File 3921 Online
What is Form 3921?
Form 3921, “Exercise of an Incentive Stock Option Under Section 422(b), “is used to report exercise of ISOs (incentive stock options) by employees. Companies crucially issue this form to their employees when they exercise their ISOs. The primary purposes of Form 3921 are:
- Informing the IRS that employees exercise their ISOs.
- Providing details to the IRS about stock option exercise helps ensure accurate tax reporting.
- It’s also crucial for determining potential Alternative Minimum Tax (AMT) implications.
Form 3921 Filing Requirements:
For companies that need to file 3921, you must have these details:
- Company Information: Legal name, address, and Employer Identification Number (EIN).
- Employee Information: Legal name, address, and Social Security Number (SSN).
ISO Details: Date the option was granted, exercise price per share, fair market value (FMV) per share on the exercise date and number of shares transferred.
Form 3921, Late Filing Penalty:
3921 tax form can cause penalties if it is not taken care of properly. The IRS penalties majorly depend on the time of delay. Here is a breakdown:
- Within 30 Days of Due Date: The penalty is $60 per year with a maximum of $630,500 per year, and for small businesses, it is $220,500 per year.
- More than 30 days after the due date till August 1: The penalty is $120 per form with a maximum of $1,981,500 per year and for small businesses it is $630,500.
- After August 1: The penalty is $310 per form with a maximum of $3,783,000 per year. And for small businesses, the maximum is $1,261,000 per year.
Quick note: For intentional disregard (or if the IRS determines it intentionally), the penalty can be as high as $630 per form, with no annual cap.
Form 3921 Deadline:
When focusing on the deadlines for Form 3921, it’s crucial to distinguish between when the forms must be provided to employees and when they must be filed with the IRS. Here is the Form 3921 due date.
- Copy B: Copy B (recipient copy) must be provided before January 31 of the following tax year.
- Copy A: The IRS copy (copy A) must be submitted before February 28 in case of paper filing or March 31 in case of electronic filing.
Important Note: If the last date of form filing is a public holiday or official off, the deadline will shift to the next business day.
How to file Form 3921 electronically with E-File Workforce Payroll:
To file the 3921 form electronically, you need to follow this simple 4-step guide:
- Step 1: Make your account on E-File Workforce Payroll and log in.
- Step 2: Locate “Filing” in the left menu and “Start New Filing” from its sub-menu.
- Step 3: Choose your filing year and form. A new form will appear on the screen.
- Step 4: Provide all necessary details and click submit.
There you have it. The process will take not more than five-minutes and you can repeat it for other forms as well.
Have Questions?
Simpler than you think!
Understanding Form 3921: Common Questions
For companies, you need to file it with the IRS, provide a copy to employees, and keep a copy for your records as well.
For employees, you need to collect it from the employer, check it for accuracy, and keep it in your records. The information will be required when you sell these ISOs.
Individual employees don’t need to report it on tax returns. This is an informational document and you must keep it in your records.
The penalty for not filing Form 3921 mainly depends on the span of delay. For longer delays, the penalty will be more than for shorter delays and vice versa. Generally, the least penalty is $60 per form, and the maximum is $310 per form.
Basically, Form 3921 is an informational document that is beneficial for the IRS, employees, and companies as well. It helps the IRS keep a clean record of all ISO transactions and make sure the right amount of tax is paid by each stock owner.
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