{"id":3599,"date":"2026-10-23T10:29:32","date_gmt":"2026-10-23T10:29:32","guid":{"rendered":"https:\/\/e-startup.io\/blogs\/?p=3599"},"modified":"2026-10-23T10:29:32","modified_gmt":"2026-10-23T10:29:32","slug":"83b-election-for-us-startup","status":"publish","type":"post","link":"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/","title":{"rendered":"How to File an 83(b) Election for a US Startup: Deadlines and Requirements"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#Introduction\" >Introduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#What_Is_an_83b_Election_for_a_US_Startup\" >What Is an 83(b) Election for a US Startup?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#Who_Should_Consider_an_83b_Election\" >Who Should Consider an 83(b) Election?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#What_Is_the_83b_Election_Deadline\" >What Is the 83(b) Election Deadline?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#Example_of_the_30-Day_Filing_Rule\" >Example of the 30-Day Filing Rule<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#How_to_File_an_83b_Election_for_a_US_Startup\" >How to File an 83(b) Election for a US Startup<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#Step_1_Confirm_Your_Equity_Is_Eligible\" >Step 1: Confirm Your Equity Is Eligible<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#Step_2_Obtain_IRS_Form_15620\" >Step 2: Obtain IRS Form 15620<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#Step_3_Complete_the_Required_Information\" >Step 3: Complete the Required Information<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#Step_4_Sign_and_Submit_the_Election\" >Step 4: Sign and Submit the Election<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#Step_5_Provide_Copies_and_Keep_Records\" >Step 5: Provide Copies and Keep Records<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#Benefits_of_an_83b_Election_for_Founders\" >Benefits of an 83(b) Election for Founders<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#1_Potentially_Lower_Taxable_Income_at_the_Start\" >1. Potentially Lower Taxable Income at the Start<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#2_Potential_Tax_Benefits_on_Future_Appreciation\" >2. Potential Tax Benefits on Future Appreciation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#3_Greater_Tax_Planning_Certainty\" >3. Greater Tax Planning Certainty<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#Risks_and_Common_Mistakes_to_Avoid\" >Risks and Common Mistakes to Avoid<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#What_Should_Foreign_Founders_Know_About_an_83b_Election\" >What Should Foreign Founders Know About an 83(b) Election?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#Conclusion\" >Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#Frequently_Asked_Questions\" >Frequently Asked Questions<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#1_What_is_the_deadline_for_filing_an_83b_election\" >1. What is the deadline for filing an 83(b) election?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#2_Can_I_file_an_83b_election_online\" >2. Can I file an 83(b) election online?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#3_What_happens_if_I_miss_the_83b_election_deadline\" >3. What happens if I miss the 83(b) election deadline?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#4_Do_foreign_founders_need_to_file_an_83b_election\" >4. Do foreign founders need to file an 83(b) election?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Introduction\"><\/span><b>Introduction<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Setting up a business in the USA typically includes giving out restricted stock to founders, co-founders, and initial employees of the company. Although receiving company stocks may be a great moment, there might be some taxes connected to receiving it that founders have to keep in mind.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">An 83(b) Election for US Startup is an option for certain people who receive substantially nonvested property, for example, restricted stock, to treat the income as received when it is received not when it vests. An 83(b) Election for US Startup founders may be especially useful when the fair market value of startup shares is relatively low.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Nevertheless, the procedure entails strict deadlines, specific requirements and tax implications that one has to take into account when doing this. Not meeting the deadlines might make it impossible to do the election.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This guide will show what 83(b) election is, who should consider doing it, how to file the form 15620 and what US and foreign founders have to know before making this choice.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_Is_an_83b_Election_for_a_US_Startup\"><\/span><b>What Is an 83(b) Election for a US Startup?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">An 83(b) election is a type of election provided under Section 83(b) of the US Internal Revenue Code. In general, it enables someone who receives property that is substantially nonvested in exchange for providing some service to elect to treat the value of such property as earned at the moment of transfer.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For instance, a person who receives restricted shares that are going to vest during the next four years would generally be able to recognize the ordinary compensation income at the time of the vesting based on the fair market value of the shares and the amount paid for them.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, if the person makes an 83(b) election, he\/she would generally recognize the taxable spread at the time of the transfer based on the difference between the fair market value of the shares and the price at which they were obtained by the individual. The future increase of the value of the shares may be eligible for capital-gains taxation at the time of sale.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Who_Should_Consider_an_83b_Election\"><\/span><b>Who Should Consider an 83(b) Election?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Individuals receiving restricted stocks that are subject to vesting or any other form of significant restriction will need an 83(b) election.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Common examples include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Founders: <\/b><span style=\"font-weight: 400;\">Persons receiving restricted shares which have vesting schedules.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Co-Founders:<\/b><span style=\"font-weight: 400;\"> Persons receiving stock based on services provided to the firm.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Early Employees:<\/b><span style=\"font-weight: 400;\"> Employees receiving qualifying restricted stock.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Service Providers: <\/b><span style=\"font-weight: 400;\">Persons receiving substantially nonvested property for services rendered.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Not all equity-based grants qualify for an 83(b) election. For instance, there is a distinction between stock options and restricted stock grants. The exercising of specific stock options may result in a choice to make an 83(b) election, contingent upon the nature of the property transferred.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Before making the 83(b) election, it is important to ensure that the grant of equity is a qualified one.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_Is_the_83b_Election_Deadline\"><\/span><b>What Is the 83(b) Election Deadline?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">&#8220;The <strong>83(b) Election for US Startup<\/strong> generally must be filed within 30 days of the property transfer, making the deadline crucial for founders who receive restricted stock<\/span><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The deadline is counted starting from the date of property transfer, which does not necessarily mean the date when you sign your startup incorporation papers or start working at your startup. It may vary depending on your equity deal.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In case if the 30th day falls on a weekend or legal holiday, there may be certain provisions that provide some flexibility in terms of filing on the next date. It will be worth making sure if such an exception applies to your situation.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Example_of_the_30-Day_Filing_Rule\"><\/span><b>Example of the 30-Day Filing Rule<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Assuming the founder is issued restricted stock on October 5, 2026, then it becomes incumbent upon him to count the number of days within which he can make the election after the issuance of the restricted stock.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To avoid last-minute issues:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Double-check with your business or lawyer for the true date of stock transfer.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Fill out the form right after the transfer.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Ensure enough time for delivery if filing by mail.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Provide proof of filing.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Just because your firm, attorney, or equity management system has not yet filed the election on your behalf does not mean that they have done so automatically for you.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_to_File_an_83b_Election_for_a_US_Startup\"><\/span><b>How to File an 83(b) Election for a US Startup<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The filing process involves identifying the property, completing the required information, submitting the election, and retaining records.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Step_1_Confirm_Your_Equity_Is_Eligible\"><\/span><b>Step 1: Confirm Your Equity Is Eligible<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Review your restricted stock purchase agreement, stock grant documents, or other relevant equity paperwork.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Check the following details:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Number and nature of the shares transferred.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Date of the transfer of the shares.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Vesting schedule and forfeiture terms.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Purchase price, if any.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Nature of the award: whether restricted stock or other form of equity grant.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This step matters because not every equity award qualifies for an 83(b) election.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Step_2_Obtain_IRS_Form_15620\"><\/span><b>Step 2: Obtain IRS Form 15620<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Form <\/span><b>15620 Section 83(b) Election<\/b><span style=\"font-weight: 400;\"> is issued by the IRS to make an election of this kind. A valid election can be made through a statement in writing which meets the regulatory requirements.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You can download the official form here:<\/span><\/p>\n<p><a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/f15620.pdf\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">https:\/\/www.irs.gov\/pub\/irs-pdf\/f15620.pdf<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Use the latest available form and instructions when preparing your filing.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Step_3_Complete_the_Required_Information\"><\/span><b>Step 3: Complete the Required Information<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The form requests information about you, the transferred property, its value, and the amount paid.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Review these fields carefully:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Taxpayer information:<\/b><span style=\"font-weight: 400;\"> Your legal name, TIN, and address are to be provided here.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Description of the property:<\/b><span style=\"font-weight: 400;\"> Type of the property and number of shares should be mentioned here.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Date of the transfer:<\/b><span style=\"font-weight: 400;\"> Mention the date on which the transfer took place<\/span><b>.<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Tax year:<\/b><span style=\"font-weight: 400;\"> Indicate the tax year which contains the date of transfer.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Conditions:<\/b><span style=\"font-weight: 400;\"> Vesting and forfeiture conditions will be described here.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Fair market value:<\/b><span style=\"font-weight: 400;\"> This section requires information about the fair market value of the property.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Price paid: <\/b><span style=\"font-weight: 400;\">Amount paid by you for purchasing the property should be mentioned here.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Taxable amount:<\/b><span style=\"font-weight: 400;\"> The amount calculated by subtracting price paid from fair market value.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">As an illustration, let us say that the founder gets 10,000 shares which have a fair market value of $0.01 per share, with an amount paid of $100. In such a situation, the fair market value will be $100, while the amount paid will be $100 as well. Consequently, the amount to be included in gross income will be zero.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Review the IRS instructions carefully before submitting the form.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Step_4_Sign_and_Submit_the_Election\"><\/span><b>Step 4: Sign and Submit the Election<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Review all the information before signing the election. The election has to be filed with the IRS during the relevant 30 days.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">See the current filing instructions on the IRS website regarding how you can submit the form. Filing online is available through the IRS forms portal if you qualify for filing online.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If filing through mailing, use the correct address based on where you file your federal income tax returns.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Never think that sending an email to your business and keeping the signed form satisfies the requirement of filing with the IRS.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Step_5_Provide_Copies_and_Keep_Records\"><\/span><b>Step 5: Provide Copies and Keep Records<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Once filed, send a copy of the executed election to the individual or corporation providing the service. In case of individuals who are performing the services and the one receiving the property being different, a copy should be sent to the transferee as well.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Keep a complete record of:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Signature on the election statement.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Documentation showing proof of timely filing or filing electronically.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Restricted stock or equity plan documentation.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Details on the transfer date and share value.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Copies delivered to the concerned parties.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">These papers will help you prepare your taxes, answer any inquiries you may have, and check your tax status.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Benefits_of_an_83b_Election_for_Founders\"><\/span><b>Benefits of an 83(b) Election for Founders<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The 83(b) election has some benefits that can be enjoyed by the founder whose equity meets the requirements to be able to file such an election.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"1_Potentially_Lower_Taxable_Income_at_the_Start\"><\/span><b>1. Potentially Lower Taxable Income at the Start<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">In cases where the restricted stock has very low fair market value at the time of transfer, it will lead to the taxpayer having lower compensation income if he opts for recognizing his income during transfer of shares.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_Potential_Tax_Benefits_on_Future_Appreciation\"><\/span><b>2. Potential Tax Benefits on Future Appreciation<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Following a successful election, any gains that follow may be eligible for capital gains tax status upon disposition, subject to the holding period and other relevant criteria.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_Greater_Tax_Planning_Certainty\"><\/span><b>3. Greater Tax Planning Certainty<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The election will set up the timing of income recognition in relation to the founder\u2019s restricted stock. This may have certain advantages in terms of tax planning, but it will be determined by the founder\u2019s situation.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Risks_and_Common_Mistakes_to_Avoid\"><\/span><b>Risks and Common Mistakes to Avoid<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">An 83(b) election can be beneficial, but it also involves risks.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Failure to make the deadline: <\/b><span style=\"font-weight: 400;\">The 30-day period is firm, and extensions are not possible just because the founder forgets to file.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Election made without considering the valuation: <\/b><span style=\"font-weight: 400;\">Fair market value that is inaccurate could have an impact on tax reporting.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Failure to consider forfeiture:<\/b><span style=\"font-weight: 400;\"> If you make the election and subsequently forfeit the stock, you do not get a refund for the taxes paid on the first election just because you forfeited the shares.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Assumption that all equity meets the criteria: <\/b><span style=\"font-weight: 400;\">Stock options differ from restricted stock. Early exercise with certain shares is a different election.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Assumption that election can be reversed: <\/b><span style=\"font-weight: 400;\">Reversal is usually impossible without IRS permission.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Records not being kept: <\/b><span style=\"font-weight: 400;\">Without the documentation, it is hard to show that the law was followed.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Review these risks with a qualified tax professional before filing. You can also consult IRS Publication 525 for more information:<\/span><\/p>\n<p><a href=\"https:\/\/www.irs.gov\/publications\/p525\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">https:\/\/www.irs.gov\/publications\/p525<\/span><\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_Should_Foreign_Founders_Know_About_an_83b_Election\"><\/span><b>What Should Foreign Founders Know About an 83(b) Election?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Foreign individuals who set up US companies may also be required to make an 83(b) election in the case of receiving qualifying restricted stock options for services rendered.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, being foreign does not automatically require one to make the election. It all depends on the terms of the equity deal, one\u2019s US tax status, relevant tax treaties, and one\u2019s taxation elsewhere.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Before filing, foreign founders should:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Check if the equity transfer is covered under US tax regulations.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Find out what taxpayer ID number and address details must be provided.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Be aware of possible implications for their US tax filings due to the election.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Think about possible tax implications in their country of residence.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Get an expert\u2019s advice on US tax issues related to startup formation.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Founders should also distinguish between forming a US company and making a tax election. Company formation does not automatically complete any required personal tax filing.<\/p>\n<p>Understanding the 83(b) Election for US Startup requirements helps founders determine whether their restricted stock qualifies for this tax election.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/p>\n<hr \/>\n<h2><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><b>Conclusion<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><b>US startup shares 83(b) Election<\/b><span style=\"font-weight: 400;\"> is one way of doing tax planning for those founders and early employees that receive restricted stock. This kind of an election is done so as to recognize the taxable value at the time of transfer instead of as the restricted stock vests and thereby helps in saving the future compensation income in case there is any increase in value of the business.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The key things in this process include eligibility, the 30-day period for filing the election, correct information, method of filing the election and proof of filing. Founders should consider their individual situation very well before making the election because it can affect their taxes in the future.<\/span><\/p>\n<p><b>E-Startup<\/b><span style=\"font-weight: 400;\"> will assist you in establishing your <\/span><b>US business through <\/b><a href=\"https:\/\/e-startup.io\/\"><b>US LLC Formation<\/b><\/a><span style=\"font-weight: 400;\">. For information on restricted stock, Section 83(b) Election Filing and the tax consequences, visit a US tax expert.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Act now so that your US business formation and tax issues are taken care of!<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span><b>Frequently Asked Questions<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"1_What_is_the_deadline_for_filing_an_83b_election\"><\/span><b>1. What is the deadline for filing an 83(b) election?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The normal deadline would be 30 days from the date of transfer of the property. If the deadline happens to fall on a weekend or holiday, then there might be special provisions that apply. Consult the IRS or a tax professional for clarification.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_Can_I_file_an_83b_election_online\"><\/span><b>2. Can I file an 83(b) election online?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Electronic filing might be possible using the IRS&#8217;s forms web portal for qualified submissions. Refer to the latest IRS guidelines regarding Form 15620 for confirmation on your method of filing.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_What_happens_if_I_miss_the_83b_election_deadline\"><\/span><b>3. What happens if I miss the 83(b) election deadline?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Usually, failing to meet the deadline implies that you will be unable to make an election for that transfer within the stipulated time period. Absence of any such election will result in the recognition of compensation income on vesting of the restricted shares.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_Do_foreign_founders_need_to_file_an_83b_election\"><\/span><b>4. Do foreign founders need to file an 83(b) election?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Founders who are foreigners should take into account the election if they have obtained the qualifying restricted property because of the services provided by them. It all depends on the nature of the equity structure and related tax conditions.<\/span><\/p>\n<p><b>Official Resource:<\/b><span style=\"font-weight: 400;\"> IRS Form 15620 \u2014 Section 83(b) Election<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/f15620.pdf\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">https:\/\/www.irs.gov\/pub\/irs-pdf\/f15620.pdf<\/span><\/a><\/p>\n<p><b>Disclaimer:<\/b><span style=\"font-weight: 400;\"> This article is for general educational purposes only and does not constitute legal, tax, or financial advice. Individual circumstances may change the applicable requirements and tax consequences.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Introduction Setting up a business in the USA typically includes giving out restricted stock to founders, co-founders, and initial employees &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"How to File an 83(b) Election for a US Startup: Deadlines and Requirements\" class=\"read-more button\" href=\"https:\/\/e-startup.io\/blogs\/83b-election-for-us-startup\/#more-3599\" aria-label=\"Read more about How to File an 83(b) Election for a US Startup: Deadlines and Requirements\">Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":3600,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3599","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","resize-featured-image"],"_links":{"self":[{"href":"https:\/\/e-startup.io\/blogs\/wp-json\/wp\/v2\/posts\/3599","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/e-startup.io\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/e-startup.io\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/e-startup.io\/blogs\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/e-startup.io\/blogs\/wp-json\/wp\/v2\/comments?post=3599"}],"version-history":[{"count":1,"href":"https:\/\/e-startup.io\/blogs\/wp-json\/wp\/v2\/posts\/3599\/revisions"}],"predecessor-version":[{"id":3601,"href":"https:\/\/e-startup.io\/blogs\/wp-json\/wp\/v2\/posts\/3599\/revisions\/3601"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/e-startup.io\/blogs\/wp-json\/wp\/v2\/media\/3600"}],"wp:attachment":[{"href":"https:\/\/e-startup.io\/blogs\/wp-json\/wp\/v2\/media?parent=3599"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/e-startup.io\/blogs\/wp-json\/wp\/v2\/categories?post=3599"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/e-startup.io\/blogs\/wp-json\/wp\/v2\/tags?post=3599"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}