Tom Davison
UPDATED! Even under the new president, 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 sooner, many of them will persist through 2010.
Kaye A. Thomas
UPDATED! Beginning with tax returns for the tax year 2007, certain taxpayers are able to claim old unused AMT credit even if it means getting a refund that exceeds the current year's tax. This pair of articles provides complete coverage of 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! The refundable AMT credit will be a boon to many taxpayers, especially those who encountered disaster with incentive stock options during the tech stock collapse that began in 2000. This pair of articles provides complete coverage of the refundable credit.
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).
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.
Andrea Coombes
MarketWatch
The pressures of the economic downturn may delay the tax reforms that President Barack Obama wants, but eventually at least some of them will probably occur.
Kaye Thomas
Fairmark Press Tax Guide For Investors
You have to hold the shares at least 61 days if you want to claim the lower qualified dividend tax rate. The holding period calculation is tricky.
Return to top of this page
Possibly. The Economic Stimulus Act of 2008, signed into law in February 2008, created a tax rebate for many people whose income, as reported on tax returns for 2007, qualified them to receive the rebate. However, in some situations this tax break can also be used to reduce taxes on your return for the 2008 tax year...
Running parallel to the regular tax system, the alternative minimum tax (AMT) was established in 1969 to require the super-wealthy to pay taxes when credits and other deductions could otherwise reduce or eliminate their tax altogether. However, for several reasons, over the years the AMT has started to hit a growing number of taxpayers who aren't wealthy, and people who exercise incentive stock options (ISOs). Congress has enacted temporary AMT relief to protect middle-income taxpayers from the AMT, and in 2008 it will consider entirely repealing the AMT...
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, and 2008 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...
Yes. Any stock held for one year and sold on or after May 6, 2003...
A capital-loss carry-forward from the past year is first used to offset capital gains from stock sales this year, dollar for dollar, up to the full amount of the carry-forward. For example, if you are holding appreciated company stock from a nonqualified stock option exercise or restricted stock vesting, you will be taxed on any capital gains when you sell it...
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...
Return to top of page
Test your knowledge with our Taxes quiz.
