ISOs
Do you know the limits on incentive stock options (ISOs)? Do you understand the impact of ISO exercises on the alternative minimum tax (AMT)?
ISOs elucidates incentive stock options: their wealth-building potential, their limits, and their taxation, including AMT. This overview page presents selected articles and FAQs from the subtopics in this section. For the full content of a subtopic, click on a link in the upper left.
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Articles (Jump to FAQs)
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. Some people are in for unpleasant surprises, though.
Tom Davison and Liam Hurley
Right after you have completed your taxes is a great time to do your 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. At the end of the year, review your analysis and strategy again.
Alan Ungar
The tax reductions of the past few years have brought both good and bad news for holders of incentive stock options (ISOs). While you may have lower capital gains rates when you hold the shares long enough after exercise, it's harder to avoid the risks of the alternative minimum tax (AMT) and to fully recoup any AMT credit.
Martin Nissenbaum
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.
Bruce Brumberg and Lynnette Khalfani
UPDATED! Tax-filing season can be onerous. If you're puzzled by a 1099-B form or don't quite know how and where to report gains and losses with stock options or ESPPs, this article is for you.
Marilyn Renninger
UPDATED! You're ready to delve deeper into how and when different taxes apply to ISOs, including the AMT. You need to consider taxes at exercise and at sale to put together a strategy that maximizes the value of your options.
Tom Davison
UPDATED! The Bush administration's 2003 tax cuts and later extensions continue to affect NQSO and ISO tax strategies.
The myStockOptions.com Tax Team
UPDATED! Learn how to report your sales of company stock on Schedule D of IRS Form 1040. Our comprehensive guide to Schedule D reporting covers sales of stock from nonqualified stock options, incentive stock options, restricted stock, restricted stock units, employee stock purchase plans, and stock appreciation rights.
W.E.B. Bantling and Michael Beriss
UPDATED! Every year, in February, after the W-2s and 1099s have arrived, we get tax-planning calls. Of course, by then it's too late. The time for tax planning is before the year ends.
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FAQs (Jump to articles)
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
The AMT rules and forms baffle even tax professionals. You can better understand the process by...
The taxation of incentive stock options (ISOs) is complex. The tax impact depends on when you sell or transfer the stock received at exercise. If you make what is called a disqualifying disposition (e.g., an early sale or a gift) of ISO shares, ordinary compensation income and any capital gains/losses will be determined by your...
"Capital gain" is income that arises from the sale of a capital asset. Gain from the sale of securities held for investment...
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 holding period to determine whether a capital gain is long-term or short-term starts on the...
Unlike with NQSOs, there is no federal income tax withholding at...
ISOs affect your AMT liability in two ways...
An incentive stock option (ISO) is a type of stock option that qualifies for special tax treatment...
Yes. People who live in high-tax states and itemize tax deductions or who have significant personal exemptions can easily owe more in AMT than in regular taxes...
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