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by spacehome
3883 days ago
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> When you file your taxes: Hire someone; don't try to do this yourself. I don't necessarily agree with this. The median person intelligent enough to work for a successful startup is competent enough to handle the tax implications of stock option exercise. True, it's time consuming to read enough to know what you're doing (e.g. what forms need to be filed), but the actual paperwork and calculations are not complex. |
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For example the OP just said options. He didn't say if these were ISOs (although my response assumed they were). Even if they were ISOs, were the options for restricted shares? Did he make an 83(b) election at grant? What if he thought they were ISOs but they were really non-qualified options or restricted stock units. (I've seen that happen but by the time I got the info as a preparer, it was too late to do anything except pay the tax.) These all are taxed and reported differently.
If you're talking a lot of money, I would find a qualified tax professional. Make sure the person you hire has experience with stock compensation.
You should find this someone now, before you exercise, to make sure you're planning for the tax implications. On the OP's exercise, there will be no tax withheld on the transaction, but the US has a pay-as-you go tax payment requirement, so the AMT tax on the exercise could be due now, rather than April 15...but there are safe-harbor rules that could mitigate this requirement....see what I mean... there's an awful lot to know which is why we're required to have so much annual CPE.
CPAs are not the only option and not all CPAs specialize in taxation. Enrolled Agents are licensed by the IRS, rather than the states like CPAs & attorneys. Whoever you hire, make sure they have experience in this area.
Good Luck!