And now for something completely different:
I just identified a legal tax scheme, where i get my bonus in over the counter options
Instead of paying social security + taxes (which for let's say 2 grand, would leave me with 750 Nett cash)...
I could get them payed out as OTC options,
let's say the options cost 50 a piece, 2 grand would give me 40 of them..
Now here's the kicker... this setup does not require a social security deduction
Nor does it require a 50+ tax rate
The amount to be taxed, is 15% of the stock value, let's say the stock is worth 130 a pop
15% of 130 is 19.5
times 40 makes 780 "Taxable"
the tax on that is about 400 bucks
So i pay 400 on 2 grand , instead of paying 1300 on 2 grand.
Some things to consider :
- Taxman expects you will not exercise until you have em 1 year
- Stocks may drop
- Stocks may rise
- You don't pay any taxes when you cash in the options
- You have to pay the taxes from the gross salary , instead of from the bonus itself.
(although nothing prohibits a higher gross that mont, covering the amount due to the taxman)
Realistically, it defers the bonus 1 year
But at a seriously improved Gross to Nett ratio, and at a certain market related risk
Since obviously, if the stocks really tank, yer screwed
If the options drop, you can still sell the options
let's say 40 per (20% drop) option, that yields 1600 (still better result than regular taxation (2000+400=1600) vs (2000=750)
Break even would be if the options dropped to 18.75
In the current climate, i think the risk is reduced
unless i pick oddball stocks
or if the market craps out more, by a factor of 2 (in which case, frankly, it won't matter much as currency itself will be pretty much null and void)
Obviously, the stocks could rise over time
At which point the OTC's would be worth more as well...
couple that with the current market crap going on ... It might be fun.
Need to check this out a bit further, and talk to my boss about it..
He likes tax tricks as much as i do...
