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Are you talking about options related to your employment, such as ISOs?

If so, its not only ordinary income, it's also wages. Your employer will withhold income tax, social security tax and medicare tax as part of the exercise and sale. You won't need to worry about estimated tax payments.


But the employer may withhold income tax from the sale of options at a rate much lower than the OP's actual tax rate. During the tech boom we had taxes on options withheld at 25% while the options income pushed us into the 39.6% bracket. If you're not aware of the difference, it can come as a shock the following April 15, especially if you've spent the income.

--fleg
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