Falling 409a valuations have prompted many privately held tech companies to reprice their employees' stock options. Navigating stock option repricing necessitates a clear understanding of its implications, risks, and careful consideration of your personal circumstances and potential tax consequences, especially in the case of ISOs.
"People who exercise ISO grants don't usually pay federal tax upon exercise." I've met enough people stuck with tens of thousands or even hundreds of thousands of dollars of unexpected taxes from ISO exercises to know this is a common and potentially devastating misconception.
A client recently asked me if it would ever make sense to exercise underwater stock options and if it could lower their AMT. Many companies have experienced downward revisions to their 409a valuations over the last year-and-a-half due to the shakeups in the tech sector, so I'm hoping this will help other people who have underwater stock options and are wondering the same thing.
If you have equity in a startup that shut down, you can claim it as a loss on your taxes. But, it's not as simple as just writing them off as a total loss when you find out about it – the IRS wants you to claim the loss in the year the stock became worthless.
Health Savings Accounts, or HSAs, are tax-advantaged accounts designed to encourage saving and preparing for future medical expenses. They encourage people who are paying lower health insurance premiums by being covered by an HDHP to direct some of the money they otherwise would have used on a more expensive plan's premiums to future expenses.
Nondeductible IRA contributions are similar to a Roth IRA in the sense that contributions are made after tax in both cases. The huge and extremely important difference is that the earnings on nondeductible contributions to a Traditional IRA are fully taxable at distribution, while the earnings on Roth IRA contributions are tax-free.
