IRS Form 3921 Instructions for 2022

1. What is Form 3921?

Form 3921 is an IRS tax form used by companies to report information about specific employees that exercised an Incentive Stock Option.

Form 3921 should be filed for the calendar year in which the stock option has been exercised.

A copy of Form 3921 should be also distributed to each applicable shareholder (Employee Exercised the ISO).

There are three copies of Form 3921

• Form 3921 copy A is submitted to IRS reporting which employee has exercised the stock option this calendar year, through Mail or Electrically.
• Form 3921 copy B is sent to the applicable employee who exercised the (ISO) Incentive Stock Options.
• Form 3921 copy C is to be filed for the company records.

2. What Are The Requirements For Filing Form 3921?

You can file Form 3921 by either mailing paper copies or e-filing. Regardless of your filing method, the following information is needed to file.

Information about the Employee who exercised the stock option (Employee's Name,
Address, and TIN)

• Date Option Granted
• Date Option Exercised
• Exercise Price Per Share
• Fair Market Value Per Share on Exercise Date
• Number of Shares Transferred

Note: If you are paper filling more than 250 copies, you must file Form 3921 online.

3. What are the Line by Line Instructions for completing Form 3921

Form 3921 consists of about 6 boxes. Each section requires certain information specific to complete the reporting. Below is the break of Form 3921 and each field is explained individually to make your filling process easier.

Completing the transferor’s Information on Form 3921

The IRS requires certain information about the transferors, which includes

• Transferor’s Name
• Transferor’s Address (street address, city or town, state or province, country, and ZIP or foreign postal code)
• Transferor’s TIN

Completing the Employee Information on Form 3921

The IRS requires certain information about the transferors, which includes

• Employee TIN (EIN or SSN)
• Employee Name
• Employee Address (street address, city or town, state or province, country, and ZIP or foreign postal code)
• Account Number

Note: An account number is required if the payer file’s more than one Form 3921 and uses multiple accounts for the recipients.

The following information is required in boxes 1-6.

• Box 1: Date Option Granted

  The transferor must enter the date that the stock option was granted to the
  employee in Box 1.

• Box 2: Date Option Exercised

  Enter the date when the employee exercised the stock option in Box 2.

• Box 3: Exercise Price Per Share

  The transferor should enter the exercise stock price per share in Box 3.

• Box 4: Fair Market Value Per Share on Exercise Date

  The fair market value per share on the date the stock option was exercised should be entered in Box 4. Fair market value is also referred to as the actual value of the stock.

• Box 5: Number of Shares Transferred

  The transferor must enter the number of shares that are transferred to the employee.

• Box 6: Other than Transferor

  Enter the Name, Address, and TIN of the entity whose stock is being transferred to the employee.

Only make this selection if the company entered in the TRANSFEROR boxes (upper left corner of Form 3921) is not the real entity of the stock that is transferred to the employee.

6. When are the Due Dates for Filing Form 3921 for 2022?

The due dates for Form 3921 are listed as follows:

• Deadline to provide copy B to all the applicable shareholders who exercised the ISO falls on January 31, 2023.
• Deadline to file Form 3921 copy A with the IRS through paper filing falls on February 28, 2023.
• Deadline to file Form 3921 copy A with the IRS through E-filing falls on March 31, 2023.

Note: If the IRS deadline falls on a weekend or any federal holiday, the deadline is automatically extended to the following business day.

Filing the correct information and following the IRS deadlines is crucial, if not your company will likely have to pay a penalty. The amount of that penalty will vary based on how long it took to file an accurate form with the IRS.

• The form was filed within 30 days after the due date: You will pay $50 per form (Maximum penalty of $547,000 per year and $191,000 for small businesses)
• The form was filed 30 days after the due date, but within August 1st: You will pay $100 per form (Maximum penalty $1,641,000 per year and $547,000 for small businesses)
• The form was filed after August 1st: You will pay $280 per form (Maximum penalty of $3,282,500 per year and $1,094,000 for small businesses)

7. What are the Advantages of E-Filing Form 3921 with TaxBandits?

E-filing Form 3921 with TaxBandits comes with many great benefits. Our e-filing process is simple and we provide instant updates on the IRS status of your forms. Our built-in audit feature catches common errors on your forms that can lead to IRS rejections

TaxBandits offers solutions for your recipient copies with postal mailing services and online access for recipients to view and download their forms.

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

• Step 1: Choose the Form and Tax Year
• Step 2: Enter the Form 3921 Details
• Step 3: Review and transmit it to the IRS

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