Tax reform resulted in considerable changes to tax rates, exemptions and to the itemized deduction rules. Employees need to review the impact such changes will have on their overall income tax liability to make sure they are not over- or under-withholding on their pay.
Companies must determine if the loss of the performance exception among other key adverse changes to this deduction will change the way they compensate executives going forward.
The combination of reduced corporate income tax rates making it less costly for a company to offer such awards and the increased Alternate Minimum Tax exemption making such awards even more attractive to an employee from a tax perspective will likely result in companies considering ISOs as a form of compensation to employees to remain competitive and attract new talent.
Qualified moving expenses paid by an employer are no longer excludable from an employee’s income. It is important for companies to make sure tax assistance polices now include such additional expenses where the goal is to make sure the employee is not out-of-pocket for the move in any way.
Tax reform introduced a valuable tax deferral opportunity for eligible stock delivered to qualified employees. The tax deferral opportunity is available when private companies make broad based (to greater than 80% of employees) stock or option transfers.
For disclosures relating to this article, please click here.