On February 26, 2008, A. William Caporizzo, Kimberly B. Wethly and Julie Hogan Rodgers of the WilmerHale tax practice discussed state tax considerations related to stock options at a webcast sponsored by the National Association of Stock Plan Professionals (the NASPP). The webcast included a discussion of how stock options are taxed at the state level, as well as the more intricate and complex state tax aspects of stock options, including the potential double taxation of optionees and apportionment and withholding issues for employers. The webcast was attended by over 600 participants.
The highlights of the presentation include:
- An overview of how states tax optionees, including a discussion of resident and nonresident taxation;
- An analysis of the methods used by various states to apportion income between the states in which services are performed versus the states in which income is recognized;
- A description of tax credits, including instances where credits may not prevent double taxation of optionees; and
- A summary of the withholding, apportionment and deduction issues for employers related to stock option income.