{"id":1532,"date":"2019-07-23T00:00:00","date_gmt":"2019-07-23T00:00:00","guid":{"rendered":"http:\/\/www-staging.carta.com\/sg\/blog\/what-is-alternative-minimum-tax-amt\/"},"modified":"2021-03-05T06:57:40","modified_gmt":"2021-03-05T06:57:40","slug":"what-is-alternative-minimum-tax-amt","status":"publish","type":"post","link":"https:\/\/www-staging.carta.com\/sg\/blog\/what-is-alternative-minimum-tax-amt\/","title":{"rendered":"What is alternative minimum tax (AMT)?"},"content":{"rendered":"\r\n<p>The alternative minimum tax (AMT) is a different way of calculating your tax obligation. It\u2019s designed to make sure everyone, especially high earners, pays an appropriate amount of income tax.<br \/><br \/>If you make more than the <a href=\"#jumpto\">AMT exemption amount<\/a>, you need to calculate both your ordinary income tax and AMT and pay the higher of the two. With AMT, you can\u2019t take as many deductions or other tax breaks, which means your taxable income (when calculating AMT) will likely be higher.<\/p>\r\n\r\n\r\n\r\n<p>You may be more prone to paying the alternative minimum tax if you:<\/p>\r\n\r\n\r\n\r\n<ul>\r\n<li>Have a high income<\/li>\r\n<li>Are married<\/li>\r\n<li>Have more than three children<\/li>\r\n<li>Live in a state with a high income tax<\/li>\r\n<li>Recently <a href=\"https:\/\/www-staging.carta.com\/sg\/blog\/exercising-stock-options\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"exercised (opens in a new tab)\">exercised<\/a> (purchased) ISOs and didn\u2019t sell them<\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<h2>What does AMT have to do with exercising stock options?<\/h2>\r\n\r\n\r\n\r\n<p>If you exercise your <a href=\"https:\/\/www-staging.carta.com\/sg\/blog\/what-are-incentive-stock-options\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">incentive stock options<\/a> (ISOs) and don\u2019t sell them in the same year, the spread between the price you paid for the options and what they\u2019re worth when you exercise is counted as income when you calculate AMT.<\/p>\r\n\r\n\r\n\r\n<p>For example, if you exercise 1,000 shares at $1 each when they\u2019re worth $5 each, you need to add $4,000 to your income when calculating AMT. You can calculate your spread using <a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/f3921.pdf\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">IRS Form 6251<\/a>.<\/p>\r\n\r\n\r\n\r\n<p>If you exercise your shares and sell them in the same year, the spread doesn\u2019t count as AMT income and instead counts as regular income.<\/p>\r\n\r\n\r\n\r\n<h2><a href=\"#amtcalculator\">How do I calculate AMT? (Free AMT calculator)<\/a><\/h2>\r\n\r\n\r\n\r\n<p>Calculating AMT can be complicated, but you may want to get an estimate before you exercise, as it could be a significant amount of money.<\/p>\r\n\r\n\r\n\r\n<p>To help, we\u2019ve put together an AMT calculator you can use to estimate your potential tax bill. To use this calculator, all you need is the following information:<\/p>\r\n\r\n\r\n\r\n<ul>\r\n<li>Your income<\/li>\r\n<li>Filing status<\/li>\r\n<li>Strike price<\/li>\r\n<li>Current FMV of your shares<\/li>\r\n<li>How many options you exercised\/you\u2019re thinking of exercising.<\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<div class=\"wp-block-patterns-blocks-columns\">\r\n<div class=\"wp-block-patterns-blocks-column\"><\/div>\r\n\r\n\r\n\r\n<div class=\"wp-block-patterns-blocks-column\">\r\n\r\n<\/div>\r\n<\/div>\r\n\r\n\r\n\r\n\r\n\r\n<figure><br \/><img loading=\"lazy\" id=\"amtcalculator\" class=\"aligncenter wp-image-2199\" src=\"https:\/\/www-staging.carta.com\/sg\/wp-content\/uploads\/sites\/9\/2019\/10\/group_82__1_.png\" alt=\"\" width=\"400\" height=\"213\" srcset=\"https:\/\/www-staging.carta.com\/sg\/wp-content\/uploads\/sites\/9\/2019\/10\/group_82__1_.png 1200w, https:\/\/www-staging.carta.com\/sg\/wp-content\/uploads\/sites\/9\/2019\/10\/group_82__1_-768x410.png 768w\" sizes=\"(max-width: 400px) 100vw, 400px\" title=\"\"><\/figure>\r\n<h3 style=\"text-align: center;\">Download the AMT calculator<\/h3>\r\n<p style=\"text-align: center;\"><a href=\"\/amt-calculator-download\/\"><button class=\"Button\" type=\"button\">DOWNLOAD<\/button><\/a> <br \/><br \/><\/p>\r\n<p>If you want to manually calculate your AMT, you first need to figure out your alternative minimum taxable income (AMTI). This includes:<\/p>\r\n\r\n<ul>\r\n<li>Your regular <strong>income<\/strong><\/li>\r\n<li>Some amounts you can usually subtract for regular tax purposes<strong>,<\/strong> such as <strong>personal exemptions <\/strong>and some <strong>deductions<\/strong>, like the deduction for state and local taxes<\/li>\r\n<li>Preference items, like the <strong>spread<\/strong> between the price you paid to exercise your ISOs and their market value when you exercised<\/li>\r\n<li>And <strong><a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/i6251.pdf\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">more<\/a><\/strong><\/li>\r\n<\/ul>\r\n\r\n\r\n\r\n<p>Calculating your AMTI can get complicated, so we recommend using tax software and\/or talking to a tax professional. If you file a paper tax return, you can calculate your AMTI using <strong><a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/f6251.pdf\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">IRS Form 6251<\/a><\/strong>.<br \/><br \/>Similar to standard deductions under the regular tax system, you can exempt (subtract) the following amount from your AMTI:<\/p>\r\n<div id=\"footable_parent_8132\"\n         class=\" footable_parent ninja_table_wrapper loading_ninja_table wp_table_data_press_parent semantic_ui \">\n                    <h3 class=\"table_title footable_title\">2021 AMT exemption amounts<\/h3>\n                        <table data-ninja_table_instance=\"ninja_table_instance_0\" data-footable_id=\"8132\" data-filter-delay=\"1000\" aria-label=\"2021 AMT exemption amounts\"            id=\"footable_8132\"\n           data-unique_identifier=\"ninja_table_unique_id_2050936100_8132\"\n           class=\" foo-table ninja_footable foo_table_8132 ninja_table_unique_id_2050936100_8132 ui table  nt_type_legacy_table selectable celled striped vertical_centered  footable-paging-right ninja_table_search_disabled ninja_table_pro\">\n                <colgroup>\n                            <col class=\"ninja_column_0 \">\n                            <col class=\"ninja_column_1 \">\n                    <\/colgroup>\n        <thead>\n<tr class=\"footable-header\">\n                                        <th scope=\"col\"  class=\"ninja_column_0 ninja_clmn_nm_filing_status \">Filing status<\/th><th scope=\"col\"  class=\"ninja_column_1 ninja_clmn_nm_exemption_amount \">Exemption amount<\/th><\/tr>\n<\/thead>\n<tbody>\n\n        <tr data-row_id=\"290\" class=\"ninja_table_row_0 nt_row_id_290\">\n            <td>Unmarried individuals<\/td><td>$73,600<\/td>        <\/tr>\n            <tr data-row_id=\"291\" class=\"ninja_table_row_1 nt_row_id_291\">\n            <td>Married filing jointly<\/td><td>$114,600<\/td>        <\/tr>\n    <\/tbody><!--ninja_tobody_rendering_done-->\n    <\/table>\n                    <style type=\"text\/css\" id='ninja_table_custom_css_8132'>\n                        #footable_8132  {\n        font-family: inherit;\n        font-size: 14px;\n    }\n\n                <\/style>\n                \n    \n    \n<\/div>\n\r\n<div class=\"wp-block-image no-shadow\">\u00a0<\/div>\r\n\r\n\r\n\r\n<p>However, these exemptions start to phase out once your AMTI hits a certain threshold:<\/p>\r\n<div id=\"footable_parent_8133\"\n         class=\" footable_parent ninja_table_wrapper loading_ninja_table wp_table_data_press_parent semantic_ui \">\n                    <h3 class=\"table_title footable_title\">2021 AMT phaseout thresholds<\/h3>\n                        <table data-ninja_table_instance=\"ninja_table_instance_1\" data-footable_id=\"8133\" data-filter-delay=\"1000\" aria-label=\"2021 AMT phaseout thresholds\"            id=\"footable_8133\"\n           data-unique_identifier=\"ninja_table_unique_id_569982497_8133\"\n           class=\" foo-table ninja_footable foo_table_8133 ninja_table_unique_id_569982497_8133 ui table  nt_type_legacy_table selectable celled striped vertical_centered  footable-paging-right ninja_table_search_disabled ninja_table_pro\">\n                <colgroup>\n                            <col class=\"ninja_column_0 \">\n                            <col class=\"ninja_column_1 \">\n                    <\/colgroup>\n        <thead>\n<tr class=\"footable-header\">\n                                        <th scope=\"col\"  class=\"ninja_column_0 ninja_clmn_nm_filing_status \">Filing status<\/th><th scope=\"col\"  class=\"ninja_column_1 ninja_clmn_nm_exemption_amount \">Threshold<\/th><\/tr>\n<\/thead>\n<tbody>\n\n        <tr data-row_id=\"292\" class=\"ninja_table_row_0 nt_row_id_292\">\n            <td>Unmarried individuals<\/td><td>$523,600<\/td>        <\/tr>\n            <tr data-row_id=\"293\" class=\"ninja_table_row_1 nt_row_id_293\">\n            <td>Married filing jointly<\/td><td>$1,047,200<\/td>        <\/tr>\n    <\/tbody><!--ninja_tobody_rendering_done-->\n    <\/table>\n                    <style type=\"text\/css\" id='ninja_table_custom_css_8132'>\n                        #footable_8132  {\n        font-family: inherit;\n        font-size: 14px;\n    }\n\n                <\/style>\n                                <style type=\"text\/css\" id='ninja_table_custom_css_8133'>\n                        #footable_8133  {\n        font-family: inherit;\n        font-size: 14px;\n    }\n\n                <\/style>\n                \n    \n    \n<\/div>\n\r\n<div class=\"wp-block-image no-shadow\">\u00a0<\/div>\r\n\r\n\r\n\r\n<p>For every $1 above these thresholds, the exemption is reduced by $0.25. When your AMT income reaches four times the exemption amount plus the phase-out threshold, you are no longer eligible for an exemption.<\/p>\r\n\r\n\r\n\r\n<p>Once you reach your final AMTI, you can figure out how much your AMT liability is.<\/p>\r\n<div id=\"footable_parent_8135\"\n         class=\" footable_parent ninja_table_wrapper loading_ninja_table wp_table_data_press_parent semantic_ui \">\n                <table data-ninja_table_instance=\"ninja_table_instance_2\" data-footable_id=\"8135\" data-filter-delay=\"1000\" aria-label=\"2021 AMT rates\"            id=\"footable_8135\"\n           data-unique_identifier=\"ninja_table_unique_id_1417155041_8135\"\n           class=\" foo-table ninja_footable foo_table_8135 ninja_table_unique_id_1417155041_8135 ui table  nt_type_legacy_table selectable celled vertical_centered  footable-paging-right ninja_table_search_disabled ninja_table_pro\">\n                <colgroup>\n                            <col class=\"ninja_column_0 \">\n                            <col class=\"ninja_column_1 \">\n                            <col class=\"ninja_column_2 \">\n                    <\/colgroup>\n        <thead>\n<tr class=\"footable-header\">\n                                                        <th scope=\"col\"  class=\"ninja_column_0 ninja_clmn_nm_. \"><span style=\"color: #ffffff\">.<\/span><\/th><th scope=\"col\"  class=\"ninja_column_1 ninja_clmn_nm_llc_limited_liability_company \"><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Q3 nmedian cash raised&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:277373,&quot;3&quot;:{&quot;1&quot;:0},&quot;5&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;6&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;7&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;9&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;&quot;Proxima Nova&quot;, sans-serif&quot;,&quot;16&quot;:11,&quot;21&quot;:1}\">26% AMT tax rate<\/span><\/th><th scope=\"col\"  class=\"ninja_column_2 ninja_clmn_nm_c_corp_c_corporation \"><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;YoY change&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:277373,&quot;3&quot;:{&quot;1&quot;:0},&quot;5&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;6&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;7&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;9&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;&quot;Proxima Nova&quot;, sans-serif&quot;,&quot;16&quot;:11,&quot;21&quot;:1}\">28% AMT tax rate<\/span><\/th><\/tr>\n<\/thead>\n<tbody>\n\n        <tr data-row_id=\"295\" class=\"ninja_table_row_0 nt_row_id_295\">\n            <td><strong>Married filing separately<\/strong><\/td><td>AMTI up to <span>$98,950<\/span><\/td><td><span data-sheets-value=\"{&quot;1&quot;:3,&quot;3&quot;:0.018}\" data-sheets-userformat=\"{&quot;2&quot;:15229,&quot;3&quot;:{&quot;1&quot;:3,&quot;2&quot;:&quot;0.00%&quot;,&quot;3&quot;:1},&quot;5&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;6&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;7&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;9&quot;:2,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri, sans-serif&quot;,&quot;16&quot;:12}\">AMTI above $98,950<\/span><\/td>        <\/tr>\n            <tr data-row_id=\"296\" class=\"ninja_table_row_1 nt_row_id_296\">\n            <td><strong>All other filers<\/strong><\/td><td><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;$9.9M&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15229,&quot;3&quot;:{&quot;1&quot;:0},&quot;5&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;6&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;7&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;9&quot;:2,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri, sans-serif&quot;,&quot;16&quot;:12}\">AMTI up to $197,900<\/span><\/td><td><span data-sheets-value=\"{&quot;1&quot;:3,&quot;3&quot;:0.072}\" data-sheets-userformat=\"{&quot;2&quot;:15229,&quot;3&quot;:{&quot;1&quot;:3,&quot;2&quot;:&quot;0.00%&quot;,&quot;3&quot;:1},&quot;5&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;6&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;7&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;9&quot;:2,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri, sans-serif&quot;,&quot;16&quot;:12}\">AMTI above $197,900<\/span><\/td>        <\/tr>\n    <\/tbody><!--ninja_tobody_rendering_done-->\n    <\/table>\n                    <style type=\"text\/css\" id='ninja_table_custom_css_8132'>\n                        #footable_8132  {\n        font-family: inherit;\n        font-size: 14px;\n    }\n\n                <\/style>\n                                <style type=\"text\/css\" id='ninja_table_custom_css_8133'>\n                        #footable_8133  {\n        font-family: inherit;\n        font-size: 14px;\n    }\n\n                <\/style>\n                                <style type=\"text\/css\" id='ninja_table_custom_css_8135'>\n                        #footable_8135  {\n        font-family: inherit;\n        font-size: 14px;\n    }\n\n#footable_8135 thead tr th.ninja_column_0,#footable_8135 tbody tr td.ninja_column_0{ background-color: rgba(255, 255, 255, 1); color: rgba(0, 0, 0, 1); }                <\/style>\n                \n    \n    \n<\/div>\n\r\n<p>&nbsp;<\/p>\r\n\r\n\r\n\r\n<p>If this amount is higher than what you\u2019d have to pay doing your taxes the usual way, you have to pay AMT.<\/p>\r\n\r\n\r\n\r\n<h2 id=\"minimizeAMT\">What is an AMT credit?<\/h2>\r\n\r\n\r\n\r\n<p>If you have to pay the alternative minimum tax, you may get an AMT credit, which you can use to reduce your tax obligation in future years.<\/p>\r\n\r\n\r\n\r\n\r\n\r\n<h2>How can I minimize AMT related to my equity award?<\/h2>\r\n\r\n\r\n\r\n<p>If you have questions about how exercising may impact your tax liability, <strong>talk to a tax professional<\/strong>\u2014preferably before you exercise. They should be able to tell you how many ISOs you can exercise without triggering AMT and generally advise you on whether\/when to exercise and sell.<\/p>\r\n\r\n\r\n\r\n<p>If you were to <strong>sell your shares (that used to be ISOs) in the same year you exercise<\/strong>, you won\u2019t have to include the spread in your AMTI. Just keep in mind that if you do this, you won\u2019t get to take advantage of ISOs\u2019 favorable tax treatment, since you need to hold them for at least a year after exercising to qualify.<\/p>\r\n\r\n\r\n\r\n<p>If your company allows <strong>early exercising<\/strong> (exercising before you <a href=\"https:\/\/www-staging.carta.com\/sg\/blog\/what-is-stock-vesting\/\">vest<\/a>), you could consider exercising your ISOs right when you\u2019re granted them and filing an <a href=\"https:\/\/support.carta.com\/sg\/s\/article\/what-and-where-is-my-83-b-form\" target=\"_blank\" rel=\"noopener\">83(b) election<\/a> within 30 days. This allows you to be taxed on the day you exercise instead of having to wait until your shares vest. If you exercise your ISOs as soon as they\u2019re granted, there usually won\u2019t be a spread you need to add to your AMTI. However, in this circumstance, you\u2019re paying cash now for shares that may be worth less in the future.<\/p>\r\n\r\n\r\n\r\n<p>You may also adopt other strategies to minimize your AMT obligation, such as <strong>lowering your adjusted gross income<\/strong>. Your tax advisor may discuss maxing out contributions to your retirement accounts and increasing your charitable contributions.\u00a0<\/p>\r\n\r\n\r\n<hr class=\"wp-block-separator\" \/>\r\n\r\n\r\n<p class=\"has-small-font-size\">DISCLOSURE: This communication is on behalf of eShares Inc., d\/b\/a Carta Inc. (\u201cCarta\u201d).\u00a0 This communication is for informational purposes only, and contains general information only.\u00a0 Carta is not, by means of this communication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services.\u00a0 This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests.\u00a0 Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein.<\/p>\r\n","protected":false},"excerpt":{"rendered":"<p>The alternative minimum tax (AMT) is a different way of calculating your tax obligation. Learn if you&#8217;re more prone to paying it, how to calculate it, how you may be able to minimize it, and more.<\/p>\n","protected":false},"author":66,"featured_media":2022,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[9,10],"tags":[59,65,82,61,62],"acf":[],"_links":{"self":[{"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/posts\/1532"}],"collection":[{"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/comments?post=1532"}],"version-history":[{"count":0,"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/posts\/1532\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/media\/2022"}],"wp:attachment":[{"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/media?parent=1532"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/categories?post=1532"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/tags?post=1532"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}