Gearing up for an exciting IPO? In the dynamic world of tech startups, pre-IPO employees have a unique opportunity to build substantial wealth through their company's equity compensation.
When working at a tech company in its early stages, a common tax tactic used by the founders and executives around their equity compensation is the 83(b) election. Yet, even today, many in the tech world are unaware of this potentially potent tax-saving strategy, no less know when it is appropriate to deploy.
Stock options are a core component of many compensation packages, especially for technology executives. Among the various types of stock options, Non-Qualified Stock Options (NSOs) are a popular choice.
For many Tech executives, figuring out the right mix of Roth and Traditional 401k contributions is complex. With the Secure Act 2.0, the IRS will push out the RMD (required minimum distribution) age to 75 in 2033. This could make Traditional contributions more attractive.
If you are a business owner, you have a great deal to think about. As I've written about in the past, you wear many hats! So, not only are you looking for ways to grow your business, but you are also thinking about ways to save time and money. You also need to think about your corporate taxes, which can vary depending on whether you have an LLC or an S corporation.
Restricted Stock Units (RSUs) are a popular form of equity compensation many companies use to incentivize and retain employees. RSUs are often granted as part of an employee's compensation package and represent a promise to deliver company stock at a future date, usually after a vesting period. While RSUs can provide a valuable opportunity for employees to participate in their company's growth, they also come with unique tax considerations, including asymmetric tax risk.
If you're a tech employee who has been granted stock options as part of your compensation package, it's essential to understand the tax implications associated with these options. In particular, you may be subject to the alternative minimum tax (AMT) if you exercise incentive stock options (ISOs). This piece will explore the basics of incentive stock options and the alternative minimum tax.
Over the last several decades, employee equity has become a much larger part of employee compensation. Although not limited to tech companies, it has become especially popular among private and public tech companies to align employee incentives with that the company's performance of the company. The rationale is that if employees are compensated in company equity, their equity value will improve over time as employees are incentivized to maximize their company equity through greater work performance. Through equity compensation, employees have more "skin in the game," so to speak, concerning the company's performance.
The Democratic agenda for changing the tax code is in, and the potential changes are wide-sweeping. This bill has the potential to change the tax code arguably more than the 2017 Tax Cuts and Jobs Act under the Republicans and President Trump.