Should I exercise my stock options?

Your stock options give you the right to exercise if and when you want to, but you’re never obligated to do so. If you choose to exercise your stock options, you can hold on to your company shares or sell them. There are two primary types of employee stock options, which differ in a few ways. Incentive stock options, or ISOs.

How do I exercise an incentive stock option?

Incentive stock option - After exercising an ISO, you should receive from your employer a Form 3921, Exercise of an Incentive Stock Option Under Section 422 (b). This form will report important dates and values needed to determine the correct amount of capital and ordinary income (if applicable) to be reported on your return.

What are incentive stock options (ISO)?

Incentive stock options (ISO) are a type of stock option that qualifies for special tax treatment. Learn more about what it means to exercise or sell ISOs. Below, we’ll cover everything you need to know about incentive stock options (ISO), including how they differ from other types of equity compensation, how they work, and how they’re taxed.