3921 Tax Form - Exercise of an Incentive Stock Option

Updated on August 10, 2022 - 10:30 AM by Admin, TaxBandits

Form 3921 is an IRS form that is used by companies to report when a specific employee exercises an Incentive Stock Option (ISO). This form has to be filled in the same year in which the ISO has been exercised by the shareholder before the deadline.

Table of Content:

1. What is 3921 Tax Form?

IRS Form 3921 is used to report specific information about stock incentive options that a corporation offers during a calendar year. When a company grants incentive stock options (ISO) to its employees and the employees exercise the options, the IRS must be notified.

2. Who Must File a Form 3921?

Companies that have shareholders who exercise their ISO should file IRS Form 3921 to report IRS that the Shareholder(employee) has received ISO compensation. You must file one form per each ISO exercised, if you failed to report before the deadline or made mistakes in filing Form 3921 you will end up paying a penalty of upto $3,426,500 per year.

For example, let’s assume you own a startup and issue an ISO for your employee (John) in 2017. And in 2021, John exercised some or all of his stock options. This means you should file Form 3921 in the coming year 2022 before the deadline January 31.

3. What Information is Required to file Form 3921?

You need the following information in order to file the 3921 tax Form. The information of the employee who exercises their ISO (Incentive Stock option).

  • The employees’ tax ID numbers
  • Company basic information ( Legal Name, Address)
  • Company TIN number
  • Date of Option Grant
  • Date of Option Exercise
  • Exercise Price per Share
  • Number of Shares Transferred
  • FMV per Share on Exercise Date

4. When is the Deadline to file Form 3921 for the 2022 Tax Year?

Below are the three different deadlines for Form 3921 based on the filing methods,

  • Deadline to distribute Form 3921 Copy B: The company must furnish a copy B to all the applicable employees who exercise their ISO on or before January 31, 2023.
  • Deadline to paper file Form 3921 Copy A: Companies must paper file form 3921 copy A to IRS on or before February 28, 2023.
  • Companies that choose to e-file 3921 Forms must do so by March 31, 2023

5. How to E-File Form 3921 in Minutes with TaxBandits?

TaxBandits offers a convenient and secure option for E-filing Form 3921.

TaxBandits provides time-saving features that help businesses streamline their e-filing process. The TIN Matching prevents TIN errors that could cause the IRS to reject a form or require the business to file a correction form.

When it comes to distributing employee copies, TaxBandits clients can choose postal mailing services or allow their employees to view their copies in a secure online access portal.

You can easily complete your Form 3921 with TaxBandits in three simple steps!

  • Choose the Form and Tax Year
  • Enter the Form 3921 Details
  • Review and transmit it to the IRS

File Form 3921 with TaxBandits to receive instant updates on the IRS status of your form. Get started with TaxBandits today and begin e-filing for as low as $0.80/Form.