If you have stock options, then you can access an asset that provides you with a choice. Very literally, a stock option is an option; it’s a form of compensation that gives you the right (but not the obligation) to buy shares of company stock at a set price. Acting […]
Alternative minimum tax
How Your Income May Impact the Sensitivity to AMT – and What That Means for Incentive Stock Options
If you have incentive stock options, you’ve likely heard of the alternative minimum tax. This tax, or AMT, is what you may pay in years that you exercise and hold incentive stock options. The greater the spread between the exercise price of your ISOs and the fair market value of […]
How to Use AMT Balancing to Manage Incentive Stock Option Cash Flow
If you have employee stock options, you need to determine what kind you have: incentive stock options (ISO) or non-qualified stock options (NQSO). The differences go far beyond their names. ISOs may provide tax advantages for you, assuming you meet certain requirements. For this reason, many people prefer incentive stock […]
What You Should Know About the Alternative Minimum Tax
The alternative minimum tax (AMT) acts as a sort of parallel tax system to the regular federal income tax system. For taxpayers, this means they need to calculate their income twice: once under the regular tax rules and a second time under AMT. After running this calculation, taxpayers then pay […]
Why Waiting to Exercise Your Incentive Stock Options May Increase The Alternative Minimum Tax
Incentive stock options are unique in that the longer you wait to exercise, the costlier it may be to exercise and hold your shares. That’s not because exercising the incentive stock option cost more, as that price is fixed, but because the cost of the alternative minimum tax (AMT) may […]
How to Do a Year End Exercise of Incentive Stock Options to the AMT Crossover Point
Finding the best time and best strategy to exercise incentive stock options is difficult. Competing considerations on income tax, investment planning, and financial planning make it difficult to address the best time to exercise incentive stock options (ISOs) with a blanket answer. Some strategies suggest that exercising early may be […]
