Tom Davison
UPDATED! Even under President Barack Obama, the Bush administration's 2003 tax cuts and later extensions will continue to affect tax strategies for NQSOs, ISOs, and restricted stock. Unless these tax laws change soon, many of them will persist through 2010.
Kaye A. Thomas
UPDATED FOR REVISED TAX LAW! Special rules for old unused AMT credit, first available in 2007, are drastically revised for tax years 2008 (returns filed in 2009) through 2012. This is the first of two articles on the refundable AMT credit, which provides a way for many people to use more AMT credit than under the regular rules.
Kaye A. Thomas
UPDATED FOR REVISED TAX LAW! Special rules for old unused AMT credit, first available in 2007, are drastically revised for 2008. This is the second of two articles on the refundable AMT credit, which provides a way for many people to use more AMT credit than under the regular rules.
Tom Davison
With the lower tax rate on dividends, let's look at the effects of dividends on your planning for stock options and restricted stock.
Tom Davison
The lower tax rate on dividends may change your stock option and restricted stock planning. Part 1 explained basic dividend rules. This article looks at dividend strategy.
Internal Revenue Service
This extensive IRS guide covers many topics related to reporting income and expenses from investments, including dividends (Chapter 1), capital gains (Chapter 4), and interest on loans (Chapter 3).
CCH Tax Briefing
A summary of tax increases, decreases, and new programs in President Obama's proposed budget plan for the 2010 fiscal year. For example, individuals in the new top tax brackets of 36% and 39.6% would see an increase in the tax rate on long-term capital gains and qualified dividends from 15% to 20%.
Joshua Zumbrun
Forbes
Both the stimulus package passed in February 2009 and President Barack Obama's budget plan contain a range of changes to the tax code, including proposed increases in the top rate for ordinary income and the rates for capital gains.
Andrea Coombes
MarketWatch
The American Recovery and Reinvestment Act of 2009 includes a routine annual increase in the AMT income exemption amounts, among other provisions that may affect people with stock compensation.
Lisa Shidler
Investment News
Considering the likelihood of tax increases after 2008, some advisors (and their clients) want to sell at least some shares now, while the top capital gains rate is still only 15%. Other advisors suggest waiting, as stocks are low and gains from an eventual market upswing may outweigh any potential tax savings.
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Yes. The credit has income limits, so a big enough spike in your income during 2009 from a stock option exercise or the vesting of restricted stock could...
Possibly. The Economic Stimulus Act of 2008 created a tax rebate for individuals that is based on income in 2007 and/or 2008. Most taxpayers qualified for the whole rebate on 2007 income, and checks were mailed to them in 2008. However, the rebate is still available to a minority of people who did not qualify on 2007 income, or who qualified for only a portion of the full rebate. People with stock compensation may fall into this group...
The alternative minimum tax (AMT) was intended to require the super-wealthy to pay tax when credits and other deductions would let them circumvent the regular tax system. However, over the years the AMT has begun to hit a growing number of taxpayers who aren't wealthy, including people who exercise incentive stock options. Congress has enacted temporary AMT relief for them, and has changed the rules for the use of AMT credits. This FAQ follows the latest developments...
While the 2003 tax law did not change the taxation of ISOs, there were a few changes that impact the tax when you sell the stock. Tax law changes in 2006, 2007, 2008, and 2009 raised the AMT income exemption amounts and provided an alternative way to use AMT credits...
The AMT system is complicated. Broadly, it starts by taking your adjusted gross income, subtracts your itemized deductions, makes certain negative and positive adjustments, and includes certain tax items called tax "preferences." The resulting amount...
The 2003 tax law has no provisions that deal directly with employee stock options or stock purchase plans. If your income goes up...
"Capital gain" is income that arises from the sale of a capital asset. Gain from the sale of securities held for investment...
If you hold stock acquired from the exercise of an NQSO for more than one year, the appreciation is...
The holding period to determine whether a dividend is "qualified" and taxed at the lower 15% rate starts on the date after the option is exercised and the stock is held...
If you take out a margin loan from your brokerage firm, it can lend your shares to short sellers. If that stock pays a dividend while your shares are on loan, you will...
The traditional strategy with NQSOs recommends waiting till...
Maybe not. You are probably thinking that you can borrow money, such as with a margin loan, deduct this as an investment interest deduction, and net it against investment income...
Tax considerations alone should not drive the choice of what stock you sell. For example, if you are holding appreciated company stock from a nonqualified stock option (NQSO) exercise, you will be taxed on any capital gains when you sell it. The capital-loss carry-forward from last year's unused losses can offset these gains, making it less "taxing" to diversify your holdings...
No. Under the 2003 tax cut, qualified dividends are taxed at the same rates as long-term capital gains...
Not necessarily. Employers usually withhold federal income taxes at the rate used for supplemental wages...
Estimated-tax periods end on the last days of March, May, August, and December, with payments due by the 15th (or the next business day) of the following month. If you are paying estimated taxes, one strategy is that just after the start of an estimated-tax period you can...
You need to pay enough tax during the year through withholding or estimated tax payments to avoid penalties and interest. The tax that has to be paid includes any AMT attributable to the exercise of ISOs or any ordinary income from a disqualifying disposition. In these ISO situations, your employer does not...
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