83(b) Elections: What they are and how to file within 30 days
What an 83(b) election does and who should consider one.
An 83(b) election tells the IRS you want to be taxed on your restricted stock at the time it's granted rather than as it vests. For founders who buy stick at a low value, filing can substantially reduce future taxes—but the election must be filed within 30 days of the grant or purchase date, and that deadline cannot be extended.
Founders choose to file an 83(b) because they'll be taxed an the spread at the time of the grant, which can be close to $0 for early founders, rather than being potentially taxed on much higher values as the shares vest. It can start your capital-gains and QSBS holding clocks earlier.
How to file:
1. Complete the 83(b) election form
2. Sign and mail it to the IRS office for your address within 30 days of the grant
3. Keep proof of mailing and provide a copy for your company records
The 30 day deadline is strict. If you have missed it see this article here about what to do in that case.
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