If you work in tech in Seattle, there's a good chance equity compensation makes up a significant chunk of your total package — and an equally good chance your taxes are considerably more complicated than they appear on the surface. RSUs that vest, options that exercise, ESPP shares that sell, and the alternative minimum tax lurking behind certain ISO exercises can turn a straightforward W-2 return into something genuinely complex.
Most Seattle tech employees discover this the hard way — either by overpaying tax because they didn't know the levers available, or by underpaying and getting hit with an unexpected bill. The right CPA pays for themselves within the first year.
When a Seattle tech employee should skip a general tax preparer
If your return is just salary and a simple bonus, many preparers can help. But once you add repeated vest events, ISO exercise timing, ESPP sales, or a possible Washington capital gains issue, it usually makes sense to compare Seattle CPAs who work with equity compensation regularly rather than a general preparer who only sees it a few times each season.
- RSUs are pushing you into a higher bracket and withholding no longer covers what you will actually owe.
- You are considering an ISO exercise and want AMT modeled before you act.
- You sold ESPP or company stock and need cost basis handled correctly.
- You have startup equity or an 83(b) question and the filing deadline risk is real.
- You expect a large concentrated gain and want help planning around Washington's capital gains tax.
The Four Types of Equity Compensation (and Why Each Is Different)
Restricted Stock Units (RSUs)
RSUs are the most common form at large Seattle employers like Amazon, Microsoft, and Expedia. When RSUs vest, they're taxed as ordinary income — your employer withholds at a flat federal rate (typically 22%, which may be lower than your actual marginal rate). If your total income puts you in the 32% or 37% bracket, you'll owe the difference at tax time. Many tech employees are surprised by this gap.
The other issue: once RSUs vest, your cost basis in the shares is the fair market value on the vest date. If you hold the shares and they increase in value, you pay capital gains on that increase. If they decrease, you have a capital loss. Tracking this across many vest events and potential partial sales requires careful recordkeeping — or a CPA who manages it for you.
Incentive Stock Options (ISOs)
ISOs get favorable long-term capital gains treatment if you hold the shares long enough (more than two years from grant, more than one year from exercise). But the spread at exercise — the difference between the strike price and fair market value — is an Alternative Minimum Tax (AMT) preference item. This means a large ISO exercise in a single year can trigger significant AMT, even if the shares subsequently drop in value. "ISO AMT risk" is one of the most expensive surprises in tech compensation, and a Seattle CPA who works with tech employees should be able to model it for you before you exercise.
Non-Qualified Stock Options (NQSOs)
Simpler from a tax perspective: the spread at exercise is ordinary income, and your employer typically withholds. The tax treatment is clear, but the timing of exercise still matters — especially for large positions where concentrating a big exercise in a single year pushes you into higher brackets.
Employee Stock Purchase Plans (ESPPs)
Most large Seattle tech companies offer ESPPs that let employees buy company stock at a 10–15% discount. The taxation of ESPP sales is surprisingly complex — it depends on whether the sale is "qualifying" or "disqualifying," and what the stock did between purchase and sale. Many employees and even some CPAs handle ESPP sales incorrectly.
Best next pages if you are shortlisting a Seattle CPA
- Browse Seattle CPAs if you want the broadest local shortlist first.
- Compare startup-focused CPAs in Seattle if your questions involve founder taxes, equity, or early-stage finance work.
- Review typical CPA pricing before you start booking calls so you know what complex equity work usually costs.
- Use the near-me directory if you are still deciding between Seattle firms and remote specialists.
Washington State Makes Seattle Equity Tax Unusual
Washington has no state income tax — which makes Seattle unusually attractive for equity compensation relative to California or New York. RSU income, option gains, and capital gains are all free from Washington state tax.
However, Washington does have a capital gains tax (enacted 2021, upheld by the Washington Supreme Court in 2023) that applies to long-term capital gains above $262,000 per year at a 7% rate. This is distinct from the income tax — it specifically targets investment gains and doesn't apply to wages or RSU ordinary income. For high earners with significant stock sales in a single year, this is worth planning around.
What Seattle Tech Employees Should Look for in a CPA
Equity compensation as a stated specialty
Ask: "How many of your clients receive RSUs or stock options as part of their compensation?" A specialist should have dozens. Ask them to explain the tax treatment of an ISO exercise that triggers AMT — if they can do it conversationally without having to look it up, you're in good hands.
Multi-year modeling capability
Equity tax planning is multi-year work. If you have ISOs you're considering exercising, the right CPA runs a projection showing you tax impact across multiple exercise-and-hold scenarios. If they're only looking at the current year, they're doing preparation — not planning.
Familiarity with Washington's capital gains tax
This is a newer development that not all CPAs have fully integrated into their planning. Ask specifically about Washington's 2021 capital gains tax and whether it might apply to your situation.
Brokerage account integration
Your equity transactions live in your brokerage account (Fidelity, E*TRADE, Schwab, etc.). A good tech-focused CPA will be comfortable working with the 1099-B from these accounts and reconciling cost basis — which is often reported incorrectly by brokers for equity compensation transactions.
Questions Worth Asking Before You Hire a Seattle Equity CPA
- How often do you handle RSUs, ESPPs, and ISO exercises? You want a direct answer, not a vague "we can handle that."
- Do you project tax before a stock sale or exercise? A planning-oriented CPA should be able to model the decision before year-end.
- Can you reconcile brokerage statements and cost basis? This matters more than most Seattle tech employees realize.
- How do you think about Washington capital gains exposure? A local specialist should have a clear framework for when this matters.
Common Mistakes Seattle Tech Employees Make
- Under-withholding on RSUs — The 22% flat withholding rate isn't enough for anyone in the 32%+ bracket. Setting aside additional cash quarterly prevents a painful April surprise.
- Ignoring AMT on ISOs — Exercising a large ISO grant without modeling AMT impact first is one of the most expensive tax mistakes in Silicon Valley (and Puget Sound). The AMT credit carries forward, but it can take years to recover.
- Wrong ESPP cost basis — Brokers often report the purchase price as cost basis on ESPP sales, which double-counts the ordinary income portion already reported on your W-2. This leads to overpaying tax on the same income twice.
- Missing the 83(b) election window — For early employees who receive restricted stock (not RSUs) that vests over time, the 83(b) election must be filed within 30 days of grant — not 30 days of vest. Missing this window can mean paying ordinary income tax on a much higher stock value later.
What Seattle Tech CPAs Typically Charge
- 1040 with RSUs and ESPP (moderate complexity): $600–$1,500
- 1040 with ISOs, AMT analysis, and WA capital gains: $1,200–$3,000
- Annual planning engagement (planning + prep): $2,000–$5,000
- ISO exercise modeling (one-time projection): $400–$900