Harvest Your Equity: Avoid Tax Traps and Bring Home the Most Money from Employee Stock Options and RSUs

Stock options and restricted stock units (“equity awards”) are a powerful incentive that can pay off big. But not understanding how to manage them can cost you big as there are significant income tax landmines and financial planning issues to navigate. Just like a farmer wants to harvest his crops at their peak and before a plague of locusts arrives, you want to “harvest” your equity awards when it will produce the best yield and avoid sacrificing too much to our version of the plague of locusts, the Internal Revenue Service. it’s not how much you’re granted that matters, it’s how much you keep!

This book provides employees of companies that provide compensation in the form of equity awards with the knowledge and tools to quickly navigate the tax, cash flow, and financial planning issues involved. This book is intentionally short. I’m not going to teach you the theory behind equity awards or why certain taxes exist. Tax laws are what they are and you’re not going to change them. But I will explain what taxes kick in when and for how much and the things to consider in exercising options and selling stock. My goal is to help you get to the right answers for your situation with as little effort as possible, so you walk away with the most money. Consider this a “do it yourself” kit. If you already prepare your own taxes with TurboTax or similar software, you probably don’t understand all the details, but you come away with a high level of confidence they were prepared accurately based on your inputs. You may even prepare your own taxes with software and then go meet with an accountant to get an expert’s set of eyes and make sure you didn’t miss anything big.