Stock Options Tax Tricks Top Advisors Swear By
Leveraging Tax-Advantaged Accounts
Utilizing tax-advantaged accounts, such as IRAs or 401(k)s, can also be a smart move. By contributing to these accounts, you might reduce your taxable income, which could help offset the taxes owed from exercising stock options. Additionally, if you can roll over gains into a Roth IRA, you could enjoy tax-free growth on your investments, providing a significant long-term advantage3.
Consulting with a Tax Professional
Given the complexity of stock option taxation, consulting with a tax professional is often advisable. A knowledgeable advisor can help you navigate the intricate rules and identify the best strategies tailored to your financial situation. They can also assist with understanding alternative minimum tax (AMT) implications, which can be a concern for those with significant ISO exercises4.