At this time, Gusto only supports Non-statutory stock options (NSOs). Use the information below to learn how to report them through Gusto.
The 83(b) election is a provision under the Internal Revenue Code (IRC) which gives an employee, or startup founder, the option to pay taxes on the total fair market value of restricted stock at the time of granting.
The 83(b) election applies to equity that's subject to vesting, and it alerts the Internal Revenue Service (IRS) to tax the elector for the ownership at the time of granting, rather than at the time of stock vesting.
Non-statutory stock options, also known as non-qualified stock options, that were exercised need to be reported on the W-2 (Box 12 code V), and taxes need to be paid on the options. This total amount needs to be entered into Gusto one time.
Keep in mind: It’s up to you to determine what value to enter for taxation. If it's a stock grant, the entire amount is taxable. If it's a stock option that was exercised, the difference between the fair market value and the strike price is taxable. We recommend speaking with a CPA or tax advisor who can help determine the appropriate amount to enter in Gusto.
If your employee doesn't have enough funds to pay the taxes all at once, or there are no more regular payrolls to run in the year, you can run an off-cycle, check payroll and collect the taxes from the employee later.
Keep in mind: In this scenario, you the employer are paying for the tax amount, and proceeding is at your own discretion.