Alternative Minimum Tax
The Alternative Minimum Tax (AMT) is a parallel federal tax system designed to ensure high earners pay a minimum level of tax – and it catches many tech employees completely off guard. Exercising Incentive Stock Options (ISOs) can trigger AMT even if you don’t sell a single share, resulting in a tax bill on gains that exist only on paper. Understanding your AMT exposure before you exercise options is one of the most important steps in managing your equity compensation. Ponder the articles below to learn how AMT works, when it applies to stock options, and how to plan around it.