How to File an 83(b) Election Forms the Easy Way

As an employee or business founder, filing an 83(b) election form is important. Filing the 83(b) election form allows the Internal Revenue Service to tax you for ownership at the time of grant, but doesn't notify the Internal Revenue Service at the time of stock vesting.

In addition, filing the 83(b) election form enables you to pay taxes for any restricted stock based on the total fair market value. While filing the 83(b) form may be a tedious and time-consuming process, having an automated solution can be a perfect solution.

With DoNotPay, you get a convenient, faster, and less frustrating option for filing form 83(b) with just a click of a button. Wondering what the 83(b) form entails? Here is what you need to know.

What Is an 83(b) Election Form?

An 83(b) election form is a letter sent to the Internal Revenue Service notifying them of your interest to be taxed on your equity, including any restricted shares. Upon issuance of the restricted shares, your equity shares are no longer subjected to federal income tax.

However, if you do not file for the 83(b) election form within the stipulated time, the tax will be calculated based on the ordinary income rate, with your taxable income being equivalent to the number of your vested shares multiplied by the market price for each share on the vesting date.

The holding period for your share commences immediately after vesting. As a result, your vested shares will attract either a capital gain or a loss depending on the prevailing market price. This translates to a long-term gain or loss especially if the shares are sold after more than one year from the date of vesting.

To be at par with the latest stock options, you need to constantly check how shares are fairing in the stock market. As an employer or employee, this may not always be possible as there are other equally important activities that you need to check on to keep your business afloat. That's when you need a trusted partner who can help you make informed decisions.

With DoNotPay, you are assured of a less tedious process that will see you file an 83(b) form hassle-free. The automated process does all the work, leaving you with enough time to take care of your business or even handle all your employee obligations, so you don't have to worry about wasting any opportunity that could otherwise earn profit for your business.

What Are the Benefits of an 83(b) Election?

As an employer or employee, filing an 83(b) election benefits you a great deal. These benefits include:

• Your shares will appreciate.
• Filing an 83(b) form accelerates the tax on your shares. This translates to capital gain, which means more money in your pocket.
• You enjoy lower tax rates.
• If you are an employer, filing an 83(b) election form lowers the taxes your employees owe on shares and this saves your money.

Here is how filing an 83(b) form benefits you economically:

If your business invests in shares worth $1 million at $0.001 per share, the par value of your shares is 1,000,000x0.001 =1,000.

If the shares represent 10% of the company ownership and you choose to invest for 5 years, your company will receive 200,000 shares per year for the five years. For each vested year, you will pay tax based on the fair market value of the shares vested. If your company equity increases to $100,000, your ownership value increases from $1,000 to $10,000.

Then, the tax liability for the first year = ($100,000 - $10,000) x 10% x 20% = $1,800.

If all shares sell at a profit in the subsequent years, your shares will attract a capital gain, which is an economic benefit for your company.

How Long Do You Have to Make an 83(b) Election?

As an employee or employer, you must file an 83(b) form with the IRS within 30 days after being granted the restricted shares. In addition, a copy of the form must be sent to your employer.

Here are the instructions for filling out the 83(b) election:

1. File the election form no later than the 30th day after the restricted shares have been granted.
2. The form must be signed and dated.
3. Attach a copy to your federal income tax return.
4. Send a copy of the form to the compensation manager.

The filing process can be time-consuming and frustrating at times, especially when you have more responsibilities. You may also forget to file the election form and this has its repercussions.

If you fill out the 83(b) election form late, your stock value will be treated as income, and you will have to pay income tax, which may be higher than the tax paid on the vested stock. However, with DoNotPay, all is not lost as you can have your 83(b) form filed on your behalf and even help you beat the deadline.

What Is the Best Way to Fill Out an 83(b) Form?

There are several ways to fill out an 83(b) form including filling out the form yourself and sending a hard copy to the IRS or even filling out the form electronically. You only need to provide your details and leave the rest to the experts.

If your company has many employees, the process may be tedious, lengthy, and also take too much of your time. You can consult a firm such as DoNotPay to help you fill out the form and file the 83b election on your behalf.

What Are the Steps to Filing an 83(b) Election?

Trying to rest your password every time may be frustrating and time-consuming. At DoNotPay, you are assured of a convenient and timely filing. The automated process is a perfect solution as it does all the work, making the process super easy. As such, you don't have to worry about missed deadlines.

Here is a step-by-step guide on how to file an 83(b) form:

1. Complete the 83(b) election form and make four copies.
2. Email a copy to your IRS service center.
3. If employed, email a copy to your employer.
4. Include a copy of your income tax return upon filing.
5. Keep a copy for your records and also be sure to retain the mailing record.

How to File an 83(b) Election Form Using DoNotPay

If you want to file an 83(b) election form but don't know where to start, DoNotPay has you covered in 3 easy steps:

1. Enter the email address of the employee/shareholder you want to grant shares to.
2. Upload a copy of the Restricted Stock Purchase Agreement.
3. And that's it! We'll email the grantee with a special link so they can access the DoNotPay 83(B) Election Form Filing Product and file their forms automatically. You'll be able to see the completed task on your dashboard, and the grantee will receive a tracking number to track the status of their shipment as well.

Why Use DoNotPay to File an 83(b) Election

Using DoNotPay to file an 83(b) election has many benefits including:

DoNotPay works across all companies/entities/groups with the click of a button. DoNotPay not only helps you file an 83(b) election but also helps you resolve other issues such as getting your birth certificate in Kentucky the same way it could for California. You can also get to learn the following:

• IRS 83(b) instructions
• 83(b) stock options
• Late 83(b) election
• 83(b) election electronic filing
• ISO 83(b)
• RSU 83(b)

What Else Can DoNotPay Do?

In addition to helping you file an 83(b) election, DoNotPay also helps you to achieve other missions including:

• Filing a complaint
• Breach of contract
• Online fax
• Copyright protection

Need Help?

DoNotPay can help you file your 83(b) election hassle-free and help you avoid the last-minute rush, while also saving you from the tedious process involved. For more information, Sign up today!