What You Should Know About Late 83(b) Election Filings
If you are late on filing your 83(b) election form, the first thing you should do is to double-check that the company indeed issued you the stock and that the 1-month window has elapsed.
Analyze the grant terms and conditions carefully because it may be contingent on an occurrence that did not happen. For instance, you may have paid a nominal sum for a company's shares, but the shares were never granted to you, or the committee intended to confirm the issuance but did not do so on time. In such a circumstance, irrespective of what anyone thinks, you may be able to claim that the company did not issue you the stocks, and the company will re-grant you the shares as of the present day. While this means you'll have to use the company's current value when the stock is awarded, it also means you'll have a new 1-month window to submit your 83(b) election form.
Taxes are akin to household chores. You pay the minimum amount required, but no more.
Mastering the taxation system and its different sections is one way to avoid overpaying. This is particularly true if your tax status is convoluted, as it often is for employees or firm founders who get equity income. Using the 83(b) election to reduce your tax liability can help you save money.
Filing a late 83(b) election form on your own can be stressful and time-consuming because of all the paperwork involved. To save yourself time and headache, you may find that filing electronically through a secure portal like DoNotPay can help you file an 83(b) form without the hassle and get it submitted before the 30 days expire. DoNotPay will relieve you of the pressure of having to do it on your own, and we will also make sure that you never miss filing 83(B) election forms in the future.
How to File Late 83(b) Election on Your Own
It is necessary to always remember to file your 83(b) election within a month of receiving restricted stock. If you don't file your 83(b) election form on time, your stock holdings will be taxed as regular income when they vest.
If you search for information about 83b stock options, you will see advantages and disadvantages to consider when deciding whether or not to submit an 83(b) election form. The table below outlines situations where filing an 83(B) election is more and less advantageous:
|Situations where filing an 83(B) election is more advantageous||Situations where filing an 83(B) election is less advantageous|
|The income amount is small||The income amount is large|
|Growth is expected to be moderate to strong||Growth is expected to be low to moderate|
|Low risk of share forfeiture||Moderate to high risk of share forfeiture|
The procedure for submitting an 839b) election form is relatively simple. You'll fill out and sign an IRS 83(b) form that includes the following details:
- Information that the IRS can use to identify you, such as your name and social security number.
- The summary of the shares granted to you, as well as the date you purchased.
- The sum you spent on buying the shares.
- Taxable income total amount.
Send a copy of the 83(b) election form to your boss and mail another copy to your nearest IRS Service Center. If you need to confirm when you filed your 83(b) election form by a specific date, it's advisable to send it using certified mail with delivery confirmation.
Benefits of Filing 83(b) Election
There are various reasons why you might want to make an 83(b) election. Most significantly, Section 83(b) of the IRS Code allows you to calculate taxable income on stocks you purchased on the same day rather than when the shares vest. Furthermore, an 83(b) election delays the start of the lengthy capital gain waiting period, culminating in favorable capital gain assessment rather than regular tax assessment when the asset is sold. Simply said, given the right conditions, an 83(b) election results in enormous tax savings.
What Happens if You Do Not File 83(b) Election on Time?
If you do not file your 83(b) election form by the deadline, you will have to pay federal taxes on stock awards at each vesting date. Your gross income will be taxed at ordinary income rates on the sum wherein the stock's price on the maturity date surpasses the purchase cost. If the price per share has increased significantly over time, this could result in a considerable tax liability.
Does Filing for an 83(b) Election Come With Risks?
The 83(b) election, notwithstanding its advantages, has its risks. When you file an 83(b) election form, the date on which taxable income is recorded is accelerated from the lodging date to the day the limited stock is awarded to you. If you make an 83(b) election, IRS will assess your taxable income according to the actual market value of the shares on the acquisition date, and then you will lose your shares later. As a result, you may be taxed on unrealized gains.
How to File Late 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:
- Enter the email address of the employee/shareholder you want to grant shares to.
- Upload a copy of the Restricted Stock Purchase Agreement.
- 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 for 83(b) Election?
- Fast: You don't have to spend hours trying to file for 83(b) election form on your own.
- Easy: You don't have to struggle to fill out tedious forms or keep track of all the steps involved in filing the 83(b) election form.
- Successful: You can rest assured knowing we'll get your 83(b) election form submitted on time.
What Else Can DoNotPay Do?
At DoNotPay, you can also learn more about:
DoNotPay offers various other services besides filing your 83(b) election form. Other services we offer include:
- Writing request letters for small business loans.
- Drafting standardized legal documents.
- Filing complaints.
- Disputing breach of contracts.
Contact us today at DoNotPay. We are here for you.