I was laid-off by my employer, but given the opportunity to exercise my non-qualified stock options. Because it was a large number of shares and I was no longer an employee, the company a small start-up did not charge me withholding as they had done when I exercised previously. Instead they told me that I needed to pay estimated taxes. However, I'm not sure where to enter the relevant information to calculate the estimated tax due. When I get ready to do taxes, I do know how to enter exercised options, I've done it before.
I'm pretty certain that your former employer is required to report the compensation element created by the exercise on a Form W-2 and withhold taxes and FICA. Tell TurboTax that you want to review your income and deductions. You'll be taken through an interview that asks for various information about how you intend to file "next year" tax year , your age next year, number of dependents next year, and so forth. Next you'll be asked for your estimates of income and deductions for , amount of taxes to be withheld throughout the year, estimated tax payments you've already made, tax credits you'll be eligible for, etc.
Essentially you'll be preparing, in a very abbreviated form, a income tax return. In order to sweep up the FICA element of the stock option exercise you'll want to put the compensation in self employment income.
TurboTax will crunch the numbers and determine if you need to make estimated tax payments and, if you do, will determine the amount to be paid in September and January When you go to prepare your actual income tax return there's a possibility that you'll be assessed an underpayment penalty.
That's because the penalty is calculated on a quarter by quarter basis and the assumption is that income and deductions come in smoothly throughout the year. If an underpayment penalty is calculated go through TurboTax's interview to "annualize" the calculation. That allows you to place the stock option exercise in the 3rd quarter, where it belongs. People come to TurboTax AnswerXchange for help and answers—we want to let them know that we're here to listen and share our knowledge.
We do that with the style and format of our responses. Here are five guidelines:. Saved to your computer. Select a file to attach: Ask your question to the community. Most questions get a response in about a day. Back to search results. I exercised non-qualified stock options at termination of my employment. How do I calculate estimated tax payment based on these?
I just need to be able to calculate how much extra estimated tax to pay this quarter. Answer I'm pretty certain that your former employer is required to report the compensation element created by the exercise on a Form W-2 and withhold taxes and FICA.
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