FAQ

How will participation in your ESPP impact your cash flow?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

ESPPs might allow you to contribute up to a maximum percentage of salary, like 10 to 15 percent. Some companies may also allow you to contribute a fixed amount. You...

How Does Income Tax Impact Your Plans to Purchase, Hold, and Sell Shares in an ESPP?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

If you participate in an ESPP, you’ll likely hear the terms qualifying disposition and disqualifying disposition. These terms speak to holding period requirements for your ESPP shares that impact how...

What are the Two Types of Employee Stock Options?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

There are two types of stock options– incentive stock options (ISOs) and non-qualified stock options (NQSOs). They have many similarities, including a strike price, a vesting schedule, and an expiration...

How Do You Pay the Exercise Cost When You Exercise Your Employee Stock Options?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

When you exercise an employee stock option, you need to pay the strike price of the option to buy the stock. The exact cost to exercise equals the number of...

How Does the Alternative Minimum Tax Impact My Overall ISO Strategy?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

The Alternative Minimum Tax can be a significant concern when exercising incentive stock options, particularly if you have large bargain element, and it’s important to understand how this might impact...

Does the Alternative Minimum Tax apply to me?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

AMT can apply for various reasons, such as having certain business deductions or exercising and holding incentive stock options. However, just because you exercise and hold incentive stock options does...

How do I calculate my Alternative Minimum Tax?

by Daniel Zajac, CFP®, EA | Last updated May 13, 2025 | FAQ

The AMT system is parallel to the regular income tax calculation and is calculated using IRS form 6251. The calculation leads to the tentative minimum tax. Generally speaking, if the...

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