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Financial Planning

Financial Planning explores various approaches to making the most of stock grant gains while minimizing taxes. The coverage includes the role of stock grants in gifts, estates and trusts, dividends, hedging, and more.

Browse an overview of this section below, or explore the subtopics to the left.

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Restricted Stock & Stock Options: Financial Planning After Your Tax Return Is Filed And At Year-End (Part 1) This is premium content

Tom Davison and Liam Hurley
The time right after you have completed your tax return is ideal for big-picture financial planning. You can more accurately project your income and likely tax situation for the remainder of this year and the next, including AMT risk and capital-loss carry-forwards, to develop your strategy.

Your Company Stock: The Importance Of Diversification This is premium content

Laura Tanner, PhD, CFP®
NEW! Through the author's personal example, this article presents the dangers of a concentrated stock position, discusses why diversification may be hard for employees with shares from equity compensation, and explores strategies for preserving your net worth. A podcast of our interview with the author is included.

Tax Planning For Options, Restricted Stock, And ESPPs After 2013 Tax Law Changes: High-Income Taxpayers Impacted Most (Part 1)

Tom Davison and William Whitaker
NEW! The beginning of 2013 brought notable shifts in tax rates for people at higher income levels. Part 1 surveys the important tax changes and considers their impact on planning.

Tax Planning For Options, Restricted Stock, And ESPPs After 2013 Tax Law Changes: High-Income Taxpayers Impacted Most (Part 2) This is premium content

Tom Davison and William Whitaker
NEW! The beginning of 2013 brought notable changes in tax rates for people at higher income levels. Part 2 looks at planning strategies involving capital gains rates, the AMT, and ISOs, and considers general ideas related to income-shifting.

Restricted Stock: Tax, Financial, Estate, And Retirement Planning (Part 1) This is premium content

Richard Friedman
Understand financial planning for restricted stock and RSUs. Part 1 discusses the growing popularity of these grants, their special features, and the related tax planning. A podcast of our interview with the author is included.

International Equity Awards And Company Stock: The Confusing World Of IRS Reporting For Overseas Assets And Income This is premium content

Richard Friedman
NEW! For US taxpayers with overseas assets and/or income, the reporting rules are complicated, and mistakes can lead to costly penalties. This article summarizes some of the most important reporting rules.

American Taxpayer Relief Act And Medicare Surtax: Impact On Stock Option And Restricted Stock Strategies This is premium content

Alan B. Ungar
The American Taxpayer Relief Act and the Affordable Care Act introduced tax-rate increases you must consider in deciding when to exercise stock options, when to sell company shares, and how to plan around income from restricted stock/RSU vesting.

Ten Financial-Planning Rules Everyone With Stock Options Needs To Know

Michael Beriss
Managing your stock options is one of the most complex financial challenges you will face. These 10 rules will help you get the most out of them.

Stockbrokers' Secrets: Strategy For Volatile Markets

W.E.B. Bantling
Market volatility and declines rattle even the most experienced holders of stock compensation (and their advisors). Here are 10 topics I find myself discussing over and over again with my best clients.

Employee Stock Purchase Plans & Your Financial Planning (Part 2) This is premium content

Bruce Brumberg
Employee stock purchase plans (ESPPs) are changing in many ways, largely in response to accounting rules. For Part 2, myStockOptions.com asked financial and wealth advisors what they are recommending to clients about ESPP participation.

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Next year I may be in a higher tax bracket. I am thinking about exercising my nonqualified stock options before then to accelerate income into this year. What issues do I need to think about? This is premium content

Before you rush into exercising, you may want to do some calculations with potential future stock prices and tax rates. When you exercise earlier than necessary...

Next year, my income will trigger the 3.8% Medicare surtax on investment income, along with higher tax rates on capital gains and dividends. If I were to sell the stock this year, I would avoid these taxes, and I would then repurchase the stock to reset the basis. What are the issues I need to consider? This is premium content

By selling stock at a gain and then buying it back at the current price, you create a new...

What's the impact of the recent tax increases on my restricted stock grants? This is premium content

Increases in tax rates indirectly affect the value of grants. Most importantly...

What is a concentrated stock position, and what can I do to protect myself and get cash for other purposes? This is premium content

A concentrated stock position occurs when a significant chunk of your net worth is tied up in a single stock. Strategies for hedging, diversification, and liquidity include...

I have various stock option grants with vested options. Do I need to exercise first my oldest grants or my oldest vested options?

There's no requirement for which vested options you must exercise first. The decision of which options to exercise first is part of your...

My company is now granting restricted stock, and the current share price is much lower than I think it will be in a few years. Any tax-planning ideas? This is premium content

For restricted stock, you can make what the tax code calls a Section 83(b) election to be taxed immediately at grant instead of later at vesting, when your stock price, and thus your tax rate, may be much higher. However, before you make your decision, realize that...

UPDATES! If my company requires me to have a foreign bank or brokerage account because of the stock plan, what do I need to know about the FBAR and FATCA reporting rules? This is premium content

Under the FBAR and FATCA rules, you may have special IRS reporting requirements if you hold assets in a bank outside the US. This FAQ explains the requirements and the severe penalties that the IRS imposes for noncompliance...

NEW! I work and live in the United States but have non-immigrant alien status (L1 visa). My stock options vested when I worked in my home country. I plan to exercise the options while living in the US. Will I have to pay taxes to the IRS and/or the US state where I live? This is premium content

If you are a US resident at the time of exercise, the options are taxable in the United States, so you will owe federal tax on...

What is backup withholding? How do I prevent it or recover it? This is premium content

Backup withholding is a form of tax withholding on income from stock sales, along with interest income, dividends, or other types of payments that are reported on Form 1099. Your brokerage firm is required to make backup withholding if you are...

UPDATES! How does a non-US resident reclaim US backup withholding? This is premium content

If you are a nonresident alien and do not complete and file Form W-8BEN with the IRS upon receiving stock-sale proceeds, such as those stemming from equity awards, your brokerage firm will assess backup withholding on the proceeds. To reclaim backup withholding, take the following steps...

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