The 83(b) election: the 30-day deadline founders can't miss
If your founder shares vest over time, US tax law by default taxes them as they vest, at their value on each vesting date. An 83(b) election lets you be taxed on their value today, which for a new company is close to zero.
Why it matters
Say you get 4,000,000 shares worth a fraction of a cent each, vesting over four years. Without an election, every vesting date is a taxable event at the then-current value. If the company grows, you owe tax on shares you can't sell. With the election, you recognize the tiny value now and pay nothing more until you sell.
The election also starts the clock for long-term capital gains on the day you receive the shares.
The deadline
How to file
- Online: the IRS accepts Form 15620 electronically through its website, after signing in with ID.me. You get a confirmation to download.
- By mail: send the signed election to the IRS office listed in the form instructions, by certified mail with return receipt, and keep the proof.
Use only one method. Give a copy to the company and keep one with your records.
Does it apply to non-US founders?
If you're not a US taxpayer and do the work outside the US, the US may not tax your shares at all, so the election may not matter for US purposes. It can still matter if you move to the US later, so many founders file it anyway. Ask an adviser in your country too.