A bonus from a raise, a vest, an exercise, a payout from a liquidity event — suddenly this is the biggest income year of your life, and the default withholding was never designed for it. What you do before December 31 decides how much of it you keep.
Equity compensation is taxed on its own schedule, withheld at rates that rarely match your real bracket, and concentrated in one company — usually your employer. Each of those is fixable. None of them fix themselves.
Supplemental income is typically withheld at a flat rate well below a high earner's actual marginal bracket. People discover the difference in April, as a bill. A projection in the payout year turns that surprise into a plan.
After a big vest, your salary, your bonus, and a large share of your net worth can all depend on one company. Diversifying is a tax event — which is exactly why it should be scheduled, not improvised.
Charitable bunching, retirement plan room, deduction timing: strategies that are marginal in a normal year do their best work in a spike year. The window is the calendar year of the payout.
A windfall without a plan becomes lifestyle. A windfall with a plan becomes independence. The difference is written down.
Silicon Slopes has made stock options and RSUs a normal part of pay in Utah. The grant letter rarely explains the tax. Here is the short version.
The value of RSUs is ordinary income on the day they vest, whether or not you sell. Employers usually withhold federal tax at the 22% supplemental rate on the first $1 million, which is below a high earner's real bracket. The gap is due in April.
When you exercise NSOs, the difference between the market price and your strike price is ordinary income. Any growth after that is a capital gain or loss when you sell.
ISOs have no regular income tax at exercise, but the spread counts toward the alternative minimum tax. Hold the shares more than two years from grant and one year from exercise, and the whole gain can be taxed as a long-term capital gain. Sell earlier, and part of it becomes ordinary income.
An 83(b) election, filed within 30 days of a restricted stock grant, can move the tax to today's low value. Qualified small business stock can exclude some or all of the gain if its rules are met. Both have hard deadlines and are easy to miss.
Insiders at public companies often sell through a 10b5-1 trading plan, set up in advance, so sales can happen on a schedule. That plan is one more piece to coordinate with taxes and diversification.
Windfalls don't wait for retirement age, and neither do we. Our clients skew toward founders, executives, and professionals mid-career — people who want a real plan, move fast, and expect their advisors to keep up. CPA-led tax strategy and fiduciary investing, one table.
Educational only — not investment, tax, or legal advice. Every situation is different; the right answer depends on the numbers, and that's what the strategy session is for.
Sit down with a fiduciary — not a salesman — and leave with a complimentary strategy for your exact situation, whether or not you ever hire us.