5 ms·

I don't understand the situation you are concerned about where you don't end up paying the minimum of 90% of your current year's tax or 110% of the previous yea

I don't understand the situation you are concerned about where you don't end up paying the minimum of 90% of your current year's tax or 110% of the previous year's tax (these are the numbers to avoid a penalty). Can you explain this situation? As I see it, even in the wild case where your company's stock explodes, if your brokerage is "selling to cover", you will more than hit 110% of your previous year's tax bill (since you are paying 22% tax on those shares). Yes, you will get a whopper of a tax bill, but you won't pay penalties on it. Btw, I don't know why you quoted "just handled" when I didn't use those words. I wanted people to recognize what "sell to cover" means, since usually when you start with a company you have to create a brokerage account and they will ask how you want your taxes handled.

manacit 7y ago
If you're vesting enough equity, your brokerage is only holding on to 22% and you don't have enough of your salary withheld, it's very possible to end up with a marginal rate that is in the high 20s or low 30s, and not enough tax paid. This can happen without triggering the 110% of previous year portion if you're regularly vesting a lot of equity - the more you vest, the farther 22% is going to be from your actual marginal tax rate. I used single quotes instead of double quotes around "just handled" to quote the idea and summary of what you were saying - that it would be handled automatically by the brokerage - and not as a direct quote