I'm exercising $8000 worth of incentivized stock options. Do I need to pay Alternative Minimum Tax?

Answers

Answer #1 | 19/12 2013 14:10

The rules are very complicated. Professional tax preparation software like TurboTax will tell you.
Your can review IRS Topic 556 for more help:
http://www.irs.gov/taxtopics/tc556.html

Answer #2 | 19/12 2013 14:10

My income was waaaaaay lower than yours and I triggered AMT. I got the surcharge back the next year by using the credit form (you don't get the money back when you sell the stock).
The only way to tell accurately is to do some dummy returns right now.
Get a blank 1040 (2012 or the draft 2013) and the 1040ES for the tax rates.
Then get a blank 6251 (the draft is out there if you use a search engine). Fill it out.
If you currently itemize, don't forget to add back state and local taxes. If you ever refinanced your home and used some of the money to cash out and buy a car, add that interest back to. Add the DIFFERENCE in the fair market value less the strike price. Do the math....
(The easy math is to take your AGI, not your taxable income, add the paper gain, subtract 80,800 if your income is still less than 153,900 and then multiply by 26%.
Then take your taxable income for 2013 and calculate the tax bill. Whichever is higher is the one you could owe.)
You can also look at IRS pub 505 for more guidance.

Answer #3 | 19/12 2013 15:17

very likely

Answer #4 | 19/12 2013 20:49

Exercising stock options does not automatically trigger the AMT. As indicated in the other answers, the only real way to tell if one will have AMT is to crunch the numbers.

Answer #1| 19/12 2013 14:10