Vieje Piauwasdy
Director, Equity Strategist

If you are on the fence about exercising your startup stock options this year, listen up.

There are a number of strategies that let you exercise and reduce your tax bill. But most of these are ‘use it or lose it’ – you’ll have to take action by year end if you want to take advantage.

This article covers everything you need to know, all in one place – so you can get it over with in one go. (We know this is no one's favorite pastime.)

Vieje Piauwasdy, Director of Equity Strategy, breaks it down:

  • Should you exercise this year and, if so, how many? Or just wait until 2021?
  • How can you save on taxes if you decide to exercise by year end?

Some of the tax strategies only work with incentive stock options (ISOs), but the general advice applies to non-qualified stock options (NSOs) as well.

So whatever your situation, set yourself a good cup of coffee and let’s optimize that tax bill.

Need some external motivation to book time for this? ⏰

Sign up for our free webinar on December 8 here.

We'll cover all of this, and there's a Q&A with Vieje. But most importantly it's the most convenient way to commit yourself to getting this done. Sign up on EventBrite.

1. Exercise now or wait until 2020? 3 tax saving considerations

In this intro, we outline three important factors to take into consideration:

  • 409A increases
  • Personal income and/or location changes
  • Taking advantage of the AMT Crossover

2. The AMT Crossover and how to exercise ISOs tax-free 

Here, we discuss the alternative minimum tax (AMT) dynamics that allow ISO-holders to exercise up to a specific amount of ISOs tax-free (in other words – won’t trigger a tax liability).

If you haven’t yet tried it, the AMT Crossover Tool will help you determine exactly how many options you can exercise tax-free before 2021. It's free. Here's how to use it:

  • Sign up here and enter your tax and equity details (~3 minutes)
  • Go to Insights in the menu
  • Launch AMT Crossover

Et voilà:

3. The AMT credit: exercise now, save in 2021

If you exercise ISOs this year, triggering an AMT tax liability, you may be able to recover some of what you paid in years to come in the form of an AMT Credit.

Good luck!

We know this is a lot to think about. We’re happy to talk to you about your individual situation and, if that makes in your situation, offer financing to cover the cost of your exercise. 

Here are some potential next steps and resources to get you going:

  • You can always use the chat in the bottom-right to ask us anything about startup equity and taxes ↘️
  • Sign up for our 8 December webinar, the easiest way to take this all in
  • You can use the calculators on the Secfi platform to help you figure your exercise costs, forecast profits, discover tax strategies and compare scenarios. This is all 100% free. Sign up here for an account
  • Exercising too expensive, but still want to do it? Secfi can finance the full cost, including taxes. Lean more about exercise financing here

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Vieje Piauwasdy
Director, Equity Strategist

Vieje is an equity compensation and taxation expert for Secfi. He guides startup employees through the complexities of private company equity to ensure that no money is left on the table. He is a proud San Francisco native and University of Washington alum. After years of experience at PwC, he decided to make the jump to tech after being promised he would never have to wear a suit again.

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