exercised options undertaxed?

Technical topics regarding tax preparation.
#1
juro  
Posts:
918
Joined:
18-Oct-2015 9:11am
Location:
USA
So, my bud had two sets of options he exercised for cash. The small one seems to have been taxed right, but the larger one was Fed taxed at 22% and likely should have been taxed closer to 34%. As a result, he thinks he owes close to $100,000 in additional fed tax.

Should he try to find some way to pay the extra tax now, or just wait until April to cut the big check?

Thanks!
 

#2
makbo  
Posts:
6840
Joined:
23-Apr-2014 3:44pm
Location:
In The Counting House
What is the goal? To avoid underpayment of estimated tax interest penalty? To manage cash flow?

He may meet the safe harbor for estimated tax by paying at least 110% of previous year's liability through current year withholding. Your state may have different rules (CA does). Or, he may not mind taking an easy loan from the government with no application or credit check, interest at 5% (as I recall).

If he can't manage his cash and has the money now, then by all means pay now.

Presumably these are non-statutory options, right?
 


Return to Taxation



Who is online

Users browsing this forum: 808CPA808, adamant, Bushmaster, golfinz, JessCPA113, JoJoCPA, JR1, lckent, MAPCPA60, missingdonut, Nilodop, ny110010001, pegatha, Seaside CPA, SUSAN, taoseno and 199 guests