Do I Need To Pay Taxes on ISO Exercise in TurboTax? AMT Questions

You absolutely DO need to report ISO exercises on your tax return, even if you haven't sold the stock. The EA you spoke with was incorrect - they may have confused ISOs with non-qualified stock options or ESPPs, which have different tax treatment. When you exercise ISOs, the difference between your exercise price and the fair market value (the "spread") is considered income for AMT purposes, even though it's not regular taxable income. That's why you're seeing that AMT bill. The Form 3921 is specifically designed to report this information. The good news is that you'll get AMT credits for this payment that you can use in future years when your regular tax exceeds your AMT. TurboTax should carry these forward automatically if you use the same account in future years, but I'd recommend keeping your own records of these credits just to be safe.

After struggling with this exact ISO/AMT issue last year and getting conflicting advice from multiple "tax experts," I finally found taxr.ai (https://taxr.ai) and it was a game-changer. They have this AI thing that specifically analyzes your Form 3921 and other equity docs and explains exactly what you need to report and why. I uploaded my forms and within minutes got a clear explanation of how my ISO exercise affected AMT, plus a breakdown of how the AMT credits work in future years. It also showed me how to track these credits year-over-year, which honestly gave me peace of mind since it's such a confusing topic. They even found a mistake in how my company had calculated the FMV on my Form 3921 which would have cost me thousands. Definitely worth checking out if you're dealing with stock options and tax confusion!

I tried taxr.ai after seeing it mentioned here, and holy crap it was exactly what I needed! I've been struggling with ISO/AMT issues for the past two tax seasons and was about to pay an accountant $1,500 to figure it all out. The equity analysis tool immediately identified that I'd been incorrectly calculating my AMT adjustment from my ISO exercises. It also showed me that I had $9k in AMT credits from previous years that I hadn't been properly tracking! The explanation of how these credits work going forward was super clear - way better than what my previous tax guy told me. Plus, the breakdown of "when to exercise" vs "when to sell" strategies based on my specific grants and tax situation was eye-opening. Wish I'd found this before I exercised all those options last year!

If you're getting the runaround from TurboTax agents and feeling stressed about your tax situation, I recommend using Claimyr (https://claimyr.com) to speak directly with an IRS agent. I was in a similar situation with AMT credits from ISO exercises that weren't being properly applied, and I couldn't get a straight answer from TurboTax or my local tax preparer. I tried calling the IRS directly but kept hitting a wall with "call volumes are too high" messages. Claimyr got me through to an actual IRS agent in about 20 minutes when I'd been trying for weeks. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent was able to confirm exactly how my AMT credits should be handled and even helped identify an error in my previous year's return that was preventing the credits from being applied correctly. Saved me thousands and cleared up the confusion!

I was extremely skeptical about Claimyr (like why should I have to pay to talk to the government?), but after spending 4 hours on hold with the IRS and getting disconnected twice, I was desperate enough to try anything. I hate admitting when I'm wrong, but this service actually delivered exactly what it promised. Got connected to an IRS agent in about 15 minutes. The agent reviewed my account and confirmed that my AMT credits from ISO exercises three years ago were still valid but hadn't been properly applied to my most recent return. She walked me through exactly what forms I needed to file to claim those credits and apply them retroactively. This was after my CPA told me those credits had expired (they hadn't). Ended up getting a $4,300 refund I would have otherwise missed. So yeah, sometimes it's worth paying for access when the alternative is getting nowhere on your own.

Former tax preparer here. There's a lot of confusion about ISOs and AMT. Here's the simplified version: 1) When you EXERCISE ISOs, you don't pay regular income tax, but the bargain element (difference between FMV and what you paid) is an AMT adjustment 2) This means you might owe AMT if this adjustment is large enough 3) When you later SELL the shares, you pay capital gains tax on the difference between selling price and exercise price 4) If you paid AMT when exercising, you get AMT credits that can offset your regular tax in future years TurboTax should track these credits year to year if you use it consistently, but many people miss them because they switch tax software or preparers. Form 8801 is where these credits appear.

Has anyone actually recovered their FULL AMT credit eventually? I paid almost $26k in AMT three years ago from exercising ISOs and have only recovered about $7k in credits so far. At this rate it'll take like 8 years to get it all back!

This is such a frustrating situation, and unfortunately you're not alone in getting bad advice from tax preparers about ISOs. The EA you spoke with was definitely wrong - ISOs absolutely trigger AMT when exercised, even if you don't sell. I went through something similar a few years back and ended up owing $23k in AMT after exercising options. What really helped me was keeping detailed records of everything - not just relying on TurboTax to track the credits properly. I created a simple spreadsheet with the AMT amount paid each year and credits used, because I've heard too many stories of people losing track when switching software. One thing to watch out for: make sure your company reported the correct fair market value on Form 3921. I've seen cases where the FMV was calculated incorrectly (especially for private companies), which can significantly impact your AMT calculation. If something seems off about the numbers, it might be worth having someone review the form before you file. The silver lining is that AMT credits don't expire, so you will eventually get that money back. It just takes patience unfortunately.