Tax Center / Global Tax Guide / Glossary / Discussion / Newsletters / About Us
Register Log in
myRecordsmyToolsmyClients
   ISOs   
Basics   
Limits   
Taxes   
Taxes Advanced   
AMT   
AMT Advanced   

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.

Test Your Knowledge Test and improve your knowledge with our Stock Options quiz and its study guide in the answer key.


Want to know more? Listen to our podcast on the basics of stock options.

  Articles   FAQs  

Avoid Tax-Return Mistakes With Stock Options & ESPPs: What You Need To Know This is premium content

Bruce Brumberg and Lynnette Khalfani
UPDATES! The 2015 tax-return season has the potential to be more confusing than most if you sold stock in 2014. Read this article for tips on reporting stock sales and on other crucial tax-return topics.

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.

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.

How To Report Sales Of Company Stock On Your Tax Return

The myStockOptions.com Tax Team
If you sold in 2014 any shares that you acquired from equity compensation or an ESPP, you will need to report the sale on your tax return. Learn here what you need to know to avoid expensive mistakes and unwanted IRS attention. Annotated diagrams of Form 8949 and Schedule D can help you make sense of the reporting rules.

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.

How To Avoid Paying Too Much Tax: Understanding The Revised Form 1099-B And Form 8949 For Reporting Stock Sales On Your Tax Return This is premium content

Bruce Brumberg
The stock-sale information provided by brokers on IRS Form 1099-B has changed. Cost-basis reporting, both for your broker on Form 1099-B and for you on your tax return, is now more complex, confusing, and vulnerable to errors. This article explains the crucial facts you must know to avoid overpaying tax or attracting unwanted IRS attention.

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.

VIDEO! Tax-Return Forms & Reporting Rules For Stock Sales

Bruce Brumberg
Learn how to prevent costly tax return mistakes with this animated presentation on IRS Form 1099-B, IRS Form 8949, and Schedule D.

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.

Return to top of page

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...

W-2 diagram! What will my W-2 show after I exercise incentive stock options? This is premium content

For an ISO exercise in which you hold the stock, nothing is...

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...

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...

In general, how does the alternative minimum tax (AMT) calculation work?

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...

What ISO strategies can help minimize AMT liability? This is premium content

Experts suggest several strategies for you to consider when you exercise ISOs and are concerned about triggering the alternative minimum tax. For example, near year-end or at the beginning of the year, you can...

UPDATES! Are there guidelines for calculating AMT trigger points? For example, if my spouse and I earn $100,000, will we trigger the AMT when I exercise ISOs? This is premium content

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, particularly if they exercise and hold ISOs with a big spread. The figures in the table below estimate the tipping point...

I know that my ISO exercises will trigger the AMT for me this year or next. Are there planning strategies related to other tax payments and income? This is premium content

When you are intermittently subject to the AMT, tax advisors suggest different planning ideas on shifting income and deductions. You have much less flexibility in your planning when you project paying AMT for the next several tax years. A basic plan is to...

Return to top of page