💡 May Is the Perfect Time to Review Your Tax Return—Especially If You Have Equity Compensation
Rohit Padmanabhan

Why Your Tax Return Tells a Bigger Story Than Just What You Owe

Now that Tax Day has passed, most high-earning professionals breathe a sigh of relief and move on. But if you're a tech professional with RSUs, ISOs, or NSOs—or if you’re on a path toward an IPO or liquidity event—May isn’t the time to forget your tax return. It’s the time to dissect it.

Why? Because your recently filed return contains a goldmine of data that can shape better decisions around equity comp, cash flow, and tax strategy before the year slips away. And right now—not in November or December—is when you still have room to pivot.

 

 

Your W-2 Isn’t the Whole Story (Especially with RSUs)

If you're in tech and earning equity, you probably received RSUs that vested last year. Those showed up as income on your W-2—but did you notice how they impacted your total taxable income and marginal bracket?

Here’s why this matters:

  • RSUs are taxed at ordinary income rates upon vesting, which could push you into a higher bracket unexpectedly.
  • If you didn’t adjust your withholding or estimated payments to reflect that income, you might owe again next April—or miss opportunities to reduce that exposure now.

Actionable step: Review Line 1 of your Form 1040 against Box 1 of your W-2. Are those inflated due to equity? Use that data to adjust current-year tax withholdings, or look at tax-advantaged accounts (like HSAs or 401(k)s) to reduce this year’s burden.

 

 

Did You Exercise Incentive Stock Options (ISOs)? Check Your AMT Exposure

If you exercised ISOs last year and held the shares, that doesn't show up in your regular income—but it does trigger potential Alternative Minimum Tax (AMT) consequences. Most people skip the AMT calculation unless prompted.

Actionable step: Look at IRS Form 6251 in your tax return. If it’s blank or unfamiliar, you may need to go back and see whether AMT should have applied. If it did apply, now is the time to consider a disqualifying disposition strategy or an AMT credit recapture plan.

Tip for tech employees: AMT exposure is common in pre-IPO companies or startup environments where ISOs are abundant and share prices are rising. Proper planning can avoid future tax traps.

 

 

Your Capital Gains Tell You If You’re Managing Timing Well—or Not

Form 8949 and Schedule D on your return reveal your capital gains activity. Are you harvesting gains efficiently—or missing out on tax-saving strategies?

  • If your capital gains were high but unrealized losses exist in your portfolio, you missed a chance to harvest losses to offset those gains.
  • If you're sitting on big unrealized gains, now may be the time to plan staggered sales, especially if a liquidity event or vesting cliff is approaching.

Actionable step: Use May to set a plan for quarterly rebalancing and loss harvesting. Align these with your equity vesting schedule.

 

 

Your Return Can Help Identify Missed Opportunities for Tax Diversification

Tax diversification isn't just about Roth vs. traditional. It’s about your income sources and how you're building flexibility for future years.

Review your tax return for:

  • How much income came from taxable sources vs. tax-deferred or tax-free ones?
  • Did you make any Roth conversions, backdoor Roth IRA contributions, or mega backdoor Roth 401(k) moves?
  • Are you overly concentrated in company stock?

Actionable step: Use this information to rebalance your tax buckets and shift strategy for the remainder of 2025. Roth conversions or charitable giving strategies (like donor-advised funds) are more powerful when done proactively.

 

 

Case Study: How One Tech Professional Avoided a $25K Tax Surprise

Let’s take Alex, a 34-year-old software engineer at a pre-IPO company. In 2024, he exercised ISOs early in the year and held the shares long-term. His regular taxable income remained unchanged, so he didn’t think much of it.

But in May 2025, when he reviewed his return with a financial advisor, they noticed a huge AMT liability from Form 6251—and realized he was eligible for AMT credit carryforward and could plan a tax-free disqualifying sale later that year.

Had Alex waited until year-end, it would have been too late to strategize.

 

 

Final Thoughts: Make Your Tax Return a Planning Tool, Not a Paperweight

You worked hard to accumulate income, equity, and investment gains last year. Don’t let a static PDF sit on your desktop when it can inform powerful planning decisions now.

High-performing tech professionals with equity compensation have complex tax needs. Reviewing your return now can uncover ways to improve tax efficiency, rebalance investment risk, and avoid painful surprises next April.

 

Disclaimer: This post is for informational purposes only and should not be considered tax, legal, or investment advice. Please consult with a qualified professional for personalized recommendations.