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ESPP Tax Strategy

Due to our large technology client base, we are frequently approached with the following questions:

  • My company ESPP stock options. How many should I sell before I hit AMT?
  • How will my ESPPs affect my overall federal and state tax? 
  • Are there any tax-saving strategies for me available in these situations?
  • Should I then sell the underlying equity? How many shares should I sell?
  • How will my tax obligation be affected by share price?
  • Should I make estimated tax payments, and if so, how much?
  • Can I construct a plan for more than one year of equity vesting, exercises, and sales?

These (and more) are all common scenarios that we compute for the clients.

The best method to complete this type of analysis is to run a “trial” tax return (or set of returns) directly in the professional software based on the variables you would like to evaluate. This way, you will get a close idea of what to expect during tax time as we will be using the actual forms. Remember, equity is only one component of your total income, so it often makes sense to consider your other income sources when computing tax obligation.

Contact us at hello@dimovtax.com if you would like to get started with an analysis or to book a consultation to discuss strategy.

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