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disergio
Level 1

ISO stocks exercised and held last year. Why after filling out them in turbotax app tax dues went up a lot?

Exercised some ISO stocks and held them last year. Received Form 3921 from my employer. Filled out "ISO Exercise and Hold" under Investment Income. Right after my Federal and state tax due skyrocketed up. Can anybody explain what just happened here?

4 Replies
TomYoung
Level 13

ISO stocks exercised and held last year. Why after filling out them in turbotax app tax dues went up a lot?

Yes, you've run into the Alternative Minimum Tax.  The "spread" between the cost of exercise and the value of the stock received is an "add back" item in determining the taxable income to use under the AMT.  Look at Form 6251 and you'll see the tax that's calculated there.

Tom Young

disergio
Level 1

ISO stocks exercised and held last year. Why after filling out them in turbotax app tax dues went up a lot?

Thanks.
disergio
Level 1

ISO stocks exercised and held last year. Why after filling out them in turbotax app tax dues went up a lot?

Yeah, I went through this form again and found that everything seems correct there even AMT tax is huge now. My concern is that I pay AMT tax (=loosing a lot of cash) now but I would not be selling those ISO stocks in the near future or maybe never.
TomYoung
Level 13

ISO stocks exercised and held last year. Why after filling out them in turbotax app tax dues went up a lot?

When the dot-com bubble burst a ton of people were in the boat of having to pay AMT on shares that were essentially worthless.  As frequently happens when lots of people (voters) are affected Congress changed the rules retro-actively for them so they weren't on the hook for the tax.  Maybe you could ask your Congressman for similar help?
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