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Stock Option Planning
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Stock options may lead to owing Alternative Minimum Tax (AMT). Despite the negative press, there are times when it makes sense to pay the AMT to get the most value out of your options. We can help you determine the point where AMT is due, if it makes sense to pay some AMT, and help you get the most value out of your options based on your risk profile.
We use the process below to help you maximize your options. There are a few variations to this process based on your income levels and the amount and types of options you have available. To find out more detail about stock options - request our Stock Option Explainer. |
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Step 1 - Project your income for the year. This will take the 'surprise' out of your taxes for the year, before layering on the options you can exercise.
Step 2 - Based on your needs and risk profile, we provide a few scenarios for exercising and holding or selling your options. If it makes sense to consider multiple years, we will do so. We can identify the spot where you will begin owing AMT, and help you determine if you should exercise more, and how much tax you would owe. The risk component is critical given the volatile nature of early-stage stock. Step 3 - We check in with you at key times for options. At the end of the calendar year and just before 12 months are up, you have the choice to sell options early and avoid AMT, in exchange for regular tax due. This flexibility is a key component to the value of incentive stock options. Step 4 - we prepare your tax return. Returns with stock options can be more complicated, we make the proces easy for you. |
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"Matt was extremely helpful in understanding our tax obligations with exercising and selling incentive stock options. He did a great job at simplifying complex concepts, such as how AMT works. He also presented several scenarios and strategies that we could pursue to optimize tax savings. Having Matt as an advisor gave us confidence when it was time to file our taxes." -Colton and Jennifer |