You negotiated the big tech offer. You survived the interview gauntlet. Now you're making $200K-$400K.
And you're about to lose $50K-$150K to mistakes you don't even know you're making.
This is the financial survival guide for tech professionals in 2026. We cover the 7 biggest money traps that hit high earners—and exactly how to avoid them.
The 7 Financial Landmines (Quick Reference)
| Risk | Who It Affects | Potential Loss | Fix Timeline |
|---|---|---|---|
| 1099-K Tax Confusion | Side hustlers, contractors | $5K-$15K | 1 tax season |
| ISO/AMT Tax Bomb | Startup employees with stock options | $20K-$100K+ | Exercise strategy |
| Equity Clawbacks | Anyone with RSUs/options | 20-50% of equity | Contract review |
| Unlimited PTO Trap | Employees at "progressive" companies | $15K-$40K | Resignation timing |
| Credit Report Errors | Anyone with credit history | 50-100 credit points | 30-90 days |
| Work Number Leaks | All W-2 employees | Privacy + negotiation power | Opt-out |
| LLC Transparency Act | Business owners, consultants | $500/day fines | File by 2026 |
1. The 1099-K Tax Trap (New for 2026)
What Changed
The IRS lowered the 1099-K reporting threshold from $20,000 to $600. If you received more than $600 via PayPal, Venmo, Stripe, or any payment processor in 2025, you'll get a 1099-K form.
The Problem: Most people think this means they owe taxes on money they already paid taxes on (or shouldn't be taxed on at all).
Who This Affects
- Freelancers and contractors
- Side hustlers (Uber, DoorDash, Etsy)
- Anyone who split rent/bills via Venmo
- People who sold personal items on eBay
The $10K Mistake
Example: You sold your old MacBook for $1,200 on eBay. You also split rent with your roommate via Venmo ($800/month × 12 = $9,600). Total 1099-K: $10,800.
Wrong Response: Panic and report $10,800 as income → pay $2,700 in taxes you don't owe.
Right Response: Understand that:
- Personal item sales (MacBook) = not taxable if sold at a loss
- Rent reimbursements = not income
- Only actual business income is taxable
Read the complete 1099-K survival guide →
2. ISO/AMT Tax Bomb (The $100K Surprise)
What It Is
Incentive Stock Options (ISOs) trigger the Alternative Minimum Tax (AMT) when you exercise them—even if you haven't sold the stock yet.
The Scenario
You join a startup. They give you 50,000 ISOs at $1/share. Three years later, the company raises a Series C at $10/share.
You exercise all 50,000 options:
- Exercise cost: $50,000 (50K × $1)
- Fair market value: $500,000 (50K × $10)
- AMT taxable income: $450,000
- AMT tax bill: ~$126,000
You just paid $126K in taxes on stock you can't sell (still private company). If the company fails, you lose everything.
Who This Affects
- Startup employees with ISOs
- Anyone exercising options before an IPO
- Engineers at Series B-D companies
The Fix
Don't exercise all at once. Use the AMT exemption strategically:
- 2026 AMT exemption: ~$85,700 (single)
- Exercise just enough each year to stay under the exemption
- Spread exercises over 3-5 years
Read the complete ISO/AMT strategy guide →
3. Equity Clawback Risk (The Fine Print)
What It Is
Your RSUs or stock options can be taken back if you leave the company under certain conditions.
Common Clawback Triggers
- Leaving before vesting cliff (usually 1 year)
- Termination for cause
- Joining a competitor (non-compete clauses)
- Performance improvement plan (PIP) termination
- Voluntary resignation before certain milestones
The $80K Mistake
Example: You have $200K in unvested RSUs. You get put on a PIP. You resign before they fire you (to "save face").
Result: You forfeit all unvested equity because you resigned voluntarily.
Right Move: Make them fire you. Document everything. Consult an employment lawyer before resigning.
Who This Affects
- Anyone with RSUs (Meta, Google, Amazon, etc.)
- Startup employees with stock options
- Executives with performance-based equity
Read the complete equity clawback guide →
4. Unlimited PTO = $0 Payout (The Hidden Cost)
The Reality
"Unlimited PTO" sounds great. In practice:
- Employees take fewer days off (peer pressure)
- When you leave, you get $0 payout (no accrued PTO)
The Math
Traditional PTO:
- 20 days/year accrued
- Salary: $200K
- Daily rate: $200K ÷ 260 = $769
- Unused PTO at resignation: 15 days
- Payout: $11,538
Unlimited PTO:
- No accrual
- Payout at resignation: $0
Who This Affects
- Employees at "progressive" tech companies
- Anyone planning to leave within 2-3 years
- High earners ($150K+)
The Fix
Before accepting an offer: Negotiate a sign-on bonus equal to the PTO payout you're giving up (~$10K-$15K).
Before resigning: Take 2-3 weeks PTO, then resign. You can't get paid out, but you can use it.
Read the complete unlimited PTO analysis →
5. Credit Report Errors (The 100-Point Drop)
What Happens
Credit bureaus (Equifax, Experian, TransUnion) make mistakes. A lot.
Common errors:
- Accounts that aren't yours
- Incorrect late payments
- Duplicate accounts
- Debts already paid showing as unpaid
The Impact
A single incorrect late payment can drop your credit score by 50-100 points.
Cost:
- Higher mortgage rates: +0.5% APR = $50K over 30 years
- Denied credit cards
- Higher insurance premiums
The Fix: 609 Letter
A "609 letter" is a credit dispute letter that forces bureaus to verify or remove disputed items.
Timeline:
- Send 609 letter (certified mail)
- Bureaus have 30 days to respond
- If they can't verify, they must remove it
- Credit score rebounds in 30-60 days
Read the complete 609 letter template & guide →
6. Work Number Employment Verification (The Privacy Leak)
What It Is
The Work Number is a database run by Equifax that stores your:
- Employment history
- Salary information
- Job titles
- Start/end dates
Who has access: Landlords, lenders, background check companies, recruiters.
The Problem
Your current employer reports your salary to The Work Number. When you interview elsewhere, recruiters can see exactly what you make.
Negotiation impact: If they know you make $150K, they'll anchor their offer at $160K-$170K instead of $200K.
The Fix
Opt out of The Work Number:
- Go to theworknumber.com
- Request employment data freeze
- Employers can still verify employment, but not salary
Read the complete Work Number opt-out guide →
7. LLC Beneficial Ownership Reporting (2026 Deadline)
What Changed
The Corporate Transparency Act requires all LLCs and corporations to file Beneficial Ownership Information (BOI) reports with FinCEN.
Deadline:
- Existing LLCs (formed before 2024): January 1, 2025 (already passed—file ASAP)
- New LLCs (formed in 2024+): Within 90 days of formation
Who This Affects
- Freelancers with LLCs
- Consultants
- Side business owners
- Real estate investors
The Penalty
$500 per day for late filing (up to $10,000 total) + potential criminal penalties.
The Fix
File your BOI report at fincen.gov/boi (free, takes 15 minutes).
Read the complete LLC transparency act guide →
8. Total Loss Valuation (Car Insurance Lowball)
The Scam
Your car gets totaled. Insurance offers you $18,000. You owe $22,000 on the loan. You're $4,000 underwater.
Why: Insurance companies use algorithms (like CCC ONE) that systematically undervalue cars.
Who This Affects
- Anyone with a car loan
- Drivers in no-fault states
- People with older cars (5+ years)
The Fix
Dispute the valuation:
- Get 3-5 comparable listings (same make/model/mileage)
- Submit to insurance adjuster
- Demand revaluation
- Most people get $2K-$5K more
Read the complete total loss valuation guide →
The Financial Checklist for Tech Workers
Before Accepting an Offer
- [ ] Review equity clawback clauses
- [ ] Negotiate PTO payout if "unlimited"
- [ ] Understand ISO vs RSU tax implications
- [ ] Check non-compete enforceability
First 90 Days
- [ ] Set up ISO exercise strategy (if applicable)
- [ ] Opt out of Work Number salary reporting
- [ ] Review credit reports (annualcreditreport.com)
- [ ] File LLC BOI report (if applicable)
Annual Review
- [ ] Exercise ISOs strategically (stay under AMT exemption)
- [ ] Review equity vesting schedule
- [ ] Dispute credit report errors
- [ ] Track 1099-K income vs reimbursements
Before Leaving
- [ ] Use all PTO (if unlimited)
- [ ] Review equity clawback triggers
- [ ] Document performance (avoid PIP forfeitures)
- [ ] Consult employment lawyer if on PIP
Related Guides
Career & Salary
- How to Make $200K: Complete Roadmap
- Top 15 Jobs Paying $200K in 2026
- Is $200K a Good Salary in 2026?
- Salary Negotiation Scripts
Interview Process
Bottom Line
Making $200K-$400K in tech is great. Keeping it requires understanding:
- Tax traps (1099-K, ISO/AMT)
- Equity risks (clawbacks, vesting)
- Hidden costs (unlimited PTO, credit errors)
- Compliance deadlines (LLC BOI filing)
The difference between knowing these rules and not knowing them is $50K-$150K over your career.
Bookmark this guide. Review it annually. Share it with your team.