Incentive stock options are a powerful compensation tool that can help you grow your wealth. Companies award them to employees as a retention vehicle, to reward specific successes or as an incentive when trying to attract new employees.
There are several advantages to incentive stock options, including:
- Incentive Stock Options have a simple process for exercising.
- You choose when to exercise your Incentive Stock Options.
- Incentive Stock Options offer the potential to participate in stock price appreciation.
- Incentive Stock Options are not subject to payroll taxes.
- Incentive Stock Options can qualify for long-term capital gains.
- You may get Alternative Minimum Tax Back as AMT credit.
- ISOs allow you to participate in the success of the company
- You can manage the cash flow required to cover the cost of the Alternative Minimum Tax.