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Annotated diagram of Schedule DTax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.


ISOs

Incentive stock options carry great potential tax benefits, but their taxation can be complex, especially when the alternative minimum tax comes into play. Browse an overview of this section below, or explore the subtopics to the left. See also the ISO sections of the Tax Center.

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Stock Options 101: The Essentials

Matt Simon
NEW! Your company has granted you stock options. Now what? This article explains the essential facts that you must know to understand your stock options and make the most of them.

Stock Option Fundamentals (Part 5): Incentive Stock Option Taxation & Alternative Minimum Tax This is premium content

Marilyn Renninger
Learn how and when income from ISOs is subject to taxes, including the alternative minimum tax. You must consider taxes at both exercise and sale to put together an optimal strategy.

Getting The Most From Your Stock Options This is premium content

William Baldwin
Podcast included! Stock options are a major element of your long-term incentive compensation, offering tremendous potential to accumulate personal wealth. Given your stock options' complexity, it’s essential to develop a strategy to realize their full potential.

The ISO Tax Trap And The AMT Credit Myth: What To Do Before Exercise And At Year-End This is premium content

Alan Ungar
The tax reductions of the past few years have brought both good and bad news for holders of incentive stock options. While you may have lower capital gains rates when you hold the shares long enough after exercise, it is harder to avoid the risks of the alternative minimum tax (AMT) and to fully recover any AMT credit.

The Alternative Minimum Tax Sweet Spot: Planning Opportunities This is premium content

Tom Davison and William Whitaker
"My income is around half a million dollars, and I'm paying the alternative minimum tax. It's annoying, and I feel trapped. Now what?" Surprisingly, the best move may be to increase income, and pay even more alternative minimum tax! Find out why by reading this intriguing article.

Stock Option Fundamentals (Part 3): Income Taxes And Withholding This is premium content

Marilyn Renninger
Here's some advice for financial fitness: take stock of taxes before you exercise! When and how you exercise your stock options can have a major impact on how much tax and which taxes you'll pay.

IRS Form 3921 For Incentive Stock Options: What You Need To Know, And How It Can Help You Understand ISO Taxation This is premium content

Bruce Brumberg
Incentive stock option (ISO) exercises made during a calendar year are reported to you and the IRS on Form 3921 early in the following year. This article explains what you need to know about the information on the form, and how the form can help you better understand the complexities of ISO taxation.

Dr. Strange Tax, Or: How I Learned To Stop Worrying And Love The AMT This is premium content

Several years ago I faced a new situation. I'd been working for a solid Fortune 500 company for a number of years and had a substantial number of stock options, mostly incentive stock options (ISOs). They were quite valuable. What I did not reckon on, however, was the alternative minimum tax. Here is my story.

ISOs: Tax-Return Tips And Traps This is premium content

The myStockOptions.com Editorial Team & Contributors
Tax reporting with incentive stock options (ISOs) can be tricky. Learn what you need to report on your return at each stage of your ISO's life cycle.

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

Tom Davison and William Whitaker
Notable shifts in tax rates have occurred for people with high incomes. Part 2 looks at planning strategies involving capital gains rates, the AMT, and ISOs, and considers general ideas related to income-shifting.

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What are the top 10 questions I should ask about my stock options?

You should know the answers to the following questions. Understanding the topics involved will help you make the most of your stock options and prevent costly mistakes...

What do I need to know about the information on IRS Form 3921 for incentive stock options? This is premium content

Your company is required to file Form 3921 with the IRS and either give you a copy or present the same information on a substitute document. With this reporting, the IRS now knows more information about your ISO exercises than it did before, particularly with regard to...

UPDATES! What happens if I live in state A when my stock options are granted, state B when I perform some of my services, state C when I exercise the options, and state D when I sell the shares? This is premium content

Generally, each state you live in determines what income is taxable and when. For administrative ease, many companies...

How will my broker know which shares to sell? Should I identify them in some way? This is premium content

If you have more than one batch of company stock, you are responsible for providing your broker with enough information to identify which shares to sell. If you do not specify...

Can I use ISO stock to exercise NQSOs? Is this a disqualifying disposition that eliminates the special tax treatment for ISOs? This is premium content

Yes, you can use ISO stock to exercise NQSOs without disqualifying it, as the...

How do I use stock that I own to exercise an option in a stock swap? What is the tax treatment? This is premium content

A "stock swap" or "stock for stock" exercise is a stock option exercise in which the exercise price is paid with shares of company stock you own...

When I take an international assignment, will taxes on my stock compensation be equalized? This is premium content

At some companies, international assignments are often accompanied by what is commonly called an equalization package. To give you an incentive to accept the international assignment, the company agrees to...

What is the alternative minimum tax?

Running parallel to the regular tax system, the alternative minimum tax (AMT) was designed to require extremely wealthy people to pay their fair share of taxes when credits and deductions could otherwise reduce or eliminate their tax liabilities. However, the reach of the AMT has expanded over time to hit middle-income people it was never intended to tax...

How can incentive stock options trigger the alternative minimum tax?

ISOs affect your AMT liability in two ways. You should consider these points in your planning both at ISO exercise and when you later sell the acquired shares...

Is it easy to calculate AMT liability?

The AMT rules and forms baffle even tax professionals. You can better understand the process by...

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