A guide to taxes and tax filing

Most tax forms, unless otherwise noted, are posted online by the IRS deadline of February 15. (If the 15th is a holiday or weekend day, the deadline is the next business day.) You can view and download your available tax forms on Fidelity.comLog In Required and get updated information on the status of any outstanding forms.

One benefit of being a Fidelity customer is access to some of the most comprehensive tax information and resources available in the industry. You can also find a wealth of tax information resources, including:

• Tax articles
• Tax-planning tools and calculators
• Fidelity' tax forms and mailing schedules

Information from the following Fidelity nonretirement account tax forms can be automatically imported into your third-party tax preparation software:

• 1099-DIV Dividends and Distributions
• 1099-MISC Miscellaneous Income
• 1099-INT Interest Income
• 1099-OID Original Issue Discount
• 1099-B Proceeds from Broker and Barter Exchange Transactions

Note that if you received a Fidelity Supplemental Information form, this information will not be imported into your third-party tax preparation software.

The shares you purchase through a qualified ESPP can be eligible for beneficial tax treatment. Your shares can "qualify" for this special tax treatment or be considered "disqualified," depending on when you sell and if certain holding periods have been met. This special treatment and the stock-price changes after purchase will determine whether the income from your sale is taxed mostly at ordinary income rates or mostly at the more favorable capital gains rates.

To receive beneficial tax treatment, the purchased shares must be held for:

• More than one year from the purchase date. This holding period requirement also meets the holding period required for long-term capital gains.
• More than two years from the offering date (the date the offering period begins).

When shares are sold after meeting both holding periods, it is considered a qualifying disposition and will usually receive favorable long-term capital gains tax treatment on a larger portion of the gains.

When shares are sold before meeting both holding periods, it is considered a disqualifying disposition and the shares will not receive special tax treatment. You will be required to report ordinary income equal to the difference between the fair market value of the stock at the purchase date and the actual purchase price.

The main difference between ISOs and NSOs is how they are taxed. Shares from an ISO can "qualify" for beneficial tax treatment depending on when you sell. Shares from an NSO exercise will be taxed at your regular income rates.

With an ISO, you will not be subject to ordinary income tax at the time of exercise, and no withholding or Social Security/Medicare taxes apply. This is because your shares can be eligible for beneficial tax treatment, so you don't know what types of taxes you will have until you sell the shares that result from the exercise.

When you sell your ISO shares from the exercise, your entire gain (or loss) over the exercise price will be treated as a capital gain (or loss), provided the shares are held for the required holding period. This is called a qualifying disposition.

To receive beneficial treatment, the shares must be held for:

• More than one year from the exercise date.
• More than two years from the grant date.

If shares are sold before these holding periods end, you will have what is called a disqualifying disposition, and the shares will not receive beneficial tax treatment and will be taxed similarly to an NSO, but with no withholding or Social Security/Medicare taxes. The amount of ordinary income depends on the sales price relative to the market price on the date of exercise.

It's important to remember that alternative minimum tax, or AMT, may apply when you hold the ISO shares through the calendar year of exercise. AMT is an alternative method for calculating your taxes that is triggered by specific events, such as the exercise of an ISO.

ISO taxes can be complicated, so it is important that you consult a tax advisor regarding your personal tax situation.

In contrast, when you exercise an NSO, the difference between the fair market value at exercise and the grant price—also known as the "spread"—will be treated as ordinary income, and Social Security/Medicare taxes apply. Your employer will generally be required to withhold taxes at the time of your exercise. When you sell the shares you received from the exercise, your subsequent gain or loss will be subject to tax as a capital gain (or loss).

US tax laws and reporting requirements vary based on your award or ESPP and what you do with the shares you receive. Check your plan documents on NetBenefitsLog In Required.

Depending on the type of award you have, you may receive dividends or dividend equivalents for your unvested shares. A dividend is a sum of money paid on the stock you own. If you have RSUs or other similar types of awards, your company will decide whether to give you a payout in shares or cash that is the "equivalent" of what you would have received on the unvested shares. If you have RSAs, you are usually entitled to the dividend payouts from your shares, even if they are unvested. Stock options and stock appreciation rights do not pay dividends.

When dividend equivalents are paid at vesting through additional shares or cash, withholding applies at that time, and they are reported as part of your ordinary W-2 compensation income. With nonemployees, such as directors and independent contractors, this income is reported on Form 1099-NEC.

Should a cash dividend payout occur before vesting, this compensation income will be taxed, and withholding applies at the time of payout.

A capital gain (or loss) is the difference between your sale price and your cost basis. If you sell stock for more than your cost basis, you recognize a gain. If you sell it for less than your cost basis, it is considered a loss. How much of that gain (or loss) you report depends on your cost basis.

For shares you received through a stock plan, it is important to note that you may need to make adjustments to your cost basis to correctly calculate any capital gains or losses.

Your employer reports compensation paid to you on Form W-2 (or Form 1099-MISC for nonemployees). If Fidelity receives data on your ordinary income from your employer, this amount will be reflected on the Stock Plan Supplemental Form. We report proceeds from the sale of stocks, mutual funds, bonds, and notes on Form 1099-B.

You need all this information for your taxes, as it is your responsibility to report gains or losses from stock sales on Form 8949 and Schedule D.

You may be able to direct deposit your IRS or state tax refund into your Fidelity account(s). Learn more at Direct Deposit Your Tax Refund.

A wash sale occurs when you sell shares at a loss and buy additional shares of the same or substantially identical security within a 61-day period. This period begins 30 days before the sale and ends 30 days after the sale, including the date of the sale. If the sale results in a wash sale, generally you will not be able to deduct the resulting loss from your taxes in the year of sale. Instead, the loss and the holding period will be carried over to increase the cost basis of the new shares. For more information, watch our video about wash sale rules.

Sales of stock received in an ISO exercise raise additional issues under the wash sale rules. For assistance with completing your tax return, please consult your tax advisor.

Cash-settled transactions result in no sale of stock; instead, you are given the cash value of the stock. As there is no stock sale, no Form 1099-B is issued or required. As a result, your W-2 or 1099-NEC will show the income from the transaction.