Beware Of Strategies To Take Advantage Of Lower Social Security Tax Rates

Newest myStockOptions.com blog http://mystockoptions.typepad.com/blog looks at what you might have thought was a tax loophole in the lower 4.2% Social Security rate.

On the possibility that the 2% cut will not be extended beyond February, employees may think if they exercise nonqualified stock options before March they will save some money by getting the lower 4.2% Social Security rate rather than the normal 6.2% rate. For similar reasons, they may be considering a Section 83(b) election to be taxed at grant on restricted stock that will be awarded in early February.  Alternatively, your company may rush in certifying and delivering performance shares after a 12/31/2011 cycle end, believing it is providing a tax benefit to executives by doing this before the rate could go up. However, Congress actually foresaw this potential abuse and covered it in the short-term rate extension, as explained in the blog.

See: http://mystockoptions.typepad.com/blog/2012/01/beware-of-strategies-to-take-advantage-of-lower-social-security-tax-rates-.html