83(b) Election - Tax planning with options, RSUs, and company stock скачать в хорошем качестве

83(b) Election - Tax planning with options, RSUs, and company stock

83(b) election for Company Stock If you are an employee of a company that offers restricted stock, or stock options you should be aware of strategies to help minimize your overall tax burden. One option you may have is what is called an 83b election. With this election, you are allowed to pay taxes on the value of your shares based on the value when they are granted, rather than when they are vested. Any future growth in your shares will then be taxed at capital gains rates, rather than income tax and payroll tax rates. The savings this strategy can provide will depend on your income, but can be as high as 20% of your total investment value. This can be an incredibly valuable strategy for those working at very early stage companies that have a low valuation, or anytime a stock appreciates significantly in value. However, before making an election and potentially paying a lot of taxes upfront, before you are required to, there are a few things you should consider: First, what is the likelihood your shares decline in value? If you make the 83b election and your company shares end up losing value, you will ultimately end up paying extra in taxes. Next, what is the vesting period of the shares, and are you confident you will continue to work for the company in that time frame? If you prepay your taxes now, and then end up leaving the company and giving up your shares, the 83b election would end up costing you significantly more in taxes unnecessarily. In general, if you are in a position where your company’s restricted stock or stock options represent a sizeable portion of your net worth, you will likely find tremendous value in working with a tax or investment professional. Restricted shares and stock options present many opportunities to dramatically increase your wealth, but also potential pitfalls that result in huge tax bills. If you are in a position where you are receiving these types of investments as part of your compensation, please reach out today to see how we help households just like yours create a long term financial plan Sync ID: MB01HGZ68MN5AZA