Category: Non Qualified Stock Options

Rethinking Whether to Exercise and Hold Non-Qualified Stock Options for Long-Term Capital Gains Tax

When it comes to evaluating strategies to exercise your Non-Qualified Stock Options (NQSOs), what is your best plan of attack? Do you: Exercise and sell all your NQSOs immediately, cashing out the full proceeds? Exercise your NQSOs and hold shares of stock, hoping the stock price will go up? Or, leave your NQSOs unexercised and hope the stock price will go up? If you anticipate a higher stock price in the future…

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10 Things to Know About Non-Qualified Stock Options

Non-qualified stock options (NQSOs) are a common compensation feature provided to employees as part of a compensation package. If you have access to these perks, they give you the opportunity to potentially profit from the rising value of the company’s stock. If you find yourself on the receiving end of NQSOs, you need to understand what non-qualified stock options are and how they work, including how they could impact your income taxes, investment risk, and financial planning goals.

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The Basics of Non-Qualified Stock Options

Non-qualified stock options are a type of employee stock option that is unique in that they retain tax characteristics similar to restricted stock units and employee control and decision-making similar to incentive stock options. From an income tax standpoint, profit is subject to ordinary income tax rates when you exercise your non-qualified stock options. 

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Hi, I'm Daniel Zajac, CFP®, EA

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I write about equity compensation and employee stock options in a way that is easy to understand.