Tax Implications of Stock Options Explained in New Safe Harbor CPAs Blog Post

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Firm offers assistance to taxpayers receiving incentive stock options (ISOs). San Francisco CPA firm specializes in individual and business taxes.

Safe Harbor CPAs - San Francisco CPA Firm
Many San Francisco residents are receiving an income windfall due to employee stock options, but they may not realize that tax consequences.

Safe Harbor CPAs, a leading San Francisco CPA firm, announces a new blog post explaining the tax implications of employee incentive stock options or ISOs. With the San Francisco Bay Area as a hotbed of tech startup’s and IPOs, the firm helps employees minimize the tax consequences of receiving stock options.

“Being a San Francisco-based CPA firm, we watched with great excitement the recent IPOs of Facebook, Zynga, and LinkedIn,” commented Chun Wong, CPA, managing partner at Safe Harbor. “Many San Francisco residents are receiving an income windfall due to employee stock options, but they may not realize that tax consequences of stock options nor how to minimize the tax bite of these important income gains. So we posted an informative article on how stock options and taxes work for the average employee.”

For more information, go to:

Employee Incentive Stock Options and Taxes - The Big Picture

It is common knowledge that start-up companies, particularly in high tech fields, hire and retain employees by awarding incentive stock options (ISOs). What is not so well known, however, is the careful tax planning required to minimize taxes and to avoid some tax traps usually unexpected by employees. A particularly stinging tax hazard for employees of rapidly growing companies is the alternative minimum tax that may be imposed on the sale of appreciated employer stock acquired through the exercise of their ISOs.

There is no income tax imposed when an ISO is granted. In addition, there is no income tax due when the incentive stock option is exercised. The first taxable event is the sale of shares acquired by exercise of an ISO.

The alternative minimum tax (AMT) continues to trap more middle income taxpayers each year. If Congressional Budget Office forecasts are correct, in 2012, nearly every married taxpayer with income between $100,000 and $500,000 will owe some alternative tax.

Therefore the intersection of stock options, employee income, and the AMT can create a nexus of tax trouble for even the smartest tech employee. Safe Harbor CPAs works to minimize the tax implications through smart strategies for tax compliance.

About Safe Harbor CPAs – a Professional CPA Firm in San Francisco

Safe Harbor CPAs specializes in accounting and tax services for individuals and businesses throughout the San Francisco Bay Area and greater California. Safe Harbor CPAs helps both individuals and businesses with tax preparation, IRS audit defense, and audited financial statements. The firm prides itself on friendly yet professional service and utilizes state-of-the-art Internet technology to provide quality customer service.

Safe Harbor CPA
Tel. 415.742.4249

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