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Its not often mentioned in these threads that you can get what you paid in AMT back in the form of tax credits in subsequent years. Thats worth keeping in mind
by psanford 4y ago
Its not often mentioned in these threads that you can get what you paid in AMT back in the form of tax credits in subsequent years. Thats worth keeping in mind if you are doing a risk calculation about the probability that the valuation of the company might drop before your shares become liquid.
- seibelj 4y agoWords words words - if all of this can be mitigated then why have it in the first place? You work at a startup that hits and need to shell out 6 or 7 figures to exercise… “Bu bu but you can get it back!!” Just change the rule then! What is the benefit? It only harms employees of new ventures
- psanford 4y agoMy comment was intended to help people who might be in that situation better understand how AMT works, not to justify it. But since you ask, the stated purpose of AMT is to make sure high earning individuals are not using tax loopholes to avoid paying any taxes. I assume it applies to ISOs to prevent employees from being compensated only in ISOs to get the better tax treatment. Having paid AMT myself on exercising ISOs, I concede its an annoying additional thing you have to consider when taking an offer from a startup. But its not some grave injustice. Tech employees at successful startups with in the money options will be just fine.