Do I need to file Form 6251 with no AMT owed after exercising ISOs?

So does this mean I'd have to stick with TurboTax? What if the spread between my exercise price and fair market value was really small, like less than $5,000? Would I still need Form 6251 then?

You don't necessarily need to stick with TurboTax. Even if FreeTaxUSA doesn't support Form 3921 directly, you can still report the information correctly on your return. The 3921 form is actually provided to you by your employer - you don't generate it yourself. The size of the spread doesn't automatically exempt you from filing Form 6251. Even with a small spread of $5,000, you should include the form to document that you've considered the AMT implications. Remember that Form 6251 serves as your work paper showing the IRS you've calculated potential AMT correctly.

How does this handle form 3921 exactly? Does it fill out the forms for you or just tell you what to do? I'm in a similar situation and pretty confused about the whole process.

I'm skeptical about these "AI tax tools." How is this any different than just Googling the information? Does it actually connect to FreeTaxUSA or do you still have to manually enter everything?

It doesn't fill out the forms for you, but it analyzes your specific Form 3921 information and tells you exactly what numbers need to go where on Form 6251. It breaks down the AMT adjustments line by line based on your specific stock option information. The difference from Google is that it's analyzing your actual documents rather than giving generic advice. It's like having a tax pro look at your specific situation. It doesn't directly connect to FreeTaxUSA, but it gives you clear instructions on what to enter manually, which solved my problem since I was able to enter the right information even though FreeTaxUSA doesn't have a specific 3921 form interface.

How does this actually work? Do they just call the IRS for you? Couldn't you just keep calling yourself until you get through?

I don't buy it. I've tried every "trick" to get through to the IRS and nothing works. They're perpetually understaffed and overwhelmed. I seriously doubt this service can magically get you through when millions of people can't get answers.

They don't just call for you - they have a system that navigates the IRS phone tree and holds your place in line. When an actual agent picks up, their system calls your phone and connects you directly to that agent. So you don't have to waste hours listening to hold music. I was skeptical too. I tried calling the IRS myself multiple times over several days and never got through. With Claimyr, I got connected to an agent on my first try. I know it sounds too good to be true, but it actually works - that's why I shared the video link so you can see exactly how it works. The IRS is definitely still understaffed, but this service found a way to work within that system.

Does H&R Block's software let you directly import Form 3921 information or do you still have to enter everything manually? And how much did it end up costing compared to TurboTax?

You still need to enter the 3921 information manually, but they have a dedicated section for it that walks you through each field from your form. Makes it pretty straightforward compared to some other software. It cost me around $69 for the Deluxe version which included everything I needed for handling ISOs and AMT calculations, versus the $119 I paid for TurboTax the previous year. So not free, but a decent savings. They also don't hit you with surprise upgrade prompts mid-way through your return like TurboTax does.

Did you get penalized or just had to submit the form after the fact? I'm in a similar situation and wondering what the consequences might be.

I actually did exactly what you're suggesting - prepared Form 6251 by hand and then entered the results into FreeTaxUSA manually. It's definitely doable if you're comfortable with tax forms and have your Form 3921 handy. The IRS has pretty clear instructions for Form 6251, and there are worksheets that walk you through the AMT calculation step by step. I used IRS Publication 535 and the form instructions to figure out how to calculate the adjustment for my ISOs. The trickiest part was understanding how to calculate the AMT adjustment (the difference between fair market value and exercise price), but once you have that number, the rest of the form is straightforward arithmetic. For resources, I found the IRS's own AMT Assistant tool helpful for understanding the concepts, even though it doesn't handle the specific ISO calculations. The key is making sure you report the bargain element from your ISOs as an AMT preference item on line 2j of Form 6251. It took me about an hour to work through everything, but I saved probably $50+ compared to upgrading to tax software that handles it automatically. Just make sure to double-check your math since you're doing it manually!