2014
Frequently Asked Tax Questions
for Stock Plan Participants
Fidelity is committed to helping make it easy for you to find the information you need
to understand and report your tax obligations. We’ve compiled a list of frequently
asked questions to help answer the most common questions for this tax season.
Q: What resources are available to me as a Fidelity customer?
A: One benefit of being a Fidelity customer is access to some of the most comprehensive tax information
and resources available in the industry.
As a stock plan participant, you have access to two main sources of information:
1. Fidelity Stock Plan Services online Resource Center accessed through
www.fidelity.com/spsresourcecenter. Here you will find tax information specific to your stock plans under
the Tax Central tab.
2. Fidelity’s Web site, www.fidelity.com/taxes/overview. Here you will find a wealth of information, such as:
• Tax articles
• Tax-planning tools and calculators
• Fidelity’s tax forms mailing dates and much more
Q: What is new for this tax season?
A: Below is a quick take on some new developments to be aware of when preparing your tax return.
Many of the changes first took effect in the 2013 tax year.
1. Issued by your brokerage firm to report sales of stock, IRS Form 1099-B has changed in a few key
ways. For example, on the 2014 version the box numbers now match the corresponding columns on
IRS Form 8949 of your tax return. The cost basis is now reported in Box 1e instead of the previous
Box 3. Also, for grants made in 2014 and later years, the IRS prohibits brokers from including
equity compensation income in the cost basis reported on Form 1099-B.
2. Upper-income taxpayers have higher tax rates on ordinary income, capital gains, and
dividends, along with the return of phaseouts on personal exemptions and itemized deductions.
3. The alternative minimum tax (AMT) income exemption amounts, the point where the AMT
exemption phaseout starts, and the threshold for the higher AMT rate are now indexed for inflation.
4. The IRS now has two tax-return forms for the increases in Medicare tax stemming from the
Affordable Care Act: the additional tax on compensation income (IRS Form 8959) and the surtax
on net investment gains (IRS Form 8960). All compensation, including stock compensation, can
trigger both these taxes.
5. IRS Form 8949 and Schedule D, which you file using information on Form 1099-B if you sold company stock
or other securities, were revised in recent years. However, the versions of the form for the 2014 tax year, to be
filed in 2015, look similar to the prior year’s versions. As mentioned earlier, the columns on Form 8949 now
match up with the boxes on Form 1099-B.
6. If the basis reported to the IRS is correct on Form 1099-B, the IRS now lets you skip Form 8949 and report
the sale only on Schedule D. You should note, however, that stock acquired through company stock
compensation plans generally includes a compensatory (ordinary wage income) element, which the IRS
prescribes must be excluded from the basis reported by the broker, so that your tax basis is almost
always higher than the reporting the IRS directs, and you should generally file Form 8949 to avoid
overpaying your taxes. With respect to stock compensation, the reported basis on Form 1099-B is most often
too low, or the box on the form is blank. Moreover, even if the basis has been correctly reported, it may be
simpler for your recordkeeping to list all your securities sales together on Form 8949.
7. Same-sex couples who married in a state that legally recognizes their marriage now must file tax returns
under their married status (whether married filing jointly or married filing separately). In many cases this may
result in a greater amount of tax than would have been incurred by the two single filings that these taxpayers
had to make in past years.
Fidelity has created guides that will help you determine your tax reporting requirements specifically for your stock plan(s).
New versions will be posted in early February on www.fidelity.com/spsresourcecenter under the Tax Central tab.
Q: When will I receive my tax forms from Fidelity?
A: Fidelity makes most tax forms viewable on the Web once they are prepared for mailing from mid-January through
mid-February. You can find the mailing schedule on Fidelity’s Web site. You can also view your actual tax statements by
visiting www.fidelity.com, clicking Portfolio under Accounts & Trade, then selecting Statements under the appropriate
account, followed by Tax Forms.
Note that your tax forms are usually mailed shortly after they post online. Your Form W-2 should be provided by your
employer. IRS Form 1040 (the full 1040, not the 1040EZ or the 1040A), Schedule D: Capital Gains and Losses, and
Form 8949 are available online at www.irs.gov, by calling 1-800-TAXFORM (829-3676), or by visiting your local IRS
office. It is important to note that mailing dates are subject to change.
Q: What is the new cost basis legislative change? What does it mean to me?
A: As part of the Emergency Economic Stabilization Act of 2008, regulations for how cost basis is reported by brokers
are required to change in phases over the years. Phase III, which affects reporting cost basis for options on stocks,
indexes, single stock futures, stock rights, and warrants, will occur for tax year 2014. Brokers are required to report
adjusted cost basis and proceeds for these closing transactions (such as SOP and SAR exercises) that are acquired
on or after January 1, 2014. Brokers are no longer permitted to include compensation income in 1099-B-reported
cost basis for options granted on or after January 1, 2014. You should consult your tax advisor to ensure that you
properly take this compensatory element into account in order to avoid overpaying your taxes.
2014 Tax Season
Fidelity understands that the new legislative requirement can be confusing and the revised 1099-B may not provide you
with enough information to complete your tax returns. As a result, Fidelity will issue a Supplemental Form to your 1099-B
that lists out ordinary income as well as the associated adjusted cost basis for the individual lots reported on the 1099-B.
Additionally, the Form will provide an adjusted Gain/Loss reflective of the adjusted cost basis for the associated lots.
You should bring all this information to your tax preparer so that he or she can make any adjustments for your stock sales.
Q: What is cost basis and where do I find it?
A: Cost basis is determined under rules set forth under the Internal Revenue Code, as interpreted by the U.S. Treasury
and the Internal Revenue Service. In general, cost basis is usually equal to what you paid for your shares (generally,
the purchase price) plus or minus certain adjustments. You must calculate cost basis to determine the amount of
reportable capital gain or loss generated by the sale of your securities. Cost basis and capital gains and losses
are reported on Schedule D. Fidelity provides estimated cost basis, gain/loss, and holding period information to
customers as a courtesy service; however, such information may not reflect all adjustments that may be necessary for
tax reporting purposes. Remember to distinguish and report both the capital gain/loss amount on your Schedule
D and the ordinary compensation income amount on your 1040 for these transactions. Your Form 1099-B Tax
Reporting Statement will no longer report adjusted Cost Basis. For adjusted Cost Basis, please refer to the Stock
Plan Services Supplemental Form. Consult your tax advisor regarding what portion of the gain, if any, may be
taxed as ordinary compensation income and how to reflect such ordinary income treatment on your tax forms.
Q: Does Fidelity offer a discount on TurboTax®?
A:Yes. One of the many benefits you have as a Fidelity customer is the ability to save on TurboTax
products for
federal and state tax returns. You will not be required to pay until you print or file your return. To receive the
discount, you will need to log in to Fidelity’s Web site. Plus, information from the following Fidelity nonretirement
account tax forms can be automatically imported into your TurboTax return:*
®
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
Please note that if you received a Stock Plan Supplemental Form, this information will not be imported into TurboTax (or any
other tax software). Please reference Fidelity’s Stock Plan Guides on our Resource Center for more information.
Q: What are wash sales, how do they happen, and how do I report them?
A: Under the provisions of the Internal Revenue Code, a taxpayer is not permitted to claim a loss on a sale of stock
or securities where the taxpayer purchased the same or substantially similar stock or securities within 30 days
before or after the sale. Wash sales appear as Wash Sale Disallowed Loss in the Date Acquired and the Date Sold
columns. A wash sale may occur if you sell securities (including options) at a loss and if, within the 61-day period
beginning 30 days before and ending 30 days after the date of sale, you buy the same or a substantially identical
security in the same or a different account. The additional shares are considered as having “washed” your loss,
and the loss from the sale transaction should be “disallowed” for tax purposes (the loss is in fact deferred until
the taxpayer disposes of the related acquired securities). The loss should be added to the cost basis of the newly
purchased shares, essentially deferring the loss until those shares are sold. Unless otherwise requested or noted,
Fidelity attempts to identify wash sales that occurred within a single taxable account as a result of the sale and
purchase of the same (but not a substantially identical) security, and adjusts accordingly the cost basis information
records we provide to you. However, Fidelity is unable to identify wash sales resulting from transactions involving
substantially identical securities, or transactions not within the same Fidelity Account®. In summary, you should
always rely on your records to determine if and when a wash sale occurs, using Fidelity-provided wash sale
information only for comparative verification. This is true whether you hold the same or substantially identical
securities in one account or in several accounts, including accounts at different financial institutions. You will also
need to rely on your own records to determine whether a loss cannot be recognized as a result of transactions
between related parties or as a result of the application of other tax law provisions similar to wash sale rules.
Consult your tax advisor regarding your specific tax situation.
Q: My employer’s W-2 doesn’t show the taxes I paid when I exercised and/or when
my grant vested. How do I know how much I paid?
A: Your W-2 from your employer should include any tax withholding paid in connection with exercises or grant vestings
in the totals of the taxes paid for the year. If it doesn’t, you can find specific information on the taxes you paid for
any exercises or vesting from your confirmations or your statements.
Q W
hy did I get a 1099-B and Supplemental Form? I already had taxes
withheld when I exercised.
A: Your employer reports compensation paid to you on Form W-2 (or potentially on Form 1099-MISC). If Fidelity
receives 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, notes, U.S. Treasury bills, and other
short-term instruments on Form 1099-B. You need all this information for your taxes, as it is your responsibility to
report gains or losses on Schedule D.
Q: Am I able to have my tax refund deposited into my Fidelity account(s)?
A: You may be able to direct deposit your IRS or state tax refund into your Fidelity account(s). Refer to IRS or state
instructions on direct deposit to determine if you can use this feature. For IRS refunds, if you are depositing your
refund into only one account, you can simply fill out the two lines in the refund section of Form 1040 or Form
1040A — one line is for the routing number and the other one for your account number (see below). If you want to
deposit your refund into two or more accounts, you will need to fill out IRS Form 8888 and indicate on Form 1040 or
Form 1040A that you have attached that form. For state refunds, the refund section for state income tax return forms
varies from state to state. Use the routing number and account type below for all direct deposits to your Fidelity
brokerage account. For more information, visit Fidelity’s Web site at www.fidelity.com/taxes/direct-deposit.
Routing number: 101205681 Type: Checking
Account number: Click here to view instructions
Still have questions? Call 800.544.9354 to speak with an experienced Fidelity Stock
Plan Services representative.
Tax laws are complex and are subject to change. State and local taxes also may apply, and the rules governing such taxes may
vary from federal income tax rules. Your actual income tax consequences depend on your individual circumstances. Therefore,
you should always consult a qualified tax advisor regarding your own particular tax situation.
Portions of the content are provided under arrangement with myStockOptions.com, an independent source of online stock plan education and tools.
Content may not be reproduced without express permission from myStockPlan.com, Inc., or Fidelity Investments.
Stock plan recordkeeping and administrative services are provided by Fidelity Stock Plan Services, LLC.
Fidelity Brokerage Services LLC, Member NYSE, SIPC
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SPS-TAX-FAQ-0215