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Author: BladeXrunners One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 125005  
Subject: Re: SSI tax on stock option? Date: 10/10/1999 4:58 AM
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Sorry about that, but *non-qualified* stock options are earned income because they were given instead of wages.

If *non-qualified* stock options are treated as earned income, thus subject to FICA etc, how's the FICA tax paid?

I know that my employer is suppose to withhold the approximate tax, but I haven't heard of any which are--mine already said they won't withhold tax. I know I can adjust my W-4 to make up the federal tax, but I don't know of any form that will adjust for FICA & Medicare. Also, the 1040 doesn't have any mean of designating which payment are for FICA and which are for federal tax. So how do I pay the FICA on these "earned" income through exercising *non-qualified* stock options?

How about the employee stock purchase plan, is the spread, which is considered ordinary income, subject to FICA? (My personal opinion is that it is not subject to FICA becaues ESPP is voluntary, but then again, if the IRS care about my opinion, then they scare the heck out of it later. . .)

I had look at most of IRS publications and were unable to find any which address this. Do you know which publication address FICA & Medicare tax?
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