IRS Publication 525 — Taxable and Nontaxable Income
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“Alternative minimum tax (AMT). For the AMT , you must treat stock acquired through the exercise of an ISO as if no special treatment ap- plied. This means that, when your rights in the stock are transferable or no longer subject to a substantial risk of forfeiture, you must include as an adjustment in figuring alternative minimum taxable income the amount by which the FMV of the stock exceeds the…”
However, if you paid the premiums on an accident or health insurance policy, the benefits you receive under the policy aren’t taxable. For more information, see Other Sickness and Injury Benefits under Sickness and Injury Benefits, later. Social security and Medicare taxes paid by employer. If you and your employer have an agreement that your employer pays your social security and Medicare taxes without deducting them from your gross wages, you must report the amount of tax paid for you as taxable wages on your tax return. The payment is also treated as wages for figuring your social security and Medicare taxes and your social security and Medicare benefits. However, these payments aren’t treated as social security and Medicare wages if you’re a household worker or a farm worker.
Stock appreciation rights. Don’t include a stock appreciation right granted by your employer in income until you exercise (use) the right. When you use the right, you’re entitled to a cash payment equal to the FMV of the corporation’s stock on the date of use minus the FMV on the date the right was granted. You include the cash payment in income in the year you use the right.
Digital assets. If your employer gives you digital assets (such as Bitcoin) as payment for your services, you must include the FMV of the digital assets as of the date(s) of receipt in your income. The FMV of digital assets paid as wages is subject to federal income tax withholding, FICA tax, and FUTA tax and must be reported on Form W -2. Notice 2014 -21, 2014 -16 I.R.B. 938, describes how digital assets are treated for federal tax purposes and is available at IRS.gov/irb/2014-16_IRB#NOT -2014-21. For further information, go to IRS.gov/DigitalAssets.
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