqualifying dispositions too. The numbers don’t always match up correctly between different tax forms, which is why getting professional help can save you thousands in unnecessary taxes.
Prior Year Tracking: AMT and Form 6251 Credits
Another common mistake? Losing track of tax credits from prior years.
If you paid AMT (Alternative Minimum Tax) in a previous year due to exercising ISOs, you might have an AMT credit sitting on Form 6251. The problem? Many tax software programs (like TurboTax) don’t automatically carry over these credits.
We’ve seen clients leave thousands of dollars in tax credits on the table simply because the previous year’s return wasn’t reviewed properly. At KB Financial Advisors, we always look back to make sure you’re getting every tax break you’re entitled to.
Making Sure Your Basis is Correct (Ordinary vs. AMT Basis)
Stock option taxation isn’t just about reporting the numbers—it’s about reporting them correctly.
Each type of stock option (NQSOs, ISOs, ESPPs, RSUs) has a different way of determining cost basis, taxable income, and capital gains. The IRS sees two different tax systems:
- The Ordinary Tax System (what most people file under)
- The AMT Tax System (which applies to certain high-income earners, especially those with ISOs)
If your AMT basis and ordinary basis aren’t correctly linked up, you could overpay or underpay on taxes—either of which can be a problem.
We make sure your basis is correct, your AMT credits are accounted for, and your stock compensation is reported the right way.
Final Thoughts: Avoiding Costly Mistakes
Stock option taxes are confusing, and the IRS isn’t exactly forgiving if you make a mistake. If your forms don’t line up properly, you could:
- Pay thousands more in taxes than necessary
- Get hit with IRS penalties and interest
- Leave money on the table in unclaimed tax credits
That’s why getting help from a financial advisor who understands stock options is so important. At KB Financial Advisors, we specialize in working with tech professionals who deal with RSUs, ISOs, ESPPs, and NQSOs.
We’re like CSI for your tax docs—we dig through everything, match up the numbers, and make sure you’re not overpaying.
If you need help figuring out your stock option tax documents—or just want to make sure you’re not paying more than you have to—let’s talk.
Simply head over to our Getting Started page to book your introductory call.
Until next time!
