83(b) Deadline Save Future Taxes

83(b) Election Guide for Startups: The $0 Tax Bill Deadline

last updated: Feb 15, 2026
Founding a company involves endless paperwork, but this single document is the only one that directly protects your personal bank account from a potential six-figure tax bill. Here is the no-nonsense guide to filing your 83(b) election before it is too late.

TL;DR

An 83(b) election tells the IRS you want to be taxed on your equity upfront—when it is worth essentially nothing—rather than later when it vests and (hopefully) has value.

  • Benchmark: File within 5–10 days of the stock grant. The legal hard limit is 30 days.
  • Rule: Always send via USPS Certified Mail with Return Receipt.
  • Warning: There is absolutely no relief for missing the deadline.

How to save thousands in future taxes: Follow the timeline below.

Glossary

  • 83(b) Election: A provision under the Internal Revenue Code that allows a founder to pay taxes on the total fair market value of restricted stock at the time of granting.
  • Vesting: The process of earning your shares over time (usually 4 years). Without 83(b), you are taxed every time a chunk of shares vests.
  • Fair Market Value (FMV): The current price of the stock. At incorporation, this is often par value (e.g., $0.00001 per share).
  • Ordinary Income Tax: The tax rate applied to your salary (and vesting stock without an 83(b), which is typically higher than capital gains tax rates.

How to file the 83(b) election

Follow this strict timeline to ensure you never pay taxes on "phantom income."

Phase 1: The Trigger (Day 1)
  • Action: Stock Purchase Agreement Signed.
  • Context: The 30-day clock starts the day you are granted the stock (transfer of property), not the day you incorporate or the day you file the form. Ensure your Term Sheet vs SAFE decisions are finalized before this trigger pulls.
  • Critical Math: If you have 1,000,000 shares at $0.0001 par value, your taxable income is $100. The tax owed is likely negligible. Reflect this ownership clearly in your Cap Table Template.

Phase 2: The Preparation (Days 2–5)
  • Action: Complete IRS Form 15620 (Section 83(b) Election).
  • Details: Incorporation services like Clerky or Stripe Atlas often generate this automatically. If you are doing it manually, use the official IRS Form 15620.
  • Requirement: You need 3 copies: one for the IRS, one for your spouse (if community property laws apply), and one for your company records.

Phase 3: The Execution (Days 6–10)
  • Action: Go to the Post Office physically.
  • Method: Send via USPS Certified Mail with Return Receipt Request.
  • Why: The IRS is notorious for losing mail. The date stamped on the certified mail receipt is your only legal proof of timely filing. Do not use FedEx or UPS unless you verify specific IRS private delivery service rules.
  • Destination: Send to the Internal Revenue Service Center where you would file your personal income tax return (check instructions for Form 15620 here).

Phase 4: The Verification (Days 11–25)
  • Action: Wait for the Return Receipt (Green Card) to arrive back in your mail.
  • Storage: Staple the Green Card to a copy of your 83(b) form. Scan both. Upload to your data room.
  • Safety Net: If the receipt has not arrived by Day 25, you still have 5 days to investigate, though you cannot re-file if the first one was delivered. This is just for peace of mind.

Phase 5: The Danger Zone (Days 26–30)
  • Action: If you have not filed by now, you are in the "red zone."
  • Reality: If you mail it on Day 30, it must be postmarked that day. If the post office is closed, you missed the window.
  • Result: The election becomes invalid. You will be taxed on the spread between your strike price and the FMV every year as shares vest.

Benchmarks

Sample math: The cost of waiting
  • Scenario: You own 1M shares.
  • With 83(b): You pay tax on $100 value at grant. Total tax: ~$30.
  • Without 83(b): Four years later, your startup is valued at $10M. Your shares are worth $10/share. As they vest, that value is treated as income.
  • The Bill: You could owe taxes on $2.5M–$10M of income despite having $0 in cash liquidity.

Risks

Failing to file an 83(b) election is one of the few unfixable mistakes in the startup world. There is no "late filing" forgiveness.
  • Phantom Income: Without the election, you are taxed on the paper value of your shares as they vest. If your company valuation skyrockets, you could owe hundreds of thousands of dollars in taxes on stock you cannot sell yet.
  • Golden Handcuffs: High tax bills might force you to sell shares early or demand a higher cash salary just to pay the IRS, draining company resources.
  • Audit Risk: While rare, not having the certified mail receipt leaves you vulnerable if the IRS claims they never received your election.

Conclusion

Mastering the 83(b) election is a necessary defensive step, but it is not the whole picture. It protects your personal upside, but it does not generate company revenue. You can have perfect tax compliance and a secure cap table, but if your other variables — Offer, Strength, Market Timing — are weak, your probability of hitting $10k MRR remains near 0%. File the form so you can forget about the IRS and focus on selling.
Take the 90-second audit to calculate your probability of hitting $10k MRR in the next 90 days.
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FAQ
  • You:
    Can I file an 83(b) election late?
    Guide:
    No. The 30-day deadline is statutory and rigid (see 26 U.S. Code § 83). The IRS rarely grants relief for late filings. If you miss it, you are stuck with the standard tax treatment.
  • You:
    Does this apply if I am an LLC?
    Guide:
    Generally, no. The 83(b) election applies to property (stock) subject to vesting. LLC interest is often treated differently (profits interest), though you should consult a tax pro about "Class B units" or similar structures that might mimic stock.
  • You:
    Do I need to attach a copy to my annual tax return?
    Guide:
    Historically, yes. However, recent IRS rule changes have relaxed the requirement to attach a physical copy to your annual 1040, but keeping the proof in your records is mandatory for due diligence during an exit.
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