Some employees are compensated with stock options. These stock options often give the employee the right to buy multiple shares of the company's stock at a set price.

Employees will often exercise these options when the fair market value of the stock is greater than the set price. At that price, the employee can then buy the stock at a low price and then sell it for a higher price, thereby making a profit. 

While this profit will boost the employee's individual income, the employee may also need to pay taxes on this additional income. The amount of taxes will often depend on whether the original stock option was a qualified or unqualified stock option. 

In most cases, employees will pay higher taxes on unqualified stock options than qualified stock options. However, the amount will often depend on the original contract terms and the exercise date. 

If you or anyone you know has questions about their stock options, contact the Houston contract lawyers of the Ross Law Group at 800-634-8042.