I had some ISO shares vested 10 months ago, granted to me 2 years prior to that. This got exercised/sold this week on a same day. This is a private firm and all I had to do is agree to the transaction with the employer, and company "cancelled" the options and gave me money directly through payroll processing, i.e., transaction did not happen at a typical brokerage firm, in case this is relevant. I got the paystub today that shows the following:
(a) Gross proceed amount (which is sell price minus grant price, multiplied by number of shares)
(b) Federal and state taxes withheld
(c) No Social Security or Medicare Tax withheld
(d) 401k deductions taken
(e) Net paid amount
The questions I have:
(1) Massachusetts state tax has been withheld at approx. 8.125% (much higher than my expectation of 5%). Is this indicating that the proceed above is short term capital gain for MA, and not ordinary income? The proceed is just the bargain amount, in my understanding.
(2) 401(k) deductions were taken from the proceed. It surprised me that 401(k) deduction can be take from the ISO shares sell proceed; Is this normal? It has thrown me off quite a bit from my scheduled contribution plan for rest of the year losing the company match that comes with every paycheck.
(3) Will the standard Medicare tax (1.45%) be assessed during tax filing time, along with any applicable additional Medicare Tax (0.9%)?
Any education on the above will be highly appreciated. Thank you!
(a) Gross proceed amount (which is sell price minus grant price, multiplied by number of shares)
(b) Federal and state taxes withheld
(c) No Social Security or Medicare Tax withheld
(d) 401k deductions taken
(e) Net paid amount
The questions I have:
(1) Massachusetts state tax has been withheld at approx. 8.125% (much higher than my expectation of 5%). Is this indicating that the proceed above is short term capital gain for MA, and not ordinary income? The proceed is just the bargain amount, in my understanding.
(2) 401(k) deductions were taken from the proceed. It surprised me that 401(k) deduction can be take from the ISO shares sell proceed; Is this normal? It has thrown me off quite a bit from my scheduled contribution plan for rest of the year losing the company match that comes with every paycheck.
(3) Will the standard Medicare tax (1.45%) be assessed during tax filing time, along with any applicable additional Medicare Tax (0.9%)?
Any education on the above will be highly appreciated. Thank you!
Statistics: Posted by dkg2707 — Fri Sep 06, 2024 10:23 am — Replies 0 — Views 60