The Startup Employee’s Guide to Options and Taxes: Wrapping Up

As promised, this series unraveled and deciphered many of the tax implications related to exercising your ISOs and NSOs. Since stock options are nearly always a significant part of the compensation packages that startup workers receive, we believe strongly in demystifying unclear tax expectations and the accompanying red tape. 

Let’s recap what we’ve covered so far: 

In our Glossary for Stock Options and Taxes, we shared straightforward definitions for many of the commonly used terms connected to exercising your stock options and dealing with related taxes. 

Next, we addressed the question: What are my ordinary tax liabilities for exercising ISOs? After outlining everything from the intricacies of the alternative minimum tax to what the name “incentive stock option” even means, we invited you to utilize our ISO decision tree as you work through your own financial plans. 

We also addressed a similar topic within the realm of NSOs. Just because these stock options are known for having less favorable tax liabilities doesn’t mean we would leave them out!
After working through capital gains tax rates, holding periods, and everything in between, we directed you to our NSO decision tree. Numerous choices must be made throughout the options exercising process, and this tool highlights them. 

Lastly, we walked you through many of the key implications that startup employees must consider when it comes to your location and your taxes. As we mentioned in this post, state residencies – and how they impact taxes – are incredibly complex, and we recommend that every individual consults with tax professionals. 

While the posts in this series will certainly be helpful to you after you’ve exercised your options, you may still be wondering how you’re going to financially tackle all of these taxes. As you may know, we at Equitybee are here to help you get the funding you need to exercise your options so that you can own shares in the company you helped build. 

What you may not know, though, is that when you get funding to exercise your options via Equitybee, your taxes are also covered. Our data shows that taxes can cost anywhere from 2x to 22x the cost of exercising your options (or even higher!). With the support of our investor network, you won’t have to worry about paying for anything out of your own pocket. 

To learn more about exercising your options with Equitybee, sign up on our homepage.