Join weekly tips for pursuing FI

What are the major downsides of paying AMT when exercising ISOs? If you're not aware of the liability come tax time, you can create a cash flow nightmare. If you're aware of the liability ahead of time, the main downside is providing an interest-free loan to the IRS with the AMT credits you receive. An AMT credit is considered "non-refundable," meaning you have to have a tax liability in a future tax year that can be offset. Depending on your tax situation in future years, it could take a while to recoup your AMT credit.