Category: Non Qualified Stock Options

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...

Non-qualified stock options and incentive stock options are the two types of employee stock options that you may receive as part of your compensation package. While they have some similarities, they also differ, particularly when speaking to how they may be taxed at exercise and upon the final sale of stock.

Some employers may allow you to choose how you receive your equity compensation. They may allow you to receive it all in NQSOs or all in RSUs or they may allow you to...

You might not give much thought to the equity compensation you receive throughout the year (until you’re forced to take action with it). But even if you do have a long-term plan in mind, it’s smart to pause periodically and review the overall strategy. The end of the year is a prime opportunity for this review, and also provides a chance to check-in and recall any decisions made during the calendar year. Not only will...

If you have non-qualified stock options, you’ve likely spent time researching when and how you’ll face taxes for them. As a general rule, you will be subject to ordinary income tax on the profit you make when you exercise non-qualified options. Being taxed when you exercise non-qualified stock options, or NQSOs, is attractive for a few reasons. For one, you control when your options become taxable. You may also enjoy more clarity as to what...

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.

When the time comes to exercise your non-qualified stock options, you may find yourself asking about the process, the cost, and how it actually happens. This may lead you to ask whether to do a cash exercise or a cashless exercise. Many people default to a cashless exercise for a few reasons. For one, a cashless exercise is an easy option with no out-of-pocket cost. You pay for the costs of exercising your non-qualified stock...

The income tax rules for an exercise of non-qualified stock options are relatively straightforward. You generally do not owe taxes when you are granted non-qualified stock options. You don’t owe when your non-qualified stock options vest, either. This no-tax timeframe allows you to defer income tax while potentially creating considerable wealth if the value of your shares increases. Exercising your non-qualified stock options is what creates a taxable event. But because you control when you...

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. 

Non-qualified stock options (NSOs) are commonly issued to allow employees to participate in the upside potential of a company. While they can offer the potential to amass wealth, they’re also usually part of compensation packages referred to as “golden handcuffs.” Golden handcuffs keep you working for a company in exchange for possibly cashing in on these options that might one day be worth a significant amount — but that value could also be lost in...