How to Enter Equity Compensation in Boldin
Equity compensation — stock options, restricted units, and employee purchase plans — is one of the more complex income types to plan around. Each type has its own taxable event, its own rate treatment, and its own timing. None of them fit perfectly into Boldin’s current income categories.
This article explains how each type works, where the tax complexity lives, and the best way to represent each one in your Boldin plan today. Where Boldin’s model produces a known approximation rather than an exact result, we’ll tell you what the limitation is and how much it matters.
Quick Reference
Type | Taxable event | FICA | Enter in Boldin as | Tax rate flag |
RSU | Vest date | Yes | Work income | None — ordinary income ✔ |
PSU | Vest date | Yes | Work income | None — ordinary income ✔ |
ESPP | Sale date | Yes on discount | Work income (discount) + passive income (gain) | Gain overstated at ordinary rate |
NSO / NQSO | Exercise date | Yes | Work income | None — ordinary income ✔ |
ISO (qualifying) | Sale date | No | Passive income | Overstated — should be LTCG rate |
ISO (disqualifying) | Exercise date | Yes | Work income | None — ordinary income ✔ |
A note on capital gains rates Boldin does not currently have a dedicated capital gains income type. Where a gain should technically be taxed at long-term capital gains rates (0%, 15%, or 20%), entering it as passive income will apply ordinary income tax rates instead. For most users this overstates the tax on that income. We flag this where it applies and note how significant the difference is likely to be. |
Restricted Stock Units (RSUs)
How they work
RSUs vest on a schedule set by your employer — typically over three to four years. On each vest date, the shares become yours and the fair market value of the shares that vested is treated as ordinary income. Your employer will withhold taxes and report the income on your W-2, just like a cash bonus.
If you hold the shares after vesting and they increase in value, the additional gain is a capital gain when you eventually sell. Short-term if held less than a year from vest, long-term if held more than a year.
How to enter it in Boldin
How to enter it Enter the expected value of shares vesting each year as work income. Boldin will apply federal and state income tax plus FICA up to the Social Security wage base — which is correct. If you plan to hold shares after vesting and want to model the eventual sale, add an investment account for the shares and model the sale separately. |
Performance Stock Units (PSUs)
How they work
PSUs work like RSUs with one difference: the number of shares you receive depends on whether performance targets are met — revenue goals, stock price milestones, or other metrics. Once the performance period ends and shares are awarded, the tax treatment is identical to RSUs: ordinary income at the award date, capital gains on any subsequent appreciation.
How to enter it in Boldin
How to enter it Enter your best estimate of the expected payout as work income in the year you expect to receive it. If the payout is uncertain, use a conservative estimate or model a range using Boldin scenarios. Boldin cannot resolve the performance uncertainty — that judgment is yours. |
Employee Stock Purchase Plans (ESPPs)
How they work
ESPPs let you purchase company stock at a discount — typically 10–15% below market price. The tax treatment depends on how long you hold the shares after purchase:
Qualifying disposition (held 2+ years from offering date and 1+ year from purchase date): The discount is ordinary income. Any additional gain above the purchase price is long-term capital gains.
Disqualifying disposition (sold sooner): The full spread between purchase price and sale price is ordinary income, subject to FICA.
How to enter it in Boldin
How to enter it For the discount portion: enter as work income in the year of sale. This is always ordinary income regardless of holding period. For any additional gain above the discounted purchase price (qualifying dispositions only): enter as passive income. This approximates the capital gains treatment, though Boldin will apply ordinary income rates rather than the lower capital gains rate. |
⚠️ Tax rate flag — qualifying disposition gain If your ESPP gain qualifies for long-term capital gains treatment, entering it as passive income will overstate your tax. The difference depends on your bracket — if you’re in the 22% ordinary income bracket and the 15% capital gains bracket, the overstatement is 7 cents per dollar of gain. For modest ESPP participation this is a minor inaccuracy. For large grants, it may be worth a conversation with a tax advisor. |
Non-Qualified Stock Options (NSOs / NQSOs)
How they work
NSOs give you the right to buy company stock at a set price (the strike price) at a future date. The taxable event is exercise — not grant, and not sale. When you exercise, the spread between the strike price and the current fair market value is ordinary income, reported on your W-2 and subject to FICA. If you hold the shares after exercise and they appreciate further, that additional gain is capital gains at sale.
How to enter it in Boldin
How to enter it Enter the spread (fair market value minus strike price, times number of shares exercised) as work income in the year of exercise. If you plan to hold shares post-exercise, add an investment account entry for those shares to model the eventual sale separately. |
Incentive Stock Options (ISOs)
How they work
ISOs are the most tax-advantaged — and the most complex — form of equity compensation. The key rules:
At exercise: no regular income tax. The spread is not reported as W-2 income.
Qualifying disposition (held 2+ years from grant date and 1+ year from exercise date): the entire gain from strike price to sale price is taxed at long-term capital gains rates. No FICA.
Disqualifying disposition (sold too soon): the spread at exercise becomes ordinary income, subject to FICA. Treated like an NSO.
AMT risk at exercise Although ISOs trigger no regular income tax at exercise, the spread is an Alternative Minimum Tax (AMT) preference item. Exercising a large ISO grant in a single year can generate a significant AMT bill even with no regular tax liability. AMT modeling is complex and outside Boldin’s current scope. If you are planning a large ISO exercise, work with a CPA or tax advisor before the exercise date — the timing decision has material tax consequences. |
How to enter it in Boldin
Qualifying disposition: Enter the total gain (sale price minus strike price) as passive income in the year of sale. Boldin will apply ordinary income tax rates, which overstates the tax — ISOs held long enough should be taxed at capital gains rates. See the flag below.
Disqualifying disposition: Enter the spread at exercise as work income. Boldin’s ordinary income treatment is correct.
⚠️ Tax rate flag — qualifying ISO dispositions Entering a qualifying ISO gain as passive income will overstate your tax. Long-term capital gains rates (0%, 15%, or 20%) apply to qualifying ISO gains — not ordinary income rates. For a user in the 22% ordinary income bracket with the 15% capital gains rate, the overstatement is 7 cents per dollar of gain. For a user in the 37% bracket with a 20% capital gains rate, the overstatement is 17 cents per dollar. If your ISO gain is large relative to your overall plan, this limitation may meaningfully affect your projected after-tax income. Boldin does not currently have a dedicated capital gains income type. A workaround is to create an investment account, add the ISO proceeds as a balance, and model a withdrawal — but this approach has its own complexity. For large ISO exits, a tax advisor or financial planner can help you model the after-tax outcome more precisely. |
Still Have Questions?
Equity compensation planning — especially around exercise timing, AMT, and holding period decisions — is one area where professional guidance pays for itself. If your equity compensation is a significant part of your retirement picture:
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