So you’ve just launched a startup and granted yourself or your co-founder some equity. Feels great, right? You’ve got skin in the game, you’re official, you own a piece of the rocket ship.
But here’s the other side of equity: taxes.
If you don’t file the 83(b) election, your “paper” ownership could turn into a very real IRS nightmare.
The 83(b) election is a tiny piece of paperwork with massive consequences. It lets you pay taxes on your stock now (while it’s worth basically nothing), instead of years later when your shares are actually valuable.
👉 Translation: file it, and you’re locking in low taxes. Miss it, and future you will be writing a much bigger check to the IRS.
The scariest part? You only have 30 days from the grant date to file your 83(b) election with the IRS. Not 31. Not “oh, I’ll just do it at tax time.”
It’s 30 days, hard deadline, no do-overs.
Miss it, and you lose the ability to make the election forever.
That’s why most startup lawyers and investors will hammer this into you the second equity is issued.
Let’s play out two scenarios:
Scenario A: You file your 83(b).
You pay a small amount of tax now (maybe nothing, if the shares are worth $0.0001 each).
Your future gains get taxed as capital gains when you sell, not ordinary income.
You keep more of your upside.
Scenario B: You don’t file.
As your shares vest, you’re taxed at ordinary income rates (much higher).
Each vesting date could trigger a new tax event.
If your startup takes off, your tax bill could be six figures… before you’ve even sold a single share.
Founders who skipped the 83(b) often say it was their most expensive mistake.
Luckily, filing isn’t complicated. Here’s how to do it:
Fill out IRS Form 83(b).
It’s a short, one-page form.
You’ll enter your name, address, SSN, number of shares, and the date of the grant.
Mail it to the IRS.
Send it to the IRS office where you normally file your tax return.
Must be postmarked within 30 days of your grant date.
Send a copy to your company.
Your startup needs it for their records.
Keep proof of mailing.
Certified mail is your friend. If you can’t prove you mailed it on time, the IRS won’t cut you any slack.
💡 Pro tip: Some founders also include a cover letter and make a duplicate copy to keep with their tax files.
Day 1 = best day. File immediately when you get your shares.
Keep receipts. Certified mail or FedEx overnight is worth the $20 insurance.
Loop in your lawyer. If you have outside counsel, they’ll usually prepare the 83(b) for you (but you’re responsible for filing).
Don’t procrastinate. This isn’t like renewing your driver’s license—you can’t fix it later.
Form 1120 for Startups: How to File Your C-Corp Tax Return in 2025
Delaware Franchise Tax for Startups: What You Owe and How to Pay by March 1
Startup Tax Deductions: 7 Things Every Founder Should Write Off in 2025
Startup Tax Calendar 2025: Deadlines Every Founder Needs to Know
The 83(b) election is just one page of paperwork, but it can save you tens of thousands in taxes later.
Think of it as startup insurance: you spend a few minutes now to avoid IRS chaos in the future.
And here’s the good news: with TaxHero AI, you don’t have to remember deadlines like this alone. We track forms like 83(b), 1120, 5472, and Delaware franchise tax so you never get blindsided by the IRS again.
👉 Ready to stop stressing about deadlines? Check out the TaxHero Startup Tax Calendar here.
With AI-powered bookkeeping and tax filing, you stay focused on what matters: building your startup.
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