Will I Have To Pay Tax On My Qualified ESPP?
Employee Stock Purchase Plans can be an important benefit for you. These programs can allow the purchase of employer stock at a discount, which creates an incentive for employees to increase their ownership stake with their employer.
The tax impact upon the sale of shares within an ESPP varies based on how long the shares were held and at what price they were sold. The tax treatment depends on whether a sale is a qualifying disposition or a disqualifying disposition.
This flowchart addresses the tax consequences you will face when participating in ESPP, and maps the tax calculations upon the sale of employer stock acquired through your plan.
Robert J. Pyle, CFP®, CFA, AEP® founded Diversified Asset Management, Inc., in 1996 to provide personalized, comprehensive wealth management services to successful individuals, families, single women, and business owners. His specialty is addressing the complex financial needs of self-employed professionals, corporate executives, and small-business owners. Our disclosure can be found here. The views, opinion, information, and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting, or tax advice.