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AMT Archives - Help with mergers & acquisitions, raising capital, creating stock options and other equity plans

Posts Tagged ‘AMT’

How AMT Changes Impact Incentive Stock Options

Have congressional changes affected your stock options?

Have congressional changes affected your stock options?

If you’re a high-income taxpayer, especially one that exercises incentive stock options, here’s something to be aware of: changes to the alternative minimum tax (AMT) could make an impact on your taxes.

ATRA’s Revisions to AMT

It used to be that Congress temporarily increased the AMT annually as a way to keep middle-income taxpayers from needing to pay the alternative minimum tax unfairly. Although it worked, the process was last minute, politically charged, uncertain and took a lot of time and negotiation. But without the increases each year, the AMT exemption amounts would impose the tax on a large population of the middle-income taxpayers, a demographic it wasn’t ever intended for. So the American Taxpayer Relief Act (ATRA) was enacted.

Here are three alternative minimum tax provisions from the ATRA:

  1. The AMT income exemption amounts set by ATRA for 2012 were $50,600 for single filers and $78,750 for married joint filers. It also did something that was completely new: it permanently indexed the exemption amounts for inflation in future years, which means that each year the alternative minimum tax income exemption amounts will automatically increase.
  2. Another first, the ATRA indexed where the phase out of the alternative minimum tax income exemption begins. The exemption amounts are phased out by a quarter for every dollar of specified exemptions. So in 2013, the range for single filers starts at $115,400 and for married joint filers it begins at $153,900, and the exemption is completely phased out when AMT income reaches $323,000 for single filers and $477,100 for married joint filers.
  3. The ATRA also indexed the income threshold where the AMT rate goes from 26% to 28%, which is another first. In 2013, both unmarried single filers and married joint filers reach the threshold at $179,500, and married people that choose to file separately reach the threshold at $89,750.

The Impact on Incentive Stock Options

How does this impact incentive stock options? As we explained in our post about Employee Stock Options last month, “taxes are due in the year that a sale takes place. If the incentive stock is held for over a calendar year, the employee must record the value of stock on the original exercise date. This value should be reflected in an employee’s AMT (alternative minimum tax) calculation.”

Do you have a question about the ATRA, AMT or incentive stock options? Contact us today – we can help!

Stock Connections specializes in working with San Francisco Bay Area companies that are involved in mergers & acquisitions, are raising capital, or creating stock option or other equity plans. We help start-up, private and public firms become – and remain – SEC-compliant. Stock Connections’ services are designed to help both start-ups and established firms comply with SEC and other regulations in their equity compensation programs. If you or anyone you know is looking to get involved with any of the above, we encourage you to contact us today.

Photo Credit: Sai89AJ

5 Tax Return Mistakes to Avoid in 2012 – Part 2

 

Photo Credit: Images_of_Money

Many questions may arise when filing your taxes. In the previous part of this blog series we discussed three commonly made tax return mistakes. In this part, we’ll outline two more mistakes and what you can do to avoid them. Read the rest of this entry »

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