Options Trading Tutorial

taxes! I exercised stock options and federal taxes were withheld?

Federal taxes were withheld from the amount paid to me and when I did this in 2005 and H&R did my taxes, it looks like they did not include this as income paid or taxes paid. I hoped to just follow what they did but it doesnt make sense to me. How do I know the taxes withheld were the right amount? What should I do?

Public Comments

1. If taxes were withheld, that means the income/withholding was on your W-2 that year and included on your tax return. Hopefully, they also did the schedule D to show the sale (it should show $0 gain if you did a same day sale as all of the income was on the W-2). If any taxes were withheld, they were some percentage, but not guaranteed to be the "correct" amount since you wouldn't know the actual difference in tax until you filed. If there were obvious errors on your tax return because of this, the IRS would have sent you a heart-attack inducing CP2000 by now.