Taxes Paid Understand what Income Tax Paid means
If your employer releases your shares after stock has vested, you generally must pay withholding taxes on the value of the shares, either at the time of grant or at release, depending on your tax election.
Income Tax Paid on the Performance Grant Summary page is the total value of the tax withholding that has been paid for the entire grant. The tax is paid to your employer, who sends it to the IRS.
For example, assume that just over two years ago, you received a grant of 400 shares, issued to you at no cost. You did not file a Section 83(b) election for the grant, and therefore must pay income taxes as the grant vests. The grant vests in four annual increments of 100 shares each. Since the grant was awarded to you just over two years ago, you have met the vesting requirements on the first two increments.
The Income Tax Paid on the grant would be calculated like this:
- 100 shares x $5.00 (value at first vest date) = $500 x 25% (hypothetical tax rate) = $125.
- 100 shares x $10.00 (value at second vest date) = $1,000 x 25% (tax rate) = $250.
- The remaining two vest dates have not occurred yet and therefore those taxes have not been paid. The total tax paid is $375.
Depending on your tax payment method, you may have paid your income tax in cash, or shares might have been used to cover the tax payment. The details of each tax payment by vest date are viewable at Performance Grant Details. On this page, only one grant is displayed, with a separate line for each vest date.
- The Total is the value of the tax that has been paid for each vest date, either with cash, shares, or a combination of the two.
- Cash is the amount paid in cash. Depending on your plan, cash tax payment methods may include a check, wire, and/or payroll deduction. If you file a Section 83(b) election to pay the tax at the grant date, you must pay your income tax in cash.
- Shares represent the number of shares that were used to cover the tax amount in shares. Depending on your plan, share tax payment methods may include withholding shares from this grant, selling shares from this grant, and/or exchanging other shares of any company stock that you own. You cannot use shares to cover your tax if you are paying your tax at the grant date. Example of shares to cover tax:
100 shares x $5.00 (value at vest) = $500 x 25% (hypothetical tax rate) = $125 / $5.00 (share price) = 25 shares
Your tax payment method election should be made with your employer prior to the date your income tax is due. Review your plan documents to determine what tax methods are allowed by your employer.
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